Economic Theory Essays

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Economics Theory Popular Concept That Essay

Words: 2089 Length: 5 Pages Document Type: Essay Paper #: 92797800

He would be faced with deciding whether he must spend all his available resources on goods or services, or whether he must save some of his income so that he would be able to finance some of his needs of his future. When he is taken as a labor resource, he must make the decision whether he must use his time in working for his pay, or whether he must spend it on sleeping and other leisure time activities. ("Decision making using marginal analysis," n. d.)

Similarly, when he is a labor resource, he must decide how much of his time he must spend on education, so that he may be able to maximize his life earnings. On the other hand, if he were an entrepreneur, then he must make the decision on how many people he must hire, or how much he must spend on acquiring a new product or service, which would help him increase production. In short, it is obvious that all economic decisions yield certain benefits to, and also at the same time impose certain costs on the decision maker involved in the decision making process. If the decision maker were to follow a simple rule, which is: continue to engage in a particular activity, as long as the marginal benefit seems to be greater than or equal to the marginal costs. The best and optimal decision would take place when the marginal benefits were to equal marginal costs, thereby enabling the decision maker to make the best use of the resources that he has at his disposal when he has made his decision. ("Decision making using marginal analysis," n. d.)

Another example of the practical application of economic theory and marginal analysis would be that of the agricultural researchers and analysts of Florida who have used economic analysis in the decision making process that they have had to indulge in when they had to…… [Read More]

Sources:
Evans, Edward. (2005) "Marginal analysis, an economic procedure for selecting alternative technologies/practices." University of Florida, Institute of Food and Agricultural Sciences. Retrieved 15 December, 2007 at http://edis.ifas.ufl.edu/FE565

Johnson, Paul. M. (2005) "Marginal Analysis: A glossary of political economic terms" Retrieved 15 December, 2007 at  http://www.auburn.edu/~johnspm/gloss/marginal_analysis 
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Economic Theories Marx Viewed Capital Essay

Words: 1511 Length: 5 Pages Document Type: Essay Paper #: 59081437

Both Keynes and Kalecki use Marx's theories as a starting point but quickly moved into new ways of thinking, particularly with regard to effective demand being oriented toward the demand-side. Marx had remained rooted in supply-side demand function, rejecting Say's Law only to note that demand did not necessarily meet supply.

Works… [Read More]

Bibliography:
Marx, K. (1867). Das kapital: A critique of political economy.

Mandel, E. (1995). Marx's theory of crises. International Viewpoint. Retrieved April 24, 2010 from  http://www.internationalviewpoint.org/spip.php?article289 
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Karl Marx Economic Theories Overview Essay

Words: 995 Length: 3 Pages Document Type: Essay Paper #: 64646159

Marxian Economics

Karl Marx was one of the most popular and prominent economists the society has ever produced. Born in 1818 in Prussia, Marx would come to activate in fields such as sociology, economy, history or journalism. In his economic activity, he uncovered a series of economic principles regarding the functioning of the society and the economy in the context of capitalism, commonly integrated under the generic umbrella of Marxism. The Marxian theories draw from the Marxist ideology, yet they are considered ideologically independent (Roemer, 2002).

The Marxian economic theories oppose the previous theories of Adam Smith, who relied of productivity and wages; Marx, on the other hand, promoted the role of labor to attaining economic gains. Marx contends that the specialization of the labor force leads to a decrease in the wages and that ultimate value of the goods and services is not able to reflect the value of the work employed. This principle was issued in the social and demographic context of an increasing population (Roemer, 1989).

"Marxian economics focuses on the role of labor in the development of an economy, and is critical of the classical approach to wages and productivity developed by Adam Smith. Marxian economics argues that the specialization of the labor force, coupled with a growing population, pushes wages down, and that the value placed on goods and services does not accurately account for the true cost of labor" (Investopedia, 2012).

The basic principles of Marxian economic can generally be classified into six categories, as follows:

(1) The fundamental principles

(2) The labor theory of value

(3) The concept of capital

(4) The concept of surplus value

(5) Capital accumulation and the falling profit rate, and last

(6) The concepts of monopoly, impoverishment and crisis.

