“ArcelorMittal profit more than doubles in the second quarter as it raised steel prices.” ArcelorMittal is one of the world’s largest steelmakers, and they recently had increased their steel prices to offset the higher cost of necessary resources. The demand for their steel is steady increasing, and some of their competitors where cut out helping to increase their profits.
ArcelorMittal had factors that caused the supply to change; one of them was the changes in the cost of necessary resources. A company’s resources are input; something used to accomplish something else. Energy cost and iron ore which is the main ingredient in steel increased. The law of supply states when prices go up quantity goes down, and when price go down quantity goes up. This means that the quantity of steel supplied was down, but the cost of energy and iron ore where passed on to the consumer. This is an example of how prices increase, cost of resources increase and the firm passes the additional cost on to there product or service which the consumer pays for. This is so the firm will still make normal profit; a normal profit is when total revenue equals total cost. ArcelorMittal was able to make an economic profit. Earning a economic profit is when the companies total revenue, which is the total dollar income earned by the firm from producing and selling a certain amount of output ( a particular good or service) exceed the total cost, and those are the cost a company pays for production.
Just like steel has necessary resources for production, steel itself is also a necessary resource to produce other things. “Demand for the steel used to construct buildings and produce cars and appliances continued to surge in Asia, Russia and the Middle East, ...