Market Equilibrium Essays (Examples)

Market Equilibrium War Outbreak

What are the effects of Market Equilibrium at the outbreak of War on the Economy?

Over the decades, there has been the continuing debate about the underlying effects that war is having on the economy. At the heart of this argument, is the belief that once a war begins it will have a positive impact. This is because it effectively, controls the forces of market equilibrium. Simply put, this is when there is a perfect balance between: supply and demand. As this helping to: ensure price stability. The reason why, is because of: the massive amounts of spending and the allocation of various resources in supporting these efforts. ("Market Equilibrium") Once this takes place, it means that there will be the ideal conditions for the economy to begin to experience above average growth. As there are no economic forces, that can create the kinds of situations…

Market Equilibrium

Individual market equilibration process

The laws of supply and demand as they relate to market equilibrium are manifested every Christmas, when children's toys are bought and sold. Quite often there is a hot toy that all children suddenly seem to want. Suppliers cannot manufacture enough toys to suit the demand of parents. As demand increases, price increases. Suppliers, eager to sell more of the desired toy, begin to increase supply to garner the high price the item commands. Eventually, prices become too high and demand drops, stabilizing at equilibrium. After Christmas and after the market grows saturated with the toy, the price drops further as demand drops further. A new equilibrium is reached as the Tickle Me Elmos and Cabbage Patch Kids of yesteryear become discount toys.

Price alone is only one determinant of demand. Another determinant is income -- as income rises, so does demand. This suggests…

The price is so high, consumers begin to become reluctant to pay for the item. etailers must lower prices to unload their excess inventory of Tickle Me Elmos, Cabbage Patch Kids, or Zhu pets.

A state of perfect equilibrium for a long period of time is rare. Perhaps one example of perfect equilibrium might be found at an elementary school that sells pizza to its students. The demand is relatively constant, given that the student population remains the same from week to week, and students have relatively few other options. Students whose parents give them money for pizza have no choice but to buy food on-site, since they have cannot eat otherwise; students who 'brown bag it' are unlikely to buy lunch, even if the pizza is substantially cheaper one day. Because lunchtime is finite, few students have the time to eat more than one or two slices, so they…

Market Equilibrium Process

Good luck finding a market that does not have some sort of government interference. Is there some sort of tax-free product, produced by an unregulated business, that I don't know about? Economic models are never based in reality, just a hypothetical world in which all external factors are stripped away, so that simple models can be built to understand how specific critical elements within these models relate to one another. So let's dispense with the silliness and get to work, looking at hypothetical products in a hypothetical free market. We are talking about the market for widgets.

The law of demand states that as the price of widgets increases, demand for widgets decreases. The law of supply states that as the price for widgets increases, the supply of widgets increases. The determinants of demand for widgets are price, the availability and price of any substitutes, and the…

In economic terms this can be represented as a graph, with two lines; one for the way demand emerges and one for the way supply emerges. The demand line shows the way demand will manifest; the usual pattern is that as the price of a good increases less people will want to buy it, this decrease the demand (Gillespie, 2010). If shown on a graph, the line representing the demand will show that when the price is high there will only be a low quality of goods demanded, but as the price decreases the quantity that people want to buy will increase. The line representing supply will show the opposite; when the price for a particular good is low the suppliers are less likely to be attracted to selling that good compared to when the price is high and there is an increased potential for a higher profit margin. If…

In the introductory stage, every additional hour of labor purchased by a firm will yield large marginal revenue. However, as the increasing workforce produces a greater quantity of products, there may be a surplus and not enough demand for the goods. Additionally, after a certain point, extra workers and extra hours can be unproductive. Thus, after a point each additional hour of work will yield less revenue, which drags down the labor MPR below the wage and eliminating the market equilibrium of labor.

Firms will logically hire a new worker or pay for extra hours only insofar as it is profitable. As the labor MRP falls, firms will hire less additional labor. When the MRP is high, they will purchase additional labor. Thus a firm's labor demand is directly correlated to the labor MRP.

