Economic Growth and Happiness
Economic Growth Can Lead to Healthier and Happier Societies
More Availability of Goods
Increase in Tax Revenues and Better Welfare Programs.
Increase in Purchasing Power
Health Industry Benefits
Business Sector Benefits
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…… [Read More]
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.
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…… [Read More]
An economic system is basically described as specific set of principles that addresses the production, distribution, and consumption of products and services. The involved parties in the production, distribution, and consumptions processes are usually determined by or dependent on the economic system. Throughout the history of humanity, different types of economic systems have evolved because different societies have placed varying emphasis on distinctive goals and priorities as part of their efforts to obtain answers to certain economic questions. In addition, the difference in economic systems is fueled by the tendency by different societies to develop very broad economic approaches to manage their resources. One of the main reasons for the development of different economic systems is to address the challenge of scarcity. The challenge of scarcity is an essential problem that confronts individuals and nations. While there are four major types of economic systems recognized by economists, there are still huge disagreements on the system that effectively addresses the challenge of scarcity.
Types of Economic Systems:
As previously mentioned, there are different types of economic systems that have been developed by different societies to deal with the challenge of scarcity. The four basic types of economic systems that are generally recognized by economists are & #8230;
Traditional Economic System:
A traditional economic system is basically fueled by customs and inheritance through which skills and techniques are passed down from generation to generation ("Economic Systems," p.2). As a result of inheritance of skills and methods, the entire community works toward the realization of a common good. Moreover, individuals' activities, the production of goods and services, and the exchange and use of resources tend to follow long-established patterns in the traditional economic system. Unlike other economic systems, the traditional economic system is not very dynamic to an extent that it's characterized by static standards of living. This characteristic emanates from the fact that individuals do not enjoy occupational or financial mobility since their economic relationships and behaviors are predictable.
With regards to resolving resource allocation issues, community interests take precedence over the individual in the traditional economic system…… [Read More]
Economic Final Report
Types of economic systems
Economic systems vary from one nation to another. Traditional economic systems refer to an economic system founded by tradition. The services and goods that people provide through the work they do, how people exchange and use the resources are trends that follow permanent patterns. These are not dynamic economic systems because there are minimal changes. In this economic system, people live on static standards. They do not enjoy much occupational mobility and financial mobility (Gregory and Robert 19). However, it is possible to predict economic relationships and behaviors. People are aware of what they are expected to do, why they trade, they know what others should give to them. In traditional economic systems, the interests of the community are of great priority than individual interests. People collaborate at work and labor proceeds are shared equally. However, in some traditional economic systems, individuals respect some personal privacy. However, it comes with restrictions as such individuals are given a strong obligation set, which they owe to the entire community. In the current world, traditional economic systems are being applied in the workplace among Aborigines of Australia and other minority groups (Conklin, 15).
The next economic system is the planned or command economic system: in this system, the economy is under government control. The government makes decisions about how to distribute and use resources. The state regulates wages and prices. The government determines the form of work an individual will do to some extent. In the past centuries, the state assumed different levels of controlling the economy. In some systems, the government exercise control exclusively on major industries. This means that the state exercises great control on the country's economy. A good example of this economy is the Soviet Communist Union. In 1980s, the collapse of the bloc of communist led to the halt of a variety of command economies across the globe. However, Cuba is the only country holding onto its command economic system (Gregory and Robert 43).
From the market economies,…… [Read More]
Has the 2008 financial meltdown in the U.S. And the ongoing economic crisis in Europe have practically ended the era of economic globalization?
Following the financial crisis that marred the U.S. economy along with other global economies as well as the ongoing Eurozone debt crisis, there have been projected concerns that this predicament would end economic globalization. The purpose of this paper is to assess this claim. Going by Immanuel Wallenstein's World Systems Theory, the political economy of Third World economies and developed economies of the West are mutually dependent. Wallenstein's conjecture is that the growth and expansion of Third World economies relies on constant interaction with Western developed economies seeing as the world is characterized by a structural division of labor where the developing nations of the Third World provide cheap labor and raw materials while the developed economies are the holders of capital and controllers of the market. Economic experts have argued that even in the midst of the global financial meltdown in the U.S. along with the ongoing Eurozone economic crisis, economic globalization remains intact. This has become possible through the decision by the governments to rescue companies from the debt crises.
