Answer to Question #142211 in Economics of Enterprise for Mahindra

Question

if more goods is produced at a better quality for a lower price for the consumer it's considered a loss for the business since they technically don't make a profit by reducing the prices

Answer 1

If the company produces more goods, then if these are goods of lower quality at a lower price for the consumer, then this leads to a gradual decrease in demand for this product, which leads to the loss of customers and, accordingly, to the loss of revenue. If a lot of high quality goods are produced, but more efficient technologies are used in such a way that this leads to a decrease in prices for consumers, then this will lead to the fact that demand increases, the number of consumers increases and this is not a loss for business, since technically they do not profit from lower prices, but potentially more customers are expected.