24 Supply and Demand - Substitution

The total quantity equation is tantamount to the economic supply and demand relation. For on the one sideare the available cash flows and on the other side the respective trade volumeswith their resulting prices:

    (24.1)

For a single product, lets say for example PCs, this relationship is from a special business perspective:. If the PC-company wants to increase its sales by another, he must either change the demandthat is, increase the flow of money, which can be achieved for example by better advertising. Or it has to change its priceand, therefore favorable has to reduce the price to get the additional sales. So holds:

    (24.2)

Economically, this is but in the overall balance to involve:

    (24.3)

Now the company has two options, the first of which is however extremely unattractive:

or

    (24.5)

in which

    (24.6)

will be attempted. Because the goal is of course an increase in turnover and thus the operating profit. Because then the operating costis less than the cash flows derived, differentially expressed

as     if successful     (24.7).

This can only succeed economically if it clears the increased cash flows for PCselsewhere in the GDP. In particular, this means increased revenue and an operating result in decreased revenue for one or more others must be recruited because the money flows the other one is no longer available. In particular, this means increased revenue for one company results from reduced income from one or more other companies, because the funds raised money flows for the other companies is no longer⁴⁹ available. This leads to

if     (24.8)  holds.