Price ceiling
Price ceiling is basically a law of regulation stated by the government that it is illegal to sell a product lower than a given of specific level that allows customers to purchase certain products such as sugar, cooking oil and chicken. Price ceiling is normally placed below the equilibrium point.
Price floor
Price floor is also a law or regulation made by the government that it is illegal to sell a product lower than its given price because they believe certain products are sold lower than the market price.
Substitute
Substitute is good that serves as a replacement towards other goods. Example such as Apple and Samsung, Starbucks and Coffee Bean, Nike and Adidas.
Quantity Demand and Quantity supply
Quantity demand is a term used in economics to describe a total amount of goods or services that are demanded at any given point in time. The quantity demanded depends on the price of a good or service in the marketplace , regardless of whether the market is in equilibrium. The quantity demanded is determined at any given point along a demand curve in a price vs quantity plane.
Quantity supplied is also a term used in economics o describe the amount of goods or service that are supplied at a given market price. Graphically , the amount of goods or service supplied lies at any point along the supply curve in a price vs quantity plane. The rate at which the amount supplied changes in response to the changes in prices is called the price elasticity of supply.
QUESTION 2
The economic issue faced by TESCO Hypermarket is the rising prices of the same product but from different suppliers For example :
The biscuits are the same types of biscuits which are cream crackers but they are sold at different prices because they are different brands. Therefore one cream cracker on the top is sold more expensive than the cream cracker on the bottom thus increasing the challenges of rising prices. Besides that food supplies such as chicken are also sold at a very high price although they chickens are not kept clean and is already old and spoilt. This shows that Tesco Hypermarket does not sell fresh chickens and also sell it at a very high price which is not fair and this causes inflationary pressures.
Futhermore, detergents are sold at a high price because the traders are selling it to Tesco at a very expensive price causing a rise in prices in detergents as well and also different brands of detergents are sold at different prices. For example Dynamo is sold at $22.00 and Softlan is sold at $8.39.
Moreover, fruits like apples are sold at a very low prices because they are non organic whereas organic fruits are sold at very high prices. Therefore non organic fruits are not healthy to be consumed by the consumers and also causes a high demand for organic prices and Tesco increases the prices of the organic products too much.
In addition Tesco also increases their rice prices causing a major economic crisis faced by Tesco. For example, certain rice products such as Sunwhite. Their prices are too expensive compared to the other rice products such as Cap Gajah.
QUESTION 3
Tesco Hypermarket and Mydin Hypermarket are known to be the two largest competitive wholesalers in business world. Tesco is always compared with Mydin because the same products sold at Tesco is also sold at Mydin with a cheaper price. Therefore, people prefer to buy their things at Mydin compared to Tesco. This also shows that Mydin is Tesco’s heavy competitor. There are few ways to improve the competitiveness between Tesco and Mydin. Firstly, Tesco has to reduce the prices of their goods sold because its to expensive like, the same cream crackers are sold at different prices because they are from different suppliers. By this way Tesco can reduce its profit margin by maintaining low costs of operation. Besides that, consumers prefer to shop in Mydin because Tesco sells food products such as chickens at a very higher price. Therefore, Mydin gains lots of income and earns profit compared to Tesco. On the other hand, Tesco should sell more fresh and clean food products. For example, wrap all the meat products and keep them in a refrigerator so that it will be fresh and clean because most of the food products such as meat and chickens are left open on the tray causing flies to sit on them. Thus, making the food products not fresh and unhealthy to eat. Futhermore, Mydin supplies more substitutes or complimentary products compared to Tesco. For example, if Mydin doesn’t have the particular biscuit brand they have alternative brands to replace them. Therefore, Tesco should supply more complimentary products so that people will still buy their product although they are from a different supplier or brand. They should always take into consideration customers feedback and their perceptions of the supermarket for them to improve their services.
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