The Effect of Regulation on the Labor Market

When the government refrains from placing certain restrictions…

Economics -- Supply and Demand of Coffee Beans

In many respects, coffee (in its final forms) is a consumer product whose profitable sale and value fluctuate in accordance with traditional economic principles of supply and demand very much like other consumable consumer products. In other respects, coffee is insulated from some of the factors that typically dictate the relative price of other consumer products. Specifically, coffee is a product whose demand remains relatively constant, or in economic terms, the market for coffee is inelastic (Mankiw, 2008) because people generally continue to purchase coffee in the same quantities regardless of increases in its price.

The Influences on Consumer Habits and Demand for Coffee

Generally, consumer consumption of coffee remains quite constant in terms of their style of consumption because the product is almost always part of very habitual routines. People drink approximately the same amount of coffee at approximately the same…

Equilibrium and Barriers

Barriers to Entry and Long-Term Equilibrium in Monopolistic Markets: Strategy and Market Forces

Introduction Marginal Equilibrium

Barriers to entry can arise out of natural market forces as well as through careful strategic creation or enhancement by incumbent organizations that have a great deal of control over a given market and/or industry. When a specific organization has established a monopolistic or near-monopolistic control over its market and enjoys a great deal of stability and equilibrium with some price flexibility as well, it can be very much in its interest to erect or encourage barriers to entry that thwart the possibility of other entrants into the market, disrupting this equilibrium. As mentioned, many of these barriers to entry arise on their own out of market forces, but they can also be encouraged by strategic decisions within incumbent organizations that influence the market generally and at times explicitly.

Before examining…

Market Equilibration

The process of achieving a market equilibrium relies on some basic principles. The principle of demand holds that, all other things being equal, the higher the price of a good the less people will demand of that good (Investopedia, 2012). There are exceptions to this law, for example goods with inverse price elasticity of demand, but in general the law of demand holds for all goods, even those with very low price elasticity of demand.

The law of supply is the inverse. It holds that all other things being equal the higher the price of a good, the more suppliers will want to provide. Thus, as prices rise, the supply of a good will rise because the profit associated with the production of that good will increase, but the lower the demand will be, because the buyers' marginal utility will decrease.

Those other things that must be equal,…

The total supply of milk might remain the same, because the remaining high-efficiency producers are likely to be able to earn profits at this level of output. In the long-run, however, lower prices are going to sustain the quantity of milk demanded at higher than equilibrium levels, and the profits available to producers at lower than equilibrium levels. Producers, in their efforts to control costs, are going to reach a point of diminishing returns on those efforts. The result of this is that the market for milk will eventually become so distorted by the price ceiling that the government is forced to raise the price ceiling in order to ensure that there are producers remaining in the market. The government will have created a situation where to simply maintain the milk market requires active management.

2. There are several factors that contribute to the price elasticity of demand. One factor…

Market Equilibration Process for Computer Peripherals

That Experience High Level of Cyclicality

The demand for computer peripherals in general for the inkjet and low-end nonimpact printers specifically has continually proven to be highly inelastic, where price reductions are not as effective as a continual stream of new product innovations. Having completed internships with peripherals manufacturers, this observation became very clear as product management and marketing teams continually tested the market equilibration process with price reductions, bundling suppliers and extending the overall warranty period as well. When the law of demand is applied to computer peripherals in general and inkjet printers specifically, the inelasticity of these markets becomes more pronounced and the ancillary process workflows emerge as the primary differentiators.

Analysis of Market Equilibration Process for Computer Peripherals

In the absence of highly elastic product demand and exceptional product differentiation that leads to unitary or highly elastic demand curves for products,…

Over the last few years, the government has exerted more control on the insurance industry by controlling premium rates meaning the industry has become less competitive on pricing. In addition to this, through Obamacare, the government has set requirements for healthcare insurers which have significantly reduced their medical loss ratio Dinan 396.

