Question

In: Economics

If you are a manager in a highly competitive business such where should you put your...

If you are a manager in a highly competitive business such where should you put your most effort to maximize profit? Pricing or cost cutting?

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Expert Solution

"Classical economists expected full job, employment prospects for the poor opened by enhanced exports and decreasing imports Keynes lauded the mercantilist concept as a" contribution to statecra Locke — country must pursue a favourable trade balance if its money stock does not slip behind that of other nations, a result that would have dire consequences. Steuart, the last mercantilist, held on to theories already outdated in his being, but he alleviated the birth pangs of modern philosophy by presenting them in all their vulnerability. Unlike the mercantlist, Smith places no special emphasis on his foreign trade jobs,
Veblen has a mercantilist notion that the advantage of one man is the failure of another man, an utterly unacceptable notion in a setting where rising productivity is the norm.

The market's consumers are not homogeneous. The low-price approach may be followed by businesses catering to these consumers as customers search for goods or services with simple features at reasonable prices. The lower the price, the higher the market would be because the demand for a good or service is highly elastic. Although firms are projected to gain less profits per unit at a lower price, the much higher value of revenue would lead to higher net earnings. The ability to provide mass production and increased distribution is the secret to a low-price strategy 's performance.


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