Concept Map of the Pizza Shop

Concept Map of the Pizza Shop

Description of the pizza shop

Cova pizza shop is a nearly opening pizza shop to be located in Flaxton and is to be specializing in selling the above-named pizza types in that region. We shall be offering different types of services to any of our customers. We shall offer warm and cold pizza types depending on the requirements of the customer. We aim to solve the inconvenience pattern of pizza shortage in the region and promise to serve our customers to the best.

Relevant regulations and their importance

The regulations governing how business should be conducted in Australia falls in the three tiers of the Australian government that is local government, state government and federal government. First, the choice of the business is regulated by the state since it is a sole trader business. Secondly, the selling of goods and services is regulated by the federal government. Lastly, the business license and permit will be provided by the local government since the business is a food business type. The Australian competition and consumer competition commission requires that the service to be delivered within a reasonable time. This act will ensure protection to the customers for the smart delivery service of the pizza. Additionally, it states that if a customer requires service to be done in a given way differently from the retailers’ ways, there is some exception for the guarantees. This protects the retailer or seller of the product and services. Australian Consumer Law does not allow misleading, harassment, coercion or unconscionably act when demanding the debt payments from the customer (Goldring et al.1979). This protects the customer from unfair practices by debt collectors.

The Queensland information on consumer protection states that it is illegal to mislead customers when advertising the goods and services in terms of the price, quality and value of the products and services. this acts as a protection to the customer from believing what is not true. In order to stop this, sellers should give all the important information about their products or services they offer without keeping silence on some important facts regarding their goods and services. Adverts of a business should not be offensive by either discriminating somebody’s gender, age, religion, race, or disability (Chiang, 2004, p.160). Queensland information on consumer protection also demands that a seller should not receive payments on goods and services if they don’t purpose to deliver them, or if they know they can’t supply them in due time.

Sellers are not allowed to mislead the customers by two-price advertising where they ought to fix the wrong pre-sale price often extrapolated high and a lower current true price. This protects the customers from being mislead to make non-informed decisions where they think they are saving. Additionally, it is illegal for the seller to offer rebates, gifts or prizes if they know they don’t intend to provide them. Such arouses the customer to buy to get the prize and thus is misleading. Australian consumer law is against misleading promises, views and forecasts if the seller knows it is not true, or does not care whether it is true or not, or does not have reasonable basis for it. This protects the customer from being misled in making decisions on a given product or service.

The Australian Consumer Law states that it is unlawful for a seller to make false representations concerning products or services. such information includes saying that a specific individual has decided to buy goods and services, some testimonials of an individual in involvement to particular goods and services, the convenience of restoration services on a product among others. Additionally, it is illegal for false depictions concerning the presence, elimination or consequence of state, assurance, pledge or rights to persuade customers to buy the product. The Australian Consumer Law on section 21 forbids a seller from an unacceptable behavior when delivering goods or services to the consumer. All the above have been put in place to guard the customers from being misled by the sellers to make non-informed decisions concerning a given product or service to be rendered by the seller.

Economic concepts and their importance

Demand and supply

Forces of supply and demand always apply in any market on which equilibrium is reached. A rise in price of a commodity tends to decline customers’ demand as well as increase the sellers’ supply of that given commodity. In this scenario of pizza market, demand changes depending on different factors which include a change in the quantity of customers, the perceptions and preferences of the customers, the changes in the income level of the buyers and the price of related products. On the other hand, the changes of supply of pizza may depend on the following factors; the number of sellers in the market, the price and supply of related products, changes in the production cost, investment capacity and weather. A market equilibrium is reached when the forces of demand and supply are equal. Otherwise disequilibrium will exist to show shortage or surplus of the product.

Importance of demand and supply

Demand and supply forces enables a customer to know the quantity of products to buy at a given price. Additionally, these forces enable the seller to know how much the customers might buy at different prices and thus know the quantity to offer in order to maximize revenue.

Inflation

This refers to the rate at which average price level of a product or a service increases over a period of time and is often presented in form of a percentage. A rise in product price may be as a result of increase in cost of production such as raw materials or labor cost. Consumer Price Index (CPI) is used in computation of inflation rate as it evaluates the rate price change of the goods and services from time to time. CPI is defined as;

Inflation is then defined as;

Importance of inflation

It enables the government to monitor and balance the economy as too high or too low inflation will necessitate the government to use tools at their disposal to increase or decrease it. Additionally, inflation effects the economy where some are advantaged while others are disadvantaged. Borrowers on fixed rate are advantaged when inflation is hire than expected while people with fixed incomes or fixed payment contracts are disadvantaged on higher inflation than expected.

Elasticity

It refers to the measure of sensitivity of a variable to the alteration in another variable. Elasticity of demand illustrates how the quantity of good varies in price change. Elasticity of demand is thus defined as;

Demand can be elastic (perfectly or relatively), inelastic (perfectly or relatively), or unitary-elastic. For perfectly elastic demand the quantity demanded increases infinitely with a small fall in price while in relatively elastic demand the percentage change in price is lower than the percentage change in quantity

. In perfectly inelastic demand the quantity demanded of a product remains the same in any price while in relatively inelastic demand, the percentage change in in quantity demanded is less than the percentage change in price. Finally, unitary elastic demand occurs where the percentage change of goods demanded equals the percentage price change.

Importance of elasticity

The knowledge of elasticity of demand is applied in formulating government policies such as taxing. Additionally, the elasticity is applied in fixing prices of goods for international trade, as well as determining the price to be paid for factors of production such as wage for laborers (Fibich et al 2005, p 68). Lastly it helps the government in controlling business cycles, to remove inflationary gaps and deflationary gaps in the economy.

References

Chiang, L.H.N., 2004. The dynamics of self‐employment and ethnic business ownership among Taiwanese in Australia. International Migration, 42(2), pp.153-173.

Fibich, G., Gavious, A. and Lowengart, O., 2005. The dynamics of price elasticity of demand in the presence of reference price effects. Journal of the Academy of Marketing Science, 33(1), pp.66-78.

Goldring, J., Maher, L.W. and McKeough, J., 1979. Consumer protection law in Australia. Butterworths.