While globalization revolves around breakthrough in the fields of science and technology, cross-border division of labor (market liberalization), economic globalization centers on growing economic interdependence between national economies globally through economic integration, cross-border movement of commodities, services, capital, and technology. Economic experts espouse that economic globalization commenced several hundred years ago since the inception of trans-national commercial engagements in Europe, the Americas and parts of Asia. Some of the historic trade arrangements include the Trans-Saharan trade and the Trans-Atlantic Slave Trade. While trans-regional trade engagement began centuries ago, it escalated towards the end of the 20th century under the auspices of trans-national trade regimes such as the World Trade Agreement (WTO) and General Agreement on Trade and Tariffs (GATT) (Shangquan, 2000). These trans-national trade regimes have since negotiated commercial engagements between nations on the international scene urging them to ease trade barriers and open up economic ties amongst themselves. This has become a pervasive trend as the developed nations of Europe and the Americas reach out to the less developed countries of the Third World through Foreign Direct Investment. The current landscape of economic globalization therefore comprises…… [Read More]
The Keynesian economic theorists follow an economic model that considers three factors in macroeconomic growth. These are income distribution, savings, and investment functions. These factors are derived from the theory's determination of equilibrium in the economy as determined by the relationship between employment, prices, and gross-domestic-product (Padalkina 18). The theory suggests that the economy does not have full employment, autonomous demand-component affect rate of growth, and investment decisions are not dependent on savings. Therefore, the theory suggests that for the economy to experience growth there must be enough demand to push the economy to full employment (Padalkina 18). In addition, the economy experiences growth when there are increases in demand, increasing returns, externalities, and productivity growth.
The Keynesian economics have advocated that discretionary government measures and interventions are necessary in promoting economic growth, increase standard of living, and employment stability. The theorists believe in the use of government intervention, and the use of social policy development. This is in addition to the use of income maintenance programs improves the management of the economy, thereby leading to economic growth (Padalkina 18). The Keynesian theory believes the financial or market-based systems require government intervention and control to reduce destabilization. To carry out this task the government has to use fiscal and monetary policies to stimulate employment and domestic output to motivate economic growth (Padalkina 18).
The monetary theorists like Modigliani believe that macroeconomic growth is achievable by focusing efforts on the role of financial and money markets. These markets are believed to determine the dynamics of aggregate price level, output level and the role of monetary policy in economic fluctuation stabilization (Free 382). This theory believes that the control of money using monetary policies will determine the exchange rates, assets, and value of the economy aggregates. The monetary theorists suggest that to grow macroeconomics requires the control of the amount of money in circulation through interest rates (Free 382). Interest rates determine the cost of financing holdings and cost of holding money, and increase the value of…… [Read More]
The production possibilities curve represents the maximum level at which a country can produce. Freer trade, such as what the EU has promoted since its inception, allows countries to do two things. The first is that it allows them to produce at their production possibilities curve. This occurs because the country under free trade conditions is going to produce those goods in which it has a comparative advantage. This improves the efficiency of production because the country is producing goods at which it is better at producing, and as it produces more of those goods than it otherwise would the country will also have better economies of scale. A country will produce at a higher level of efficiency after free trade than it did before, bringing it closer to the production possibilities curve.
The other thing that happens under free trade is that the production possibilities curve is that it gets pushed outward. The improved efficiency from free trade is likely to increase the production capacity of the nations engaged in the trade. As a result, not only with the countries involved meet their old production possibilities curve, but they will see their production possibilities curves move as well.
2. An economy that is operating inside its production possibilities frontier is not operating at its capacity. There are issues within that economy with respect to efficiency. This economy should be able to increase production of any good at this point, a new good or existing one, because there is unused productive capacity in the economy. The country has resources that are being unused (Investopedia, 2011). If those resources are used, then the country will be in a position to experience economic growth up until the point where the production reaches the production possibilities frontier.
3. There are a number of reasons that the production possibilities frontier is pushed outward. Two of the main ones are improvements in technology and the exploitation of more resources (Riley, 2006). The first of these, improvements in technology, will push the production possibilities frontier outward by allowing the country to make better use of the resources that it has. The production possibilities frontier is a function of both the resources that the country has available and the ability of the country to leverage those resources. So if…… [Read More]
The revelation of the financial crisis that unfolded in United States in 2008 is considered to be the worst economic crisis since the Great Depression, 1929. The distinctive causative factors that have contributed to the U.S. economic crisis 2008- 2009 are differentiated by aggravated financial control, higher risks in capital investment, the housing bubble phenomena in relation to the brisk credit expansion. The aggregation of these factors in the U.S. economy directed the economy towards the de- leverage and credit crunches as the bubble burst. The following paper shall be discussing about the degree of correlation between the tax implications policies with respect to the financial crisis in U.S.. The precise review of strong linkages between the taxation and economic crises is the explicit explanation of the crisis that shook America. The paper also highlights the key factors that demonstrated their abilities and rescued U.S. In the economic crisis.
