As assumptions change so does the supply for example

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As assumptions change, so does the supply. For example, if unemployment rates are low, offers of higher pay may not increase supply – everyone who wants to work is already working. If competitors quickly match a higher offer, the employer may face a higher pay level but no increase in supply. (b) Product market factors An organisation must generate enough revenue to cover expenses, such as compensation. Therefore an organisation’s pay level is constrained by its ability to compete in the product/service market. Product demand and the degree of competition are therefore two key factors in the determination of an organisation’s pay level. Both these factors affect the organisation’s ability to change what it charges for its products and services. If prices cannot be changed without decreasing sales, then the ability of the employer to set a higher pay level is constrained.
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