In the case studies, the person in charge has made two decisions. The first is the person responsible for the decision to re-establish a large-scale leather processing plants. The second is the person responsible for the decision to sell leather processing plants in order to re-build a dairy plant.
We can know that to improve the living standards of people have more demand for milk. During the factory construction of a milk shortage in the market, the scarcity and rising price of milk, dairy products factory in order to get good economic returns. However, in 1990, the rapid development of the leather industry and to the scarcity of raw materials prices, policy makers have seen the profits to dairy products factory converted into a leather processing factory; the community is always in progress, with the development of light industry, Can have more choices, leather processing plant was also a sharp drop in earnings. Over time, the standard of living of the great changes, accompanied by an increase in personal income, consumption of milk products have begun to increase as time items are often longer and more flexible needs, so do the people in charge of the second Decision.
In this case, the response to a number of economics:
Scarcity is the community's resources are limited, and scarcity.
Application theorem of supply and demand, when demand is greater than the supply, policy-makers to raise prices in order to gain economic benefits.
Income elasticity of demand refers to a demand for consumer goods income level of response to changes in the measure, in case the consumer incomes rise, the demand for milk has also increased, reflecting this view.
Enterprises are economic interests first.