The recent financial crisis reported in U.S. has followed the roots of the antecedent financial crisis that took roots in 2007 as the crisis of U.S. housing market. The crisis had a multiplier effect and the adverse consequences were reportedly spreading throughout the world, and proved to catalyze the economic crisis of many countries from developed to undeveloped and underdeveloped countries. The crisis unfolded in U.S. And reached an astonishing level by September 2008 when a number of eminent U.S. financial institutions, including AIG and Lehman Brothers collapsed (Hendrickson & Nichols, 2010).
In order to understand the root causes of the economic crisis in U.S. 2008-2009 this is important to illustrate the factors that triggered the materialization of crisis that stated from the disintegration of the housing bubble and the contribution of the complexity created by the financial policies and instruments that distorted the scheme of asset price correction that proved an agent of the noteworthy recession and global and domestic economic turnaround.
More importantly the paper discourses the response of the concerned authorities towards the rehabilitation…… [Read More]
Economic Crisis Policies
US current economic crisis is considered to be started from real estate sector. The real sector started to decline in 2006 and it accelerated in 2007 and 2008. Housing prices have fallen from the peak from about 25% so far. The decline in prices left homeowners with no option and they were unable to refinance their mortgages and causes default of mortgages. This default of mortgages and loans swallowed the banks and financial markets such as falling of Lehman's brothers and other Banks and blow to rest of economy happened as the whole economy was relying on banks and ultimately it slows down investment in the country and capital flows to other parts of the world like China and India. Bank losses cause reduction of bank capital which in turn requires capital reduction thus saving bank from lending. It is estimated that every $100 loss and reduction of bank capital would cause $1trillion reduction in bank lending. (ISR international socialist review, 2009)
Critical Analysis of the Causes of Current Economic Crisis
The current depression is said to be biggest since the great depression of 1930's.There are many causes of current economic crisis. Some of them are discussed below.
At the macroeconomic level we have seen that consumption has increased over last two decades, aggregate household consumption represents more than 70% of gross domestic product. Consumption increases due to relaxed credit policy for real estate sector which ultimately results in low saving, which puts strain on governments' revenues because of increased investments and results in budget deficits. (Journal of accountancy, 2009)
Another major cause of downturn of U.S. economy is decline of rate of profit in U.S. economy as a whole. From 1950 to 1970 the rate of profit decreases about 50% and around 22 to 12% in onward period. This decline in profits is due to decline in general trend during this period.
Marxist theory while explaining this decline says that this decline further prove to be a double edged sword and cause higher unemployment and soared inflation and also cause lower real wages which paralyze the growth process and cement higher unemployment rate. Moreover, the lower rates of profit in U.S. push the capitalist to bring the rate of profits back to track, while doing so they followed the policy of higher inflation by…… [Read More]
This economic indicator can be used to determine inequality within a given region or area. It can also be view the capacity for individuals within a particular nation to consume
b. Rate of Value- $41,560
c. Source of Information- "Per Capita Personal Income U.S. And All States." Per Capita Personal Income U.S. And All States. Bureau of Business & Economic Research, 12 Oct. 12. Web. 02 Feb. 2013.
d. Date of information- September 2012
6) Housing Starts-
a. Economic Indicator- Housing starts are usually indicated by the number of privately owned, new houses, under construction within a given period. This data is usually comprised of three, very distinct components of single family houses, condos, and apartment buildings. Housing starts are very important economic indicators as housing is a substantial component of the middle class family's net worth. Home ownership is also a means by which are other industries are successful. Aspects such as carpet, brick, appliances, lawn care, and others, all benefit from a robust housing market. As such, housing, and housing related industries comprise a substantial amount of the overall nations GDP. Housing starts, therefore, indicates future demand for housing related goods and services.
b. Rate of Value- 780,000 units started in 2012 which is a 28% increase above 2011 levels
c. Source of Information- U.S. Department of Commerce- Cooper, Stephen. Census.gov. U.S. Department of Housing and Urban Development, 17 Jan. 2013. Web. 2 Feb. 2013.
d. Date of information- January 17, 2003
7) Unemployment Rate
a. Economic Indicator- the unemployment is the number of individuals out of work who are actively seeking work. This number does not account for individuals who have given up searching for work altogether. The number is calculated by dividing the number of unemployed by those who are actively in the labor market. The unemployment is a key economic indicator…… [Read More]
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.
