Present day market is consumer dominated. This means that a consumer either makes or destroys a business. If a business has to flourish it has to provide the consumers what is demanded by them with good quality and competitive price. This provides the business firms a strong incentive to serve the interests of consumers by adopting efficient production techniques and cost saving technology.
The business firms trade in goods and services in order to maximize their profits. There is less inclination towards provision of goods and services that are needed by the consumers. However, the business firms must be motivated to help the consumers in order to help themselves i.e. achieving the goal of profit maximization.
No, good intentions are not the single factor that is present behind helping others.
The cost of producing a good or service depends upon certain factors. Theses are:
1. The cost of labor and inputs used in the production process: if the cost of labor and inputs goes high, the cost of production will increase and the supply of the product shall reduce.
2. The government's taxation or subsidy policy: if the government increases the taxes on the production of a commodity, it shall increase the cost of production and decrease the supply of the product.
The producers shall continue to supply the product at a price that is able to recover the variable cost of production even if the consumers are unwilling to a price sufficient to cover the cost.
The price of a commodity helps in the calculation of the total value of a product. However, it is not its accurate measure. The prices are an accurate measure of a good's marginal value only. This is so because while doing a marginal analysis of a product, it is the marginal utility of the product that decides the price that a consumer would be willing to pay for it. As soon as the consumer stops deriving additional satisfaction from the use of a commodity, he or she will stop paying the price of the commodity.
The example of a good that has high total value but low marginal value is water.
The professional wrestlers earn additionally on the basis of their performance. The more addition they make to the entertainment of the people who come for watch the wrestling, they are highly paid. On the other hand, nurses are paid on the basis of their total service for the organization. There is no such additional contribution valuation of their services.