decisions for producers

Question 1

What to produce

Answer 1

producers seek to maximise their profits by producing goods and services in high demand and no over supply. They plan to produce the maximum amount that they can sell for profit. They choose ways of keeping the cost of producing products as low as possible

Question 2

how to produce
- e.g

Answer 2

• producers look for the least costful ways to produce goods and services to minimise costs and maximise profits.They can look for cheaper supplies of raw materials and capital goods or cheaper subsitiutes for these items.
• a builder might use steel for a house’s frame work because it is cheaper and longer lasting then timber

Question 3

for whom to produce
-e.g

Answer 3

-goods and services are made for any buyers who can pay the price that sellers are prepared to accept. This leads to a great variety of products in different markets depending on the number of buyers, the buyers are, and how much they are prepared to spend. Some products are produced for people on low to middle income whereas others are aimed at high income earners

• food products as an example a loaf of bread only costs a few dollars because of it being a basic food item whereas truffles cost over $2000 per kilogram because they are rare