Determinants of Supply and Demand
Fixed Costs:
-Food (prices in the menu)
-Taxes
-Rent
-Machinery
Variable Costs:
-Labor (wages)
-Utilities
-Materials for production
5 Determinants of Demand
1) Tastes and Preferences: there will be several types of pizzas; a variety of tastes and flavors to accommodate the preferences of customers.
2) Market Size: Our restaurants will be located in areas with a large market, so there will be a larger demand.
3) Income: Our restaurant locations’ will also be in a high income area as people who have high incomes tend to spend more.
4) Price of Related Goods: Depending on the price of other goods in the market, the demand for pizza will increase or decrease. For example, if the price of hamburgers go up, the demand for pizza will increase.
5) Consumer Expectations: By locating our restaurants in rich areas, we can ensure greater spending as more people purchase things in anticipation of having money and based on their future income. Consumers can expect to have a delicious meal.
6 Determinants of Supply
1) Price of Resources: We will have our own farms to produce the raw materials, such as milk to make cheese. Our factories will also be located relatively close to our restaurant, so there won’t be a high cost of transportation. There will be set wages for our workers as well and our rents/bills (electricity) will be managed.
2) Government Tools: Our restaurants will be looking for tax breaks and subsidies for our farms/farmers.
3) Technology: Our methods of production will be efficient and energy saving.
4) Competition: By locating our restaurants in an area with businesses in a similar market, we can ensure an increased supply and we’d have more incentive to create something “new and improved” to attract more customers.
5) Price of Related Goods: The hamburgers, sandwiches, etc, in the location we chose are higher, the supply of pizza will be affected as more people would be willing to buy it.
6) Producer Expectations: Our customers, and thus our future income is guaranteed due to our efficient methods of production, affordable prices, and good location. In turn, we will produce more supplies.
-Food (prices in the menu)
-Taxes
-Rent
-Machinery
Variable Costs:
-Labor (wages)
-Utilities
-Materials for production
5 Determinants of Demand
1) Tastes and Preferences: there will be several types of pizzas; a variety of tastes and flavors to accommodate the preferences of customers.
2) Market Size: Our restaurants will be located in areas with a large market, so there will be a larger demand.
3) Income: Our restaurant locations’ will also be in a high income area as people who have high incomes tend to spend more.
4) Price of Related Goods: Depending on the price of other goods in the market, the demand for pizza will increase or decrease. For example, if the price of hamburgers go up, the demand for pizza will increase.
5) Consumer Expectations: By locating our restaurants in rich areas, we can ensure greater spending as more people purchase things in anticipation of having money and based on their future income. Consumers can expect to have a delicious meal.
6 Determinants of Supply
1) Price of Resources: We will have our own farms to produce the raw materials, such as milk to make cheese. Our factories will also be located relatively close to our restaurant, so there won’t be a high cost of transportation. There will be set wages for our workers as well and our rents/bills (electricity) will be managed.
2) Government Tools: Our restaurants will be looking for tax breaks and subsidies for our farms/farmers.
3) Technology: Our methods of production will be efficient and energy saving.
4) Competition: By locating our restaurants in an area with businesses in a similar market, we can ensure an increased supply and we’d have more incentive to create something “new and improved” to attract more customers.
5) Price of Related Goods: The hamburgers, sandwiches, etc, in the location we chose are higher, the supply of pizza will be affected as more people would be willing to buy it.
6) Producer Expectations: Our customers, and thus our future income is guaranteed due to our efficient methods of production, affordable prices, and good location. In turn, we will produce more supplies.