Channel bags will be the product that will be used to help discuss both micro and macroeconomics elements. There various factors that affect the demand and supply of channel bags, in this case, leather bags will be the specification…
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Therefore, the profit margin always increases with fall in the prices of these channel bags. Another crucial factor that affects the supply of these products is the income differences. In any case, there is an increase in the income levels of a population holding other factors constant, the sales for channel bags increase because the extra amount will be spent on purchasing them and an increase in profit margin is realized. Although when income spent decreases, the households will only concentrate on the most essential commodities lead to a fall in sales of channel bags, as it will be considered a luxurious need. The price at which other related goods are sold will affect demand in that if a bag like travelling bag with the same features is offered for a relatively low price compared to that of channel bags there will be a fall in demand for the channel bags, which results to low sales and profit. In case there is an increase in demand of the travelling, all customers will shift to channel bags hence rise in sales and profit margin. Advertisement also affects sales in such a way that whenever there is an effective awareness created on the channel bags there is a boost in sales and profits.The channel bags being in fashion is another factor that has boosted its sales. Many customers always prefer whatever product that is in fashion hence there is increased demand.
The supply of channel bags can be affected by price changes. If an increase in the price of channel bags is factored in, the supply of this product will increase with an expectation of widenig the profit margin but if the prices fall the supply will be low. Low supply leads to a decrease in sales while an increase in supply leads to incresed sales. Lastly, change in technoloy employed matter a lot. Up to date technology makes production to be very effective and efficient hence increased supply that enjoys from economies of scale hence incresed profit margin. Demand curve The above graph shows that an increase in price of the bags leads to a fall in demand of the bags and decrease in price of the bags leads to an increase in demand of the bags. Other actors will lead to a shift of the curve. An increase in demand leads to a shift to the right while a decrease in demand leads to a shift to the left. Supply curve The above graph show how increase in the price of a commodity leads to an increase in the supply of the commodity. In case there is a fall in price of the bags, there will be a consequent fall in supply of the bag. . Other factors will lead to a shift of the curve. An increase in supply leads to a shift to the right while a decrease in supply leads to a shift to the left. b) Market structure The kind of market structure for channel bags is a perfect competition kind of market. This is simply because there are no barriers for new sellers into the market; there are many sellers and buyers. In this market, there are many other sellers. All these companies are allowed free entry into these markets where there are many buyers. c) The channel bags company should move from this kind of market structure because there is maximization of profits. The most ideal market structure is the monopoly kind of market where the firm can dictate its own profits and prices. The most
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