The Production Decision
The establishment of a business is reliant on a complex series of processes based on the decision made by the consumer. Prior to the process of decision-making, microeconomic data is collected. Three aspects should be discussed when evaluating the information. Firstly, there is logic. It is a conversion of all data in numerical presentation. It enables one to draw logical conclusion after examination of the mathematical situation. The answer might be true and clearly thought but not correct. The second part involves examining what kind of competition is present and the effects it has on the business. A common scenario that occurs is competition over demand by companies with the same kind of products. According to the microeconomic theory, demand is warranted in an instance where price reduction occurs.
Crucial topics are evaluated when two or more manufacturers are competing with each other owing to the fact they produce the same goods or offer the same services. The state of the economy is an important aspect worth evaluation. This is after the indicators foretell a reduction in the fourth quarter of the year. The economy of a government is categorized under macroeconomics. During the process of decision, one should also consider variables and unknown factors. They stem from the desire of the consumer to get a new look on the products or services. For instance, some fashion companies prefer following the trends set by celebrities to create products that will attract its clientele. The example used to illustrate the above-mentioned factors is the shirt making industry. This type of company cannot produce more shirts than the set limit because it equates to less profit. The competition that exists between the shirt making industry and its counterparts is perfect competition. This translates to the companies making the same products thus each having a small market share. In this sort of competition, the pricing rates are independent thus not influenced by the manufacturers. They are considered as price takers, meaning the price is either acceptable or not which in most cases is not disputed.
In conclusion, the economic decisions made are usually done by the top management of the company or manufacturing industry. The data collected is keenly evaluated and the best choice is made. In most cases, the officials usually make the right decisions though it is usual if a wrong decision is made. However, such decisions are viewed as detrimental to the progress of the company.