The second factor that affects the degree of competitiveness of the industry is the number of companies operating in the industry. This has been the major reason for the hundreds of mergers in the industry since this is the major driving factor for changes in market share. The last factor is government-provided health insurance. The government provides insurance plans which create significant competition for the private companies Vanness and olfe 101()

The productivity measures that can be developed are the number of health insurance consumers, average cost of providing medical cover and price of health insurance premiums. The…

Market Patterns

One industry that has shifted in the past few years in terms of its structure is the smartphone operating system market. A few years ago, most of the early smartphones were based around proprietary operating systems. Palm and Blackberry dominated the market. Apple joined the industry with the introduction of the iPhone, but more recently other firms have entered the market as well, including Google (Android), indows, Symbian and other systems. The market has moved from a stable oligopoly of four firms basically between two firms into a market that is much closer to monopolistic competition. However, there is the risk that as operating systems shake out, the market could return to an oligopoly of just three operating systems (est & Mace, 2007).

In the short-run, firms in this industry will seek to gain market share through differentiation. The products are slightly differentiated from each other -- they…

Rational firms will choose the lowest-cost option between the two. The market is expected to be efficient, so that while some firms will find it cheaper to pollute, other firms will find it cheaper to install pollution abatement mechanisms.

Ultimately, the system will seek to deliver the lowest per-unit cost of abatement. This will be achieved because the firms that are going to abate their pollution are the ones for whom the cost of abatement is lower than the cost of polluting. With these firms focused on their abatement efforts, they will deliver a greater degree of pollution abatement at a lower per-unit cost with the marketable permits than any other system.

To see the value in this system, the alternative must be considered. If firms are mandated to reduce pollution, they will do so to bring themselves under the maximum allowable pollution levels. However, firms will have no economic…

Market Efficient espect Set Information Impossible Makes Abnormal Profits

Market Efficient

In his work, Fama argued that given the massive use of resources by the brokerage firm to conduct studies on trends in the industry, the effects of changes in interest rates on corporate balance sheets and expectations of managers and/or political analysts of the companies should be able to systematically beat a generic portfolio with the same risk characteristics.

Since, according to Fama, professional in every situation, the analyst has a fifty percent chance of beating the market; although its specific capabilities did not exist he would beat a lot of the market. The analyst did "help" the market to be efficient if all the investors, in fact, would hold portfolios composed of stock indices, would open up significant opportunities for professional traders to take advantage of the situation. But the movement of traders to that "new market" would…

S.

2.

Movie theaters should solve their problem by allowing for market pricing on seats at different showings. I would borrow a system that is in place at some discount airlines. This is a good business to take cues from because, like the movie theater business, they have regularly scheduled but perishable supply. The prices for each seat would depend on how many seats for the showing remained. The first, say, ten seats in the theater would be the lowest-priced, and then the prices can increase as the number of remaining seats decreased. The theater would therefore encourage people to forgo a popular showing for a less-popular one because of the money saved

The downside to this approach is that it does not explicitly solve the problem of having capacity overages. If there is excess supply, then the theater is simply shuffling the same number of customers around between different…

emaining workers will get jobs at higher than equilibrium wage, the Supply curve shifts to the left, and wage and output stabilize until something else changes like input cost or legislation.

Were firms able to hire workers at less than minimum wage, say like in Figure 4, where the cost of paying illegals including the enforcement cost results in lower demand for legal minimum wage workers, the result would be a total average cost between the two supply lines, increased outcome for the firm, at less than average minimum wage cost. The new Alabama law seems to attempt to drive off the black line "illegals" by mandating stiffer enforcement for services and privileges like business or auto licenses, awls (2011) explains. This creates an interesting distribution of costs if firms derive profit, but the cost of enforcement is being pushed onto others not employing illegals. If the black line in…

competitive market environment that Victorian Diary Giant operates by answering four questions in the case. Victorian Diary operates under the perfect competitive market. In the last few years, the firm has cut the milk prices by 8.5% making the new price to move to $4.50 per kilogram leaving farmers at break-even level because of the glut of the milk in the world markets. While 8.5% cut of price is relatively good, however, the struggling famers does not achieve much comfort from the new price.

