Market conditions can greatly affect the ways companies decide to make their products, both now and in the future.
In the short term, companies have some resources they can't change right away, like machines and the size of their factories. But they can change other resources, such as the number of workers or the materials they use.
For example, if lots of people suddenly want a certain product, a company might hire more workers for a little while to make more of that product. However, if they keep adding more workers, they might find that each new worker isn’t able to help as much in making additional products. This is called diminishing returns.
In the long term, companies have the flexibility to change everything about their production. If they notice that people will keep wanting more of a product, they might decide to build a bigger factory or use new technology. By doing this, they can make more products at a lower cost per item.
In short, understanding market conditions helps companies adjust how they produce their products. They can respond to what’s happening now while also planning for the future to ensure they grow and succeed.
Market conditions can greatly affect the ways companies decide to make their products, both now and in the future.
In the short term, companies have some resources they can't change right away, like machines and the size of their factories. But they can change other resources, such as the number of workers or the materials they use.
For example, if lots of people suddenly want a certain product, a company might hire more workers for a little while to make more of that product. However, if they keep adding more workers, they might find that each new worker isn’t able to help as much in making additional products. This is called diminishing returns.
In the long term, companies have the flexibility to change everything about their production. If they notice that people will keep wanting more of a product, they might decide to build a bigger factory or use new technology. By doing this, they can make more products at a lower cost per item.
In short, understanding market conditions helps companies adjust how they produce their products. They can respond to what’s happening now while also planning for the future to ensure they grow and succeed.