(1)

The fundamental principles of Marxian economics refer to (a) the theory of economic development, from slavery to feudalism, to capitalism, to socialism and to communism; (b) the dialect materialism, with emphasis on the evolution of economy occurring as a result of a clash of the opposites, and last, (c) the labor theory of value, according to which labor is the only source in the creation of value.

(2)

According to the labor theory of value, the value of an item within a society is given by the amount of work employed in the creation of…… [Read More]

References:
Munro, J.H.. Some basic principles of Marxian economics. University of Toronto. http://www.economics.utoronto.ca/munro5/MARXECON.htm accessed on October 1, 2012

Prychitko, D.L. Marxism. Library of Economics and Liberty.  http://www.econlib.org/library/Enc/Marxism.html  accessed on October 1, 2012
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Economic Growth and Happiness Economic Growth Can Essay

Words: 1551 Length: 6 Pages Document Type: Essay Paper #: 15659208

Economic Growth and Happiness

Economic Growth Can Lead to Healthier and Happier Societies

More Availability of Goods

Higher Income

Increase in Tax Revenues and Better Welfare Programs.

Increase in Purchasing Power

Technological Advancement

Health Industry Benefits

Business Sector Benefits

General Benefits

Reflective statement

Economic Growth Can Lead To Healthier and Happier Societies

Economic growth has long been termed as the precursor to any society's success, and in this paper, we shall be looking at various aspects of economic growth that are directly correlated to happiness in the society, as well as those that negate this causality leading us to wonder whether all the technological progress in the world can eventually lead to happiness.

There are various factors that impact happiness where geography is a consideration in the sense of the location of a country has an important part to play in terms of its cultural values, and the manner in which happiness is defined in the culture. The progress that the country has made in terms of the economic bloc it belongs to as the U.K. has being part of the EU; its history also plays an important part in how happiness is defined. (Megan, 2009) Consider that U.K. is one of the most advanced nations of the world and its economy is among the most progressed, therefore their criteria of h happiness includes towards a better, healthier environment; whereas, countries that are emerging keep economic empowerment as their premise for happiness.

Similarly there are variables that are indicative of economic growth are: higher availability of goods, higher income, and technological advancements, each of which are discussed in further detail below:

More Availability of Goods

When we consider economic theory, all experts have taken the basic assumption that a wider variety of choice available to consumers in terms of more goods and services available to them leads to a better standard of living and in turn makes people happier.

However it has to be seen whether the availability of goods on its own accords has been able to make societies happier. Consider the example of an economy where there are a higher number of goods available, but there is huge class divide so that five percent of the population has more than 80% of…… [Read More]

Sources:
Fribbance, I. (2009). Economic wealth and happiness. Introduction to the social sciences . Open University.

Fribbance, I. (2009). The changing UK economy: making a greener and happier society? . London: Open University.
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Economics Define Economics Economics Is Defined as Essay

Words: 1813 Length: 6 Pages Document Type: Essay Paper #: 19200212

Economics

Define economics

Economics is defined as the study of how society allocates limited resources and goods (Encyclopedia Britannica, 2009). Resources include inputs such as labor, capital, and land and are used to produce goods. Goods include products such as food and clothing, as well as services such as those of barbers, doctors, and firefighters. Often goods and resources are deemed scarce because of society's demand for them vs. their availability (Stapleford, 2012). Economics, then, becomes the study of how goods and resources are allocated when scarce. It also allows us to anticipate the outcomes of changes in governmental policies, company practices, or population shifts, and so forth.

The market system is one avenue economists use to allocate scarce resources. A market is defined as any system or arrangement where trade takes place (Encyclopedia Britannica, 2009). In the U.S. there are several markets trading at all times. The study of the market system falls into two branches - macroeconomics and microeconomics.

Define microeconomics

Microeconomics is the study of the economic behavior of individual firms, consumers and industries and the distribution of total production and income between them (Encyclopedia Britannica, 2009). Microeconomics allows economists to analyze the market to establish the average price point for goods and services. This analysis also aids in the allocation of society's resources among all potential uses (Funderburk, 2012).

This branch of economics first emerged when economists began analyzing consumer decision-making processes and outcomes in the early 18th century (Stapleford, 2012). The first in-depth explanation of the discipline came from a Swiss mathematician named Nicholas Bernoulli, who laid the groundwork for microeconomic theory by suggesting that consumer choices are always rational. In the late 19th century, London economist Alfred Marshall proposed examining individual markets and firms as a way to understand the broader economy. It was then that microeconomics became formally established as a field of study.