A wide variety of literature review indicates that regulation frequently has significant impacts on the economy. However, it is not possible to generalize prepositions about the impacts of economic regulation (High, 2001). The literature…… [Read More]
Mexico; How Interest Rates Can Be Used to Manage an Economy
The management of the economy, undertaken with strategies from the government and decision fro the central bank, is usually undertaken with the aim of promoting and supporting a stable economy, balancing the desire for sustainable growth with the need to constrain inflation. This is an issue faced by almost all countries; inflation can be harmful to an economy, impacting not only in the internal stakeholders, but influencing the exchange rate. The control of inflation, often through the use of interest rates, may also help to stifle growth. This can be a conundrum, as stimulating growth and constraining inflation requires a very careful balance of economic policies. Mexico has been faced with this issue and in March 2013 the Banco de Mexico
made a surprise decision to reduce their interest rates from 4.5% to 4% (Trading Economics, 2013), and then hold the rate at 4% in April (Hughes and O'Boyle, 2013). Management of the economy is a tricky balancing act, and when the country had a growth rate substantially above that of many western countries in the post global recession period, one may wonder why there was a reduction in interest rates. Looking at the situation of Mexico and the use of interest rates it is possible to examine the reasons for the decision and how the rate reduction may be good for Mexico's economy in the long-term.
Mexico has performed relativity well over the last few years; the economy has been showing positive growth well above rates in the more developed countries. In 2012 it was estimated that the real rate of growth in the GDP was 4%, in 2011 it was 3.9% and in 2010 it was 5.6% (CIA, 2013). Three years of growth has been beneficial to the country. With an official GDP of $1.163 trillion in 2012, which equated to a per capita rate of $15,300 in purchasing parity terms (CIA, 2013), it is also apparent there is likely to be more room…… [Read More]
Economic Principles and Purchasing a House
Economics Principles and Purchasing a House
This essay discusses principles of economics as they apply to making decisions about purchasing a home. The essay also reviews the decision making process and how it is affected by marginal benefits and marginal costs. The health of the economy and also international trade are factors to think about too, along with looking at conditions which could have lead to making a different decision.
Supply and Demand
Buying a home is one of the single most important economic decisions that most people make. Because it is such a big decision, it is important to look at all the right considerations. The way to do this is to understand how economic principles apply. One principle that affected my decision was the law of supply and demand.
The number of homes available for sale is influenced by supply and demand. On the supply side, how many homes are for sale is influenced by the selling price of homes. If people see that they can sell their homes for higher prices, more of them are willing to sell, with all other things being equal. The converse is also true; more people are discouraged from selling when prices are low, as they are today.
The unemployment rate also affects the supply of homes. The more people there are out of work, the more people there are who fall behind on their mortgages and cannot afford to keep their homes. These homes add to the overall supply either through voluntary short sales or through involuntary foreclosures. The U.S. currently has a high number of homes available for sale. As of January 2012, the total existing-home inventory in the U.S. amounted to a 6.1 month supply at the current sales rate (RealEstateABC.com, 2012). This rate does not take into account what analysts call the shadow inventory, which includes distressed inventory that is being kept off the market. Experts believe that shadow inventory will continue to keep prices low for years to…… [Read More]
Economics: Application of Concepts
An Analysis of the Economic Situation in the U.S.
In the last five years, we have seen the U.S. economy expand but at a pace that is seen as being relatively moderate. In conducting an analysis of the current economic situation in the U.S., I will largely limit myself to inflation, interest rates, and unemployment.
Although the current economic situation is better than it was five years ago, there are signs of uncertainty that continue to suppress economic activity. This is more so the case taking into consideration the prevailing unemployment rates. For the most part of year 2008, the unemployment rate was stuck between 5% and 6% (Bureau of Labor Statistics, 2013). As at January this year, the nation's unemployment rate stood at 7.9% (Bureau of Labor Statistics, 2013). This is an indication that in comparison to five years ago, the total unemployed labor force increased significantly.
Standing at 1.6% on January 1st of this year, the U.S. inflation rate during a similar period five years ago stood at 4.3% (Multpl, 2013). The relatively high inflation rate five years ago can be attributed to the adverse effects of the 2007 -- 2010 financial crisis. It is however important to note that in the recent past, the cost of imported raw materials has fallen and labor costs have stabilized. This has helped rein in inflation.
