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Boom, Recession, Trough and Recovery.

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Introduction

Boom, Recession, Trough and Recovery Boom Period In the boom period levels of competition can cause a business to buy up more land and labour and therefore the business will have to pay more rent and wages to households. This will give households the opportunity to buy products. This will cause businesses to reduce prices to attract customers to their shop rather than their competitors. This will give the business more profits if they are successful they may however make losses. Investment in the business will also cause the business to buy more land and labour and therefore the business will have to pay wages and rent to the households. This will cause households to be able to buy more expensive goods and so prices may rise. ...read more.

Middle

Levels of Competition because of this as there will be a smaller demand for the product and so the business will have to buy less land and labour and so households will get less wages and rent. This will mean that households will not be able to afford to buy products in the economy. This will mean that the businesses profits will start to fall and so could lead to bankruptcy. Investments during the recession period will rise, as the government will try to get the economy back to its original state. This will mean the business will slowly be able to increase their amount of land and labour to produce more goods for households to buy with their rent and wages. However this will be hard, as they may have to spend money on other things. ...read more.

Conclusion

Levels of competition get harder to compete with other businesses, as there is less money to play with. With less money the business can't compete to lower prices when other companies are going through price wars to lower prices to get customers to buy their product. This means the business may face bankruptcy, as they are unable to sell their product. Investments from the government will get larger as they want to get the economy back to its original status and maintain it. This may start to increase profits as the business gets money to buy land and labour and this provides rent and wages for households to buy the businesses products. Promotion will again make the product more familiar to the public, however this costs money and so the business has to hope on a lot of sales to make a profit. To make a profit is very unlikely through this when a business is in a trough period. Cwk 17/01/2004 ...read more.

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