Supply dila Jer and Why do you think it is important for ma

Supply dila .Jer and . Why do you think it is important for managers to understand the mechanics of supply and demand both in the short run and in the long run? Give examples of companies whose business was either helped or hurt by changes in supply or demand in the markets in which they were competing

Solution

It is because they are profit seekers and profit directly depends on Equilibrium Quantity and Price. Equilibrium achieves by the intersection of supply and demand. If there is an excess supply that means surplus then manager decide to produce less in future or reduce the price of the output to sell (in case of non-durable goods). If there is an excess demand that means shortage then manager decide to produce more and increase the price of the output to sell.

For example all manufacturing companies like Honda which produces the car. If there is excess demand for cars then the company decide to more no. of cars and vice-versa.