Competition occurs when there is a rivalry among firms producing similar products. In the competitive environment, firms always try to take away the market shares of other firms. However, a perfect competitive market is the kind of market where firms are price taker. The following requirements operate in a perfect competitive market:

Firms operating in the market produce identical products,

There are no barrier to enter…

Amazon, eBay, and Craigslist

A Real orld Market

E-commerce companies promote and sell their products at the online platform. They use the most advanced systems, techniques, and strategies for doing advertisements for their products, making and receiving payments, and managing customer and stakeholder relationships. This paper presents an analysis of the strategies and policies of three top companies from e-commerce industry, eBay, Amazon, and Craigslist.

The paper starts with a brief introduction to these companies by discussing their origin, scale of operations, location, product and service portfolio, and core operational strategies. Amazon.com is an American multinational e-commerce corporation that mainly deals in new and branded products. eBay is an auction website that provides a platform to the buyers and sellers to interact and do transaction in a safe and convenient way. Craigslist is also an e-commerce website where buyers and sellers negotiate for their transactions. If a buyer has to…

Health Care Market

In discussing the market for a health care good or service, one must first understand that in speaking of "health care," one is actually speaking of the entire health care industry, along with each of the goods and services that are produced and exchanged within this market. From organ transplant operations and blood donation to therapeutic massages and nursing home activity programs, the span of health care goods and services is both vast and varied. Further, in viewing today's uncertain economy, the market for health care goods and services is one that brings with it many different questions that must be addressed in order for a stakeholder to fully comprehend what decisions need to made in order to turn a profit.

Scarcity of esources

Scarcity of resources within this market significantly influences the decisions that stakeholders are forced to make. With scarcity of resources comes limited action…

Economics

Observing the Influences that Impact Market Equilibrium

Purchasing fresh produce in a farmers market offers an opportunity to buy direct from a supplier. The process of buying fruit and salad items direct from the suppliers, rather than though an intermediary such as a supermarket, increases the exposure of the purchaser to price fluctuations. Visiting the market, which is held every weekend, over a number of weeks it was possible to see how different influences would impact on the supply and demand for the products, and how this impacted on the prices. The prices of the little gem lettuces appears to be one of the more sensitive products; this may have been due to their short shelf life. These lettuces, unlike other produce, are not suitable to be held for any period in cold storage, so there is not the ability to hold a supply ready for the peak demand.…

27-29) This provoked financial demands and awareness of the people in different parts of the world. People and businesses are dissatisfied with the traditional financial systems due to lack of opportunities for investors. Businesses today require more diversified portfolios for investments because this will reduce their investment risks and increase the probability of future capital flows.

Increased capital mobility has increased the importance of exchange rates which is serving as a monetary policy channel in some industrialized economies. In mid 2000s, there was a sharp shift in the flow of international investments and savings (geographic pattern) resulting in the segmentation of current account imbalances. This was also a major contributing factor. Additionally, the domestic financial markets were also affected by the change in regulatory environment. The two important factors for this are as follows:

1. apid growth of OTC (over-the-counter) markets of derivatives in terms of complexity as well as…

2007 Economic Crisis on American Car market

Effect of the 2008 global economic crisis on automotive industries

Crisis in the United States

Crisis in Canada

Crisis in ussia

Crisis in European markets

Crisis in Asian markets

Effects by other related crisis events

In this paper, we will review the effects of 2008 global automotive crisis. Our main focus will be on the American car manufacturers and the negative impact they suffered due to the crisis. We will also have a look at how this crisis had affected car manufacturers in other major markets around the world notably Europe, Canada and the prominent Asian markets such as China and India. Finally, we will look at some of the other factors which were important to this event namely the energy crisis since the cost of fuel is directly related to the car industry.