When it comes to interest rates, it should be noted that in an attempt to stir economic activity and neutralize the effects of the recent downturn in economic activity, the Federal Reserve has in recent times attempted to keep interest rates low through the maintenance of near zero interest rates (Board of Governors of the Federal Reserve System, 2012). In comparison to five years ago, the current performance of the stock market as…… [Read More]
In the first phase, the price of coffee increased and thus lured producers into the market. This caused the supply to move up the curve. The increased supply caused the demand to decrease and thus caused the overproduction. The mechanism is shown below graphically.
The graph shows the coffee market at an equilibrium price of 3.25. The increase in price caused the supply to rise and the demand to fall. This lead to an over production of Q3-Q2.
As the demand was unchanged, an overproduction occurred and the price began to come down. The suppliers began to cut down the supply and the price became lower than the equilibrium price. During all this confusion, coffee houses began to open up in the areas of high income earners and they started charging a premium for coffee. This brought the market to equilibrium but new firms had started entering the market. These firms enjoyed abnormal profit as they were charging a price higher than market price. The demand also increases as a result of the establishment of these firms as the high income groups get attracted towards these coffee houses due to their good taste.
The market returns to equilibrium with a price less than the previous one. The quantity traded, however, increases.
With the price constantly going down and an inelastic demand due to high income, the coffee houses were the most benefitted party in this scenario. As the price of the coffee comes down, these retailers get more and more profits. The high price has very little effect on the demand of the product because of the preferences and high income of the consumers. So, the gourmet coffee houses charge more and more premium. The demand and supply are affected to a minimal extent as the coffee houses target groups with high income. So the supply and demand are somehow inelastic and these changes will not affect them considerably.…… [Read More]
Economics of Alcohol Abuse
Econcs Of Drugs & Alcohol
How an Economist Might Approach Alcohol Abuse
One answer would be to raise price by decree. Holding all other factors the same, this artificial price increase would initially reduce quantity consumed, but there would still be demand that went unfulfilled, which implies foregone profit at the new lower quantity and higher shelf price. Were supply restricted, say through a fixed number of licenses, this triangle would represent profits producers would want to capture but could not under the artificially high price. Were the price rise caused by say input costs, in the long run producers who could achieve economies of scale would increase production, so price would fall back to the original at higher quantity (Chen, 2007, p. 1), but this would be impossible were supply artificially limited, and if the profits were taxed away there would be no incentive to increase supply. In the case of a tax, the result would be a transfer from the producers to the state with unfulfilled consumer demand at a new artificial lower quantity and higher price, which would normally be a deadweight loss to society. If there were social costs to alcohol abuse, the artificial restriction of demand would offset some of that loss and if the tax went to the same general fund it would also offset that cost.
But this story above assumes all consumers can quit. Were alcohol addictive, the addicts would consume at any price regardless of supply after all the casual consumers had been priced out. The market solution might just reduce the personal income of the lowest-earning abusers, cause them to commit crime, or if they had to work more to support the higher price of their habit, this assumes there was work to be had. One way to deal with this element would be to offer difficult rehabilitation in exchange for controlled dosages for those who couldn't afford the new higher cost. As more alcoholics gave up, total social cost from enforcement and damages would fall, workforce productivity might increase, and any remaining program costs could perhaps be shifted onto offenders who could afford to pay. Price controls and taxation can reduce supply and quantity supplied, but the ultimate long run solution is to reduce demand for products that generate social costs. This is not possible in some cases, say for…… [Read More]
Total revenue represents all the company income. Total revenue is calculated by multiplying the price of products with the quantity sold. Typically, total revenue is calculated as follows:
Total revenue = price x quantity
Where price (P) and quantity (Q).
As being revealed in Table 1, total revenue is calculated by multiplying price with quantity, when firm produces 2 quantities of goods, firm's total revenue is $10, however, when a firm produces 3 quantities of goods, its total revenue is $15.
Marginal revenue is an additional revenue that a firm generates when a firm sells additional unit of output. The marginal revenue plays an important role in the perfectly competitive firm where a perfectly competitive firm maximizes its profit when marginal revenue is equal to marginal cost. The formula used to calculate marginal revenue is:
Marginal revenue= Change in total revenue/Change quantity.
The average revenue is calculated by dividing the total revenue by the quantity produced.
