Answer: Loss leader pricing
Explanation:
Loss leader pricing is a pricing strategy that involves fixing the price of a product well below its cost or market price to attract a new set of customers. In most cases, the "loss" in such products is shifted to another product to cushion its effect. The grocery store is selling milk at $1.50 lower than its market cost by employing loss leader pricing strategy to its business model.
Answer:
The price on the black market tends to be higher.
Explanation:
When price ceilings are placed in legal markets, buyers are able to get goods and services at lower prices. But sellers may not be willing to sell unlimited supply of goods at the low price. This could lead to artificial scarcity, and formation of black markets.
The main aim of black markets is for suppliers to maximise profits, so a supplier is able to sell his goods at an amount above the price ceiling set in the legal market.
Also black markets are characterised by practices such as tax evasion, which are beneficial to the suppliers.
Answer:
The advantages of starting own business:
- Flexibility: a person who starts his own business does not necessarily have to work 9/5 monday-friday, he can set his own schedule. Needless to say, many business owners work longer hours than regular employees, but the do so because of the hope to earn more money from profits than from a regular wage.
- The possibility of profit: an employee in a legal firm will not be able to obtain any dividends (unless he owns stock), while the very definition of a business owner is someone who obtains profits.
- Fulfillment: it is probably more fulfilling to see your own business develop and grow than go to work everyday for someone else's company.
Some disdavantages are:
- Risk: starting a business is risky. The business might result in losses instead of profits, in other words, the business may fail.
- Capital needs: to start a business, you need some capital, and it is not always easy to obtain. Most business owners either get debts, or liquidate some of their own assets (house, car, etc) to finance the company.
- Longer work hours: as stated above, it's very likely that a business owner will have to work night and day, especially during the first stages.
<span>During the recession witnessed in early 2001, many firms laid off their employees and downsized. The reason for the downsizing of employees from these firms in 2001 was the incompetency and poor performance of the employees. It may sound mean but to the company, this is advantageous since they can reduce the costing while at the same time maintain or increase the final goods.</span>
