Final answer:
Retailers often expand their offerings and increase store traffic as a response to competitive market pressures for higher profits. Profits motivate businesses, influencing supply and demand dynamics where higher consumer demand may result in increased prices and new supplier entries. This cycle can lead to more variety and potentially lower prices for consumers.
Step-by-step explanation:
The result of the pressure being placed on many retailers to increase profits by carrying additional merchandise or services that will also increase store traffic is a phenomenon often observed in competitive markets. In such markets, profits act as a compelling motivator for businesses to seek expansion and increase the variety of their offerings. This is seen as a strategy to not only boost revenue but also to attract more customers, essentially serving as a catalyst for consumer demand and reinforcing the cycle of supply and demand.
Several factors influence this market dynamic. These include consumer income levels, anticipated product price increases, the number of buyers, and the availability of related products. When consumers demand more goods than are available, prices tend to rise, rendering the market more attractive for new suppliers. This leads to what is called entry, which is the influx of new firms in response to increased industry profits. Consumers benefit from this cycle as it typically results in increased productivity, leading to a larger variety of goods at potentially lower prices. The advent of department stores is a historical example illustrating a significant shift in consumerism and procurement patterns, transitioning from family-run shops to large enterprises that offer a standardized array of goods and services.