The table below summarizes a firm's marginal revenue:
Table 1: Total Revenue and Marginal Revenue of a Perfect Competitive Firm ($)
Within the perfect competitive market structure, perfect competitive firms are price takers because they have no control of the market and they receive the market price offered to them in the market. In the market competition, there are many firms selling identical products and each firm charges the same market price for the goods sold because a firm…… [Read More]
Economic Impact Study: Students at Schreiner University
An economic impact analysis is designed to estimate both the direct and indirect effects on the economy that are associated with any given type of expenditure. In other words, an increase in the demand society has for a product sets in motion a series of various expenditures from the companies and organizations that provide what is needed to make that product. The parts and labor have to come from somewhere, so the economic impact is not just on the company from which the product was ordered, but on that company's suppliers and their suppliers, all the way down the chain. When it comes to services, though, such as would be seen with higher education, the economic impact analysis is somewhat different. Since the student is not ordering a good or a product of any kind from the school, there is more to the actual story than meets the eye.
Suppliers that provide textbooks and other materials can be part of the analysis, but that would focus more on the impact on the learning institution itself. When focusing on the students and the economic impact they face when attending an institution of higher learning, an economic impact analysis has to focus on how paying for higher education is carried out and how the need to pay for higher education impacts the overall economy (Kadlec, 2013). If students are spending money on education, they are not spending money on other things. That affects the school, but also affects the rest of the community and even the global economy through a lack of purchases. In the past, studies have been done that have looked at the impact of colleges and universities on local economies.
These include the expenses of supplies and other goods needed by students, and money the college spends in order…… [Read More]
Economics of Monopoly Power
Take a position regarding whether the current initiatives of the FCC actually encourage competition in all communication markets and protect the public. Provide specific examples to support your response.
The FCC has over the years been involved in various initiatives to ensure that there is fairer play and a leveled field for the operation of the communication companies in the U.S.A. Though some may point fingers that the FCC has played lip service to the idea of encouraging competition for long, it is apparent that several efforts by the FCC has ensured a more competitive environment especially in the broadband provision.
The reason why the U.S.A. lags behind many countries in the broadband aspect in particular is the fact that there is a stunning lack of competition in this market. It is noticeable that there are a few players who dominate the market and all the time they seem to consolidate their monopoly rather than opening up new competition. This freezing competition comes with the decreasing competition, there seems to be a disappearing urgency to expand the broadband (Mike Masnick, 2011). It is in light of the realization that competition drives broadband that FCC has engaged in many endeavors including the latest initiative of "connect2compete" with a sole aim of taking the internet to every single person out there.
The aim of the connect2compete project is to ensure that the millions of families that are not able to afford the exorbitant rates of up to $150 per month are able to access internet at a subsidized price of $10 per month. As if this was not enough, there is an additional benefit of buying a netbook or a PC at prices that are less than $150 with digital literacy opportunities also availed by the FCC (JSI Capital Advisors, 2011). This can be termed as one of…… [Read More]
Economic Policy and the National Debt
Ironically, when governments overspend they typically find ways to refund or restructure debt -- when individuals or corporations within those countries do the same, the consequences are quite different. Money means more than one thing -- usually an object that is traded for payment of goods or services, of exchange. However, when we talk about the government, there is a huge different in the way the money supply works within the economy. In modern capitalism, commodity money (gold and silver) was replaced by representative wealth in that currency is no longer tied to the stores of precious metals. Instead, monetary policy under the Federal Reserve states that the goal of fiscal policy is to "promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates" (U.S. Mint, 2011).
As individuals, we typically live within a budget based on our expenses and income. It consists of food, clothing, transportation, housing, etc. Excess goes into savings or investments, in theory. Large governments do not operate this way, or with this level of responsibility for the detail of budgets within a small amount of time. Instead, they often use a concept called deficit spending. This is the amount that the government exceeds in their spending over a period of time and assume that the debt will not be called due, as it would for an individual. One theory about deficit spending says it is desirable over time because it compensates for the cycles of demand (Hamilton, 2010). The other view, though, is focused on fiscal conservatism, and says governments should be required to balance a budget, and surpluses used to pay down debt. Realistically, though, the national debt has been increasing since the end of World War II, with a huge spike in the 1980s and early 1990s, until now, as of October 2012, is in excess of $16 trillion, or about $142,000 per taxpayer (U.S. Debt Clock, 2012). Just because this debt is "on the books," though, does not mean it is not real, and it is thus passed down from…… [Read More]