Answer to Question #131891 in Macroeconomics for Michelle

Question

Brief statement of why a proposed company should be established in a country, take into consideration preference, demand, consumer surplus, market demand and changing trends of the economy.

Answer 1

Why a Proposed Company should be established in a Country

A company should be established in a country if the country’s economic trends are favorable for business running. High economic growth leads to increased profits as people can spend more and there is a development which has a positive effect on a business. Also, when the economy is flourishing, more investors are willing to start businesses in a country as the risk of business failure is reduced. Preference influence consumer demand. Therefore, if the preference for a company’s product or service is high, the market demand is high. This means that the chances of business success in the country are higher hence favorable for investment. Another factor that would contribute to the establishment of a company is consumers’ spending power. If the company can be able to offer better deals compared to competing businesses and still make reasonable profits, then it is wise to establish the company. All these factors are the reasons why an investor should start a business in a country.