In the mid-20th century, the concept of market failure led to the modern definition of microeconomics (Funderburk, 2012). Market failure refers to situations in which market operations prevent the efficient allocation of resources. Today, microeconomists are primarily concerned with analyzing market failure and suggesting ways…… [Read More]

References:
"Economics." Britannica Concise Encyclopedia. Chicago: Encyclopedia Britannica, 2009. Credo Reference. 3 Sept. 2010. Web. 10 Aug. 2012.  http://ezproxy.adler.edu/login?qurl=http://www.credoreference.com/entry/ebconcise/economics 

Funderburk, D.R. (2012). Is the "New Economics" Either New or Economics?. National Social Science Journal, 38(2), 20-28.
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Economic Impacts of Regulation Is a Written Essay

Words: 1536 Length: 5 Pages Document Type: Essay Paper #: 85221461

Economic Impacts of Regulation

Regulation is a written instrument that contains rules with the force of law (Ogus, 2004). Regulation as a process involves monitoring and enforcing rules, established through primary or delegated legislation. Regulation usually creates, constrains or limits a right. In addition, regulation creates and limits a duty besides allocating responsibilities (Ogus, 2004). Regulation may take several forms depending on its application. These includes legal restrictions made by the government, contractual obligations, which binds several parties together, self-regulations by industries, third party regulation, co-regulation, market regulation, certification and accreditation

Regulation made by a state tries to produce outcomes that might not occur (Ogus, 2004). In addition, it attempts to prevent or produce outcomes in various places to what might occur. Through this, regulation becomes an implementation object of policy statements. Examples of regulation include controls on prices, market entries, wages, pollution effects, employment of particular people within certain industries, development approval, the military forces and services and production standards for particular goods (High, 2001).

Public services usually encounter conflicts between procedures of maximizing profits and people's interests on these services. Therefore, most of the governments have various forms of control or regulation for the purpose of managing these possible conflicts (High, 2001). This regulation ensures deliverance of appropriate and proper service. The regulation does this without discouraging the proper functioning as well as development of the business. For instance, regulation in most countries controls the sale of prescription drugs and alcohol (Amato & Laudati, 2001). It also controls key sectors in the economy such as a food business, public transport, and provision of personal and residential care, film and TV. In addition to these, the regulation controls monopolies and the financial sector of the country (High, 2001). With regards to this, the objective of this paper is to identify the impacts of regulation on various sectors of the economy.

Literature Review

A wide variety of literature review indicates that regulation frequently has significant impacts on the economy. However, it is not…… [Read More]

Resources:
Amato, G., & Laudati, L.L. (2001). The anticompetitive impact of regulation. Cheltenham [u.a.: Elgar.

Grabowski, H.G. (2009). The impact of regulation on industrial innovation: [a workshop on the Impact of Federal Regulations on Industrial Innovations, New York, May 2-3, 2008]. Washington: National Academy of Sciences.
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Economics There Are a Number of Different Essay

Words: 702 Length: 2 Pages Document Type: Essay Paper #: 50788131

Economics

There are a number of different metrics that can help to measure the health of an economy. The GDP is one of those numbers, and can be obtained from the Bureau of Economic Analysis. Following a decline of 2.6% in 2009, the GDP grew in 2010 by 2.9%. GDP rates fluctuated by quarter, with a low of 1.7% in Q2 following by escalating growth in the last two quarters. This represents a slow recovery from the steep declines of 2008-2009. Another measure of economic health is unemployment. The current unemployment rate from the Bureau of Labor Statistics is 9.0%, a decline of 0.4 percentage points from December. This rate is historically high, it is lower than at any point in the past year, again showing a sign of slow recovery. A third measure of economic health can be found in the inflation rate. The best measure of inflation is core inflation, which removes the highly volatile food and energy components from the index. Core inflation sits at 0.1% and has been around zero or just above for the past six months. Low inflation is not congruent with a robust economy, but can indicate an economy that is growing very slowly, which appears to be the case. Put together, these three measures indicate that the economy is growing, but very slowly.