Introduction

The automobile industry is a very important part…

Investments

Investment returns are the amount that the investment is worth (upon sale), net of taxes, over and above the price paid for the investment. The returns can be expressed either in absolute terms, or in annualized terms. The return on an investment that cost $1,000 and is sold for $1,060 a year later is as follows:

Open

Close

eturn

% eturn

This graph shows that the odds of an outcome increase as the expected return approaches 6%. If there were an infinite number of scenarios, the graph would look like this, but the tails on the y axis would by fully extended infinitely as the probability of an outcome approaches zero.

The expected rate of return on the Treasury bonds is the weighted average of the probabilities and returns listed in the table. Thus:

Probability

eturn

W.Avg

-14

-1.4

-4

-0.8

Expected eturn

The expected return therefore is 6%…

market structures in detail and analyses the pricing strategies that the firms have to undertake when they operate in different regimes. The case study on Toyota is considered next, which indicates that firms competing in various structures does not only have to focus on price and quantity ceteris paribus, they also have to consider external and internal variables that have a bearing on these decisions.

Introduction to Market Structures

Market structures are important parts of economic theory as they model market behavior that can help economists explain activities in industry with ease. Market structures, hence are basically models that define market behavior with respect to certain criteria so that it becomes simpler to compare events in real life to the postulated scenario as described in theory in order to be able to determine casualties and to define optimal strategies that firms operating in different market structures can use.

There are…

Market power can exist when there are substantial barriers to entry into the indus-try. Expectations about incumbent reactions, incumbent advantages, and exit costs all can serve as entry barriers.

The extreme case of a firm with market power is monopoly, where the industry con-sists of only one firm. Here, industry and firm demand curves are one and the same. In contrast to competitive markets, consumers pay more than marginal cost and the firm earns economic profits. Output is restricted from competitive levels. With a monopoly, not all the potential gains from trade are exhausted.

Monopolistic competition is a hybrid between competition and monopoly. It is like mo-nopoly in that firms under both market structures face downward-sloping demand curves. Market power comes from differentiated products. Examples include the toothpaste, golf ball, tennis racket, and shampoo markets. The analyses of output and pricing policies are similar in the two cases. The difference…

An important contribution to the market ideology is that the authors recognized the existence of a relationship between employment and the market. This relationship was based on that the employment, the division of labor and the "human material progress had proceed in parallel with the growth of the market." Otherwise put, there existed a direct relationship between the market and the employment, with the market being the feature which set the tone. An increase of the market would generate an increase in employment and vice versa. However, an increase or decrease in employment would not affect the market as the relationship between the two is unilateral.

Engels, Moore and Jones believed that the future successful implementation of the communist policies would see no major use of the market; "in the society of the future, there would be no mediation through the market. Wealth would satisfy needs directly. It would be…

The FDA will need to draw a line in the sand -- the goal of clinical trials isn't to save money, it's to test a drug's effectiveness.

Janet Rehnquist recommended that the FDA "exert leadership" on this issue. The complexities of globalized clinical trials do not lend themselves to half-hearted regulatory efforts. The problem with taking a more active role is that the FDA begins to become the regulator of regulators, which casts a wider net on its responsibilities than was ever intended. There is cause to want the FDA to consider the practical concerns, much less the ethical ones, in scaling back the reliance on non-U.S. clinical trials.

3. e agree that monitoring online marketing of drugs is going to be difficult. But since the Internet is the main source of information for a lot of people -- 91 million Americans a year look for health information online. ith…

Market Structure and Managerial Decision Making

The objective of this paper is to discuss the concept game theory in the competitive market environment where there are two or more firms competing against one another. The paper cites the examples of Nash equilibrium, prisoner dilemma, and dominant strategy. Moreover, the paper discusses the theory of perfect competition, monopoly, monopolistic market and theory of oligopoly. (Bhat, and au, 2008).

