Question

economic forces

Answer 1

There are some forces, better known as factors, indicate market competitiveness of a firm.

These forces are as below:

No.1) Rate of inflation: this is the rise in price level. If resources of supply (like labor, materials, etc.) are costly, price of product can’t be lowered; therefore, the firm can’t produce the good at competitive price.

No.2) Rate of unemployment: if this is high, the demand of goods would be low; the firm has to offer a good at lower price, which may not be possible always since the fed cost has to be covered.

No.3) Fiscal policy: this is the government policy of imposition of tax. At higher tax lower would be the product demand, because disposable income decreases; the firm can’t increase its market share.

No.4) Instability of government: it affects the whole market; the firm can’t take the long-term decision for improvement and development, since rules change by the change in government.