Monetary policy is essentially maxed out at present. The Fed's target overnight rate is at 0.25%, which is as low as the central bank is willing to reduce rates. This rate results in a low cost of borrowing, which in theory brings more money into the active money supply. The buyback of government securities, under a program that has become colloquially known as quantitative easing, is another means of introducing money to the economy, which again should spur investment. Overall, however, monetary policy has only had marginal impact. The Fed funds rate was cut early in the recession and did not stem the massive job losses and decline in GDP. Quantitative easing may have contributed something to recent growth, but Q4 growth in 2010 lagged that of Q4 2009, so…… [Read More]

Works Cited:
Bureau of Labor Statistics: CPI Detailed Report December 2010. Retrieved February 8, 2011 from  http://www.bls.gov/cpi/cpid1012.pdf 

Bureau of Labor Statistics: Employment Situation Summary. Retrieved February 8, 2011 from  http://www.bls.gov/news.release/empsit.nr0.htm 
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Economics Part A-Economics and Society Essay

Words: 937 Length: 3 Pages Document Type: Essay Paper #: 69634406

Unfortunately most growth oriented economic policies such as "supply-side" economic policies tend to exacerbate inequality. A greater role of the government in the economy such as increased taxation on the rich can reduce inequality. Inflation and unemployment are usually inversely proportional in most economies, i.e., increase of money supply through deficit financing reduces unemployment but increases inflation while tight monetary policies reduce inflation but increase unemployment. According to a number of analysts, a major cause of terrorism in the world is an acute sense of deprivation among a large section of the population. Economic measures can, arguably prove more effective in rooting out terrorism than military action.

Part C-Theory

What, How and for Whom to Produce:

In 'free market economies' decentralized decision making by individuals and firms based on consumers' desires (which determine the price of goods) and the profit motive determine what goods are produced and in what quantities. For example, consumers in the present age value automobiles and the skills of auto mechanics more than horse-drawn carriages or blacksmiths, so they are likely to spend their money to buy cars and pay auto mechanics for their services rather than spend their money on horse-drawn carriages and the services of blacksmiths. Hence firms are likely to produce automobiles instead of horse-drawn carriages and people are likely to become mechanics rather than black smiths. (O'Connor and Faille, 2000) How goods are produced is decided by the firms basing their decision on increased efficiency to cut costs; the 'for whom' decision is largely governed by household incomes.

On the other hand in controlled markets, centralized decision makers in the government, or a state-planning agency dictate the types of goods to produce. The government dictates how resources are to be utilized to satisfy society's needs and also controls the wages and prices.

Most economists argue that free market economies are superior to controlled economies because free markets are more efficient; they encourage individual responsibility for decisions; the profit motive provides the…… [Read More]

Sources:
Free Market Economy" (2003). Article in Microsoft Encarta Encyclopedia. CD Rom Version, 2003.

O'Connor, D.E. & Faille, C. (2000). Basic Economic Principles: A Guide for Students. Westport, CT: Greenwood Press.
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Economics in Construction Industry Data Essay

Words: 1716 Length: 6 Pages Document Type: Essay Paper #: 3139551

9%

6.2%

6.3%

6.4%

6.4%

6.4%

Source: Kelly, Herring (2012).

Fig 3: France Construction Growth Rate (%)

Source: Kelly and Herring (2012)

Economic theory points out the factors leading to the decline in the construction output in France. Economic theory argues that the changes in demand for construction activities may be due to several economic factors such as changes in Gross National Product, and changes in interest rates. (Finkel, 1997). Akintola and Martin (1994) argue that the level of a national economy is a primary factor that could affect the construction demand in a given economy. Typically, "there is a relationship between construction demand and the growth in GNP, as a measure of the economic well being of a nation." (Akintola, and Martin 1994 P. 9). During the period of economic prosperity, there is a general increase in demand for consumer goods which triggers up the demand for construction activities.

In France, there are construction activities in both private and public sectors. Generally, France enjoyed economic prosperity between 2001 and 2007 making the country to enjoy a significant increase in demand for construction activities during the period. However, with global economic crisis that affects France from 2008, the demand for construction activities declines making many private construction companies to reduce their workers in…… [Read More]

References:
Akintola, A. And Martin, S.R. (1994). Models of UK private sector quarterly construction demand. Construction Management and Economics 12(1):3-13.