Game Theory

The game theory is a type of situation where the rewards or payoff given to any player depends on the action of the other players. The interdependence between two or more firms is referred as a game theory, and the rewards earned by a firm is known as a payoff, and the payoff matrix assists in analyzing the interdependence between firms. A duopoly is an interdependence between two players that may result in a game theory. However, a relationship between two…

Competitor Product's Market

A short history of the organization and a description of their product

Hostess Brands, Inc. is a company set up in 1930 under the name Interstate Bakeries that later changed to Hostess Brands Inc. In November 2009. The company is located in the United States with its headquarters in Irving Texas. It has an operation centre in Kansas City, Missouri. The company works as a distributor and wholesale baker of snacks in the United States. It owns many brands such as Nature's Pride, Wonder Bread, Bakers Inn, Drake's and Dolly Madison. The company makes and sells cakes, loaves, snacks and rolls under different bakery brands (Smith, 2012).

These brands also make blue berry muffins, cheese Danishes, food cake donuts, honey buns and bear claws among others. Hostess gets revenue through selling of baked goods to mass marketers, supermarkets and stores in the U.S. The privately held bread…

c) Mutual Interdependence: This assumption is based on the relationship between two or more individuals where one person depends upon the other for economic interest or benefit. When making a decision one has to consider the effect of his or her decision to the partner. This is common in the Perfect competition -- pure market phenomenon.

With the assumptions above the game theory helps in developing a perfect competition among the consumers.

Goal theory in perfect competition market

It tends to describe market structure based on assumptions which are non-existent, most market systems are imperfect, however the long run and short run situations can help in holding the assumption to be true based on the equilibrium, price and output.

Basic assumptions required for conditions of pure competition to exist as below;

Many small firms: Each producer producing a significant percentage in the total output in the market hence has no…

capital fall if financial markets are no longer segmented? What evidence is there of this effect?

Up until the mid-1940's markets where knows to be restrictive in cash flow movement, this in combination with tax and transactional barriers on ownership by foreign entities meant that equity markets were not developed. They were in fact marked with low liquidity, not enough regulation and inconsistent disclosures.

If capital markets are segmented, then investors can only invest domestically. This means that the market portfolio (M) in the CAPM formula would be the domestic portfolio instead of the world portfolio.

This equilibrium had banks, securities market and capital markets as the primary source of finance. The localized source of finance meant that domestic investors were they only players in the market with most shares, resulting in high cost of capital.

1970's brought on the liberalization of markets in the developed countries which resulted in…

However, they are worth considering on the long haul. Since the oil and gas reserves are suffering from a chronic shortage, a major company such as Exxon should think strategically and expand into this area. The discussion is more complex, in the sense that intensive research and development efforts are needed to both improve the above mentioned alternatives and to discover new sources of energy.

Exxon Financial esults

Due to the high crude-oil and natural gas prices, in the context of a busy hurricane seasons in the Gulf of Mexico, Exxon has reported record figures for 2005, mounting up to $36 billion in net income and 31% return on average capital.

Source: Exxon Mobil 2005 Company eport

The results Exxon reported for the 2005 fiscal year are impressive:

record earnings of $36 billion, up 46%;

net income per common share of $5.76;

net income to average shareholder's equity of 339%…

The hiring would then lead to an increase in consumer spending, which could encourage other businesses to increase their hiring as well. The increased business investment could allow companies to develop processes, technology and capacities that will allow them to not only increase their presence in domestic markets but to increase their exports as well. The Keynesian as-AD model assumes that this multiplier will result in an increase in aggregate demand and aggregate supply, if governments increase spending. For the government, the multiplier is expected to decrease with the size of the investment, so the ideal amount of spending is not infinite, but is constrained by a declining multiplier, which would lead to an equilibrium level of government spending.

