se of productivity, change in taxes, change in expectations (Reducing of prises in future which makes the producers who rise the productivity in that time), and the change of number of suppliers.
The change in supply might be caused by other reasons as well: the economy factors, amount of employees ext. (Verian, 1997). p> Elasticity of supply and demand
The degree of sensitivity or reaction of consumer or producer on the change of prise of goods and services is actually the elasticity of supply and demand. In case if consumer is reacting on change of prise that the demand is elastic but in case if consumer is not reacting that the demand is not elastic. The index of elasticity is also applied in relation of the amount of produced products. p> In everyday practice life of market there is a situation when shortage or surplus of goods which is influence on prices.
Firs case: supply of goods in exceeds the demand. This exceed might be caused by surplus of production of goods or by unfounded high prices. This situation also might be caused in case if population has low income.
Second case: the demand exceeds the supply. This case is showing that the market has the deficit of those or other goods. This situation makes consumers to look for the provided goods. Market is reacting on deficit by rising prices for goods. The solutions of this situation might be: decreasing of the income of population, or by raising the amount of products which are demanded. p> Third case: equality of supply and demand. This case might happen after some period of time. This exact time shows that the price is optimal. The optimal price is coming in case of free competition and theoretically denies correspondence of price for the good to amount of needed expenses. Such equality shows us the stability of production and the market which makes the best affectivity of market economy (Matveeva, 2007).
Models of market and its impact on productivity
Market relationships are influencing on productivity by interrelation of supply and demand. However this influence is not limited only with role of price and pricing. The huge impact on production, distribution, material exchange, ext make model of market. There are four models of market: 1 perfect competition, 2 monopolies, 3 monopolistic competition, 4 oligopoly. On the base of different models of market in population the freedom of business is forming the tendency of forming expenditures of labour for production of goods and services. (Dolan, 1996)
Kinds of market competition
Perfect competition characterized by big amount of independent firms which produce standard products. In perfect competition of firms products can be moved from one branch of industry to another. That means that firms can move from production of one good to another (Chekanski, 2008).
The monopolies. The mo...