Department Business Innovative & Skills (2011). The UK Industry Performance Report with reference to the UK Construction Industry Key Performance Indicators.UK.
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Economics and Housing the Wall Essay

Words: 805 Length: 2 Pages Document Type: Essay Paper #: 30307488

Even though the housing market is slowing, the article speculates that it may take six to eight months before sellers accept that the market has softened and reduce their prices. This demonstrates the economic theory that the supply relationship is a factor of time. Suppliers do not always react quickly to a change in demand or price, but eventually they must. The article suggests that demand will decline 3.5% next year, but that median home prices will still increase by 5%.

Suppliers are beginning to react to falling demand through a decline in price increases and incentives which are really indirect price decreases. That's why this is referred to as a "cooling off" period in the article which mentions that some condo buyers are being offered a car to make a purchase of a condo. The use of incentives may be viewed by the suppliers as a way to mask the fact that prices are falling. They are trying to hide the fact that market power has switched away from sellers to buyers. This change in power will only motivate potential buyers to negotiate a price that is far lower than the published price. And, suppliers may be hoping that demand will pick up. If it does, it's easier to take away the incentives than to adjust prices.

Buyers expect that prices will fall further as demand decreases. Therefore, according to the article, they are now delaying their purchases or at least avoiding over-priced purchases. As a result, we're seeing sharp falls in the quantity demanded in over heated areas such as the West Coast where home-purchase contracts were down 14% in October, 2005. Demand isn't falling as much in other areas where housing appreciation hasn't been as astronomical.

The Wall Street Journal article does not discuss when or if housing prices will actually begin meaningful decreases, but economic theory suggest that the market will move towards equilibrium, a point when supply and demand are equal. How long this will take is the $20 million question, leading to debates over whether there will be an eventual housing crash or a more gradual market adjustment and speculation about how specific regional markets will…… [Read More]

Bibliography:
Arnold, Roger A. (2005) / Economics, 7th Edition; South-Western Publishing.

Hagerty, J.R. And Simon, R. (2005, November 15). Housing market shows further signs of cooling. Wall Street Journal. Retrieved from Web site: http://www.realestatejournal.com/buysell/markettrends/20051115-hagerty.html
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Economic Crisis and Capitalism Essay

Words: 3179 Length: 10 Pages Document Type: Essay Paper #: 95991899

Economic Crisis

The recession of 2008-2009 and the subsequent government responses provides a good test for economic theories. There are no controlled experiments in economics, so we can only work with case studies in order to understand how economies work. A good starting point is to consider the issue through multiple different lenses, so that we can understand how the crisis occurred and what prescriptions might be best suited for response either to address the root problems or to engage in prevention. This paper will consider the works of Marx, Schumpeter and Keynes in analyzing the financial crisis. All three of these men would have been able to understand its causes, but likely would have taken very different approaches to solving the problem.

The second issue at hand is the question of the future of capitalism. We have a pretty good sense at this point of what the response of government is to the threat of such crises going forward, but each crises also presents us with new information that we can use to best understand how are governments can and should set up the economic system of the future. There will be some discussion about the future of capitalism then, synthesizing what we already know and what will likely take place in the future.

Karl Marx was one of the most important economists and he fairly accurately understood the nature of capitalism. He might be better known for the failures of his strongly socialistic response to capitalism, that doctrine having been roundly refuted in practice. However, his understanding of capitalism can inform us of the past recession and what the responses should have been, and perhaps should be in the future.

Marx noted that capitalism was a distinct form of economic organization in that it requires and supports the advancement of capital in the form of profit. This profit, he argued, can exist on the individual level but for an entire economy is only possible for economy-wide profit to occur through exploitation. He argued that…… [Read More]

References:
Cox, W. & Alm, R. (2013). Creative destruction. Library of Economics and Liberty. Retrieved December 7, 2013 from  http://www.econlib.org/library/Enc/CreativeDestruction.html 

Eichengreen, B. (2010). The crisis of financial innovation. University of California at Berkeley. Retrieved December 7, 2013 from http://emlab.berkeley.edu/~eichengr/crisis_finan_innov.pdf