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Old February 7th, 2011, 20:34   #41
rustysniper's Avatar
Join Date: Apr 2008
Location: Canal Flats BC
Originally Posted by SSjon View Post
Economies of scale has nothing to do with importation, it may do a lot with firms exporting but not imports. Lets say for your sake that demand really is low, Canadian retailers would have to lower the amount they supply/import and thus lower the prices to match the market equilibrium price to keep up the volume. If they cannot cover the costs then it is no longer profitable to stay in business, which means the efficiency scale of the market is small and there should be very few retailers.

As you can see low demand means less retailers but lower prices, I say that there is high demand in Canada for Airsoft, and not just based on the fact that Wal-Mart and Canadian Tire sell them in every one of their stores. Focusing on "good" models, very few retailers are allowed to import them legally into the country meaning a low supply. Simple demand and supply dictates that low supply leads to high demand. Where there is high demand there will be high prices regardless of volume. As well as the fact that there are naturally few retailers they could easily corner the market and jack up the prices.
LOL....I am in the import know not what you speak grasshoppa.....
I love it when people who are not in business lecture on topics they have no experience in.....

And FYI.."SCALE" applies to many aspects of business.....not just manufacturing as you like to insist. Supply vs Demand is a scale.....Cost vs Production is a scale.....Ability to purchase vs Ability to Sell is a scale.....and so on......look it up

"Economies of scale, in microeconomics, refers to the cost advantages that a business obtains due to expansion. There are factors that cause a producer or purchasers average cost per unit to fall as the scale of output or volume is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost"
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