Oversupply

  

Categories: Company Management

You thought you had something special: turbo-charged blenders for wanna-be athletes returning to their high school form. You thought you were the only one, in a market filled with people who'd happily pay 300 bucks to grind kale, carrots, and beans into egg powder and dead (usually) anchovies. Yum.

But then...wow. To your surprise, a competitor came onto the landscape with a similar design, look, and feel. Yes, from China. Shocking that they'd be so similar to yours. And 50 bucks less at retail. And then another and another and another. And all a sudden, there are 8 brands of blender on the market, all killing each other with discounting until there's no margin for anyone in this somewhat flatly elastic demand curve of buyers.

By the time all 8 brands are priced at $199.95, netting to the maker just a hundred bucks, nobody is making any money, under the oversupply of competitive brands.

So now what do you do? Well, start by getting back in shape. When TubroBlend goes under, you're likely not going to have any takers when you apply for office jobs, so you'd better be able to lift with your legs, not your back.

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Finance: What are Macroeconomics v. Micr...3 Views

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And finance Allah shmoop What Our macro economics versus micro

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economics Alright people Hedgehogs bumble bees raindrops dust bunnies Bedbugs

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Bacteria protons corks you know Small micro the Empire State

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Building the pyramids the Great Wall The you the continent

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of Asia the Earth the solar system the galaxy the

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universe the multiverse A You know big macro Well that's

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the basic difference At least a frame of it between

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macroeconomics and microeconomics Big versus small macro economics deals with

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economic principles on a large scale National unemployment rates international

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trade Central bank interest rate decisions tariffs on foreign made

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fuzzy bunny slippers Like those things I have a pair

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micro economics Yet it deals with topics closer to home

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It's about individuals Home mortgages car payments life insurance retirement

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accounts of individuals mostly the retail price of fuzzy bunny

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slippers Right It's also about individual firms like payrolls insurance

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figuring out how many bunny slippers Teo make before Christmas

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But the economy has been slow GDP only edged up

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zero point one percent last quarter and unemployment rates have

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ticked up to their highest level in three years The

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Federal Reserve is worried and his considering lowering interest rates

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Yeah those air concerns of macro economics Bunny slippers cost

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twenty five bucks Regular slippers Cost Fifteen bucks Your daughter

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wants the bunny slippers for Christmas but it's been a

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rough year you know because the weak economy you've got

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laid off a quarry Meanwhile your side gig tuning electric

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bassoons has been slow Can you afford the extra ten

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bucks for the bunny slippers over Just the normal rectangular

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ones right Well that's a question of micro economics for

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the bunny slipper firm While they might see that the

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economy has been slow there are news reports about Cory

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layoffs and the cratering electric bassoon market Earlier in the

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year they bought a large supply of bunny slippers from

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their Chinese manufacturing partner They don't sell enough of them

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Well they'LL get stuck with a bunch of bunny slipper

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inventory they can't get rid of should they drop the

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price of the slippers like cut prices down to twenty

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bucks from twenty five make sure they get rid of

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most of the inventory by Christmas We'Ll those air questions

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of micro economics as well Both types deal with the

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same basic components though the difference has to do with

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scale Both macro and micro economics deal with the function

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of markets For instance the island nation of Macro vain

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eah sees a decline in GDP In a panicked attempt

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to fix the problem the central bank floods a country

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with its currency macro dollars Inflation suddenly spikes All right

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that's a macro economic issue Because inflation has jumped food

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delight meal at the buffet used to be nineteen ninety

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nine But after the spiking inflation while now the price

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the other two nights Yeah that's a micro problem Another

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example Both micro and macro economics deal with supply and

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demand Macro Vania discovers a small island inside its territorial

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waters It turns out to have a large guano supply

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on it's guano is the droppings of bats or seabirds

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know fertilizer Mohr Aggregate supply of guano means prices for

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fertiliser in the country fall right More supply same demand

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Prices fall Also macro Vania is able to export toe

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other countries helping its balance of trade and allowing it

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to bring in more imports That's macro You can use

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that cheap fertilizer to grow more Turn up You sell

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them on the side Teo Get a little extra cash

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Now you can afford one more night of Jeffers Delight

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each week That's micro Well Micro economics doesn't just impact

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households It operates on the scale of businesses as well

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the guano trading firms that scrape it off the small

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island and ship it overseas That's micro the small grocery

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store that buys your excess turn ups Yeah that's micro

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too OK so quick and very dirty Review Macro economics

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It's the big stuff The national economy global trade interstellar

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currency exchange total aggregate demand and supply as it relates

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to inflation gross domestic product national income interest rates unemployment

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macro So then we have Micro Micro is all about

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devices the government has implanted in your brain Yeah you

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