Buying price

With the invisible hands of competition and the forces of supply and demand at work determining consumer's behaviour, as an entrepreneur we need to get behind the scene of what makes consumers willing to buy. What are their unmet demands and insatiable appetites ? The makers of products and services are willing to sell and consumers ever so willing to buy at a price. Supply equals demand for a price. That much we know for sure.

Yet consumers act according to their elasticity of demand. They respond to price first and foremost because money is scarce . They are price elastic. On the supply side, high prices encourage the production of more products or services while simultaneously discourage more consumption. At the point where the quantity supplied and quantity demanded meet, the market reaches equilibrium. Thus, we produce the quantity at which the marginal revenue of the last unit produced equals the marginal cost . Price equals the marginal cost.

Individuals purchase on their elasticity of demand. This illustrates that we must meet the needs not fulfill their wants. Marginal utility means the usefulness or utility of having an additional unit of a product or services. At the point where a buyer is fully satisfied, an additional unit is of no value. If you already have 3 plates of 'roti tisu' ( Malaysian pancake) and 3 cups of 'teh tarik' ( tea with milk) , an additional amount of both is of no value.

However, consumers with unlimited cash in hand tends to be more price inelastic and buy regardless of the price.