The as-AD model illustrates another reason by government spending cannot be infinite. As and AD increase, P also increases. This means that inflation occurs as demand and supply in the economy…

Health Care Economics

Monopsony power is defined as a situation where there is only a single buyer in the market (Investopedia, 2014). In a monopsony situation, all of the bargaining power rests with the buyer, such that the seller is a price taker, and also a taker on term as well. The buyer therefore pays what it wants, and on whatever terms. A monopsony is an unusual natural market condition. In some situations, monopsony is related to monopoly, a good example being health care in Canada, where the government is the employer. With a government monopoly, there is also only one buyer for health care supplies, and health care labor. Unions can also constitute a monopsony in labor, in situations where non-union workers are prohibited. One must work to the terms that the union has negotiated, or not at all. This paper will look at the nursing shortage in the…

Product

a) The product is a food replicator. This product can rearrange the particles in the air and turn them into comestibles. The user will simply enter the food that he or she wants to eat, and the replicator will create it. There will be models that are focused on different ethnic cuisines, so if somebody in the U.S. asks for chicken and waffles, they can get that, and if someone in Singapore wants chicken rice, that can be arranged.

b) The market is going to consist of high net worth individuals. This is because the replicator is expensive to produce. Also as a unique product it has a lot of inherent value to people, especially given the popularity of fine dining these days. So net worth is the primary segmentation variable. Income is a proxy for this.

c) I chose this method of customer segmentation because the product costs…

ehavioral Finance and Human Interaction a Study of the Decision-Making

Processes Impacting Financial Markets

Understanding the Stock Market

Contrasting Financial Theories

Flaws of the Efficient Market Hypothesis

Financial ubbles and Chaos

The stock market's dominant theory, the efficient market hypothesis (EMH) has been greatly criticized recently for its failure to account for human errors, heuristic bias, use of misinformation, psychological tendencies, in determining future expected performance and obtainable profits.

Existing evidence indicates that past confidence in the EMH may have been misdirected, as the theory's models do not show a thorough understanding of trading operations in a realistic light.

Researchers have suggested that a variety of anomalies and inconsistent historical results demand that traditional financial theories, namely the EMH, be reconstructed to include human interaction as a key decision-making process that directly affects the performance of financial markets.

This research paper aims to determine whether or not there is a…

Law of Demand

Changes in supply and demand of goods and services lead to a shift in equilibrium. Business managers have to be seized of how market equilibrium is sought in order to make robust business decisions that can pay-off. Market equilibrium is attained when the quantity demanded by the consumers corresponds to the quantity that the firms are willing to supply bearing in mind that equilibrium is basically the price quantity pair where the quantity demanded corresponds to the quantity supplied (Vienneau, 2005). Business enterprises have to be aware of the nuances of the market equilibrium.

Economists postulate that other things held constant, an increase in price of a commodity will make the quantity of that commodity demanded to decline and vice-versa. The demand of a commodity is the amount of that commodity that is bought per unit time at a particular price. An individual will demand a specific…

public goods, private goods, common resources, and natural monopolies.

Public goods are when there is a focus on providing benefits to someone without them having to offer different forms of compensation. This is because the interests of the community will outweigh the need for making any kind of profit. Some examples of this include: fire, police, and national defense. Private goods are those products that are sold directly to consumers with the intention of making a profit. This is when a private producer, will realize that there is unmet demand and provide this to consumers. In exchange for delivering these services or products, they will receive some form of compensation. (Mankiw, 2011)

Common resources are those reserves that are available to everyone. The most notable include: the fish in the ocean, the air that everybody is breathing and public lands. While natural monopolies are when there is one organization which…

Monopolies and Trusts:

Appropriate Areas for Government Intervention?

Capitalism is the economic system that has dominated the United States virtually since the day of its independence. A social and economic system based on the recognition of individual rights; capitalism demands that owners' rights to control, enjoy, and dispose of their own property must be respected. In a capitalist system, the purpose of government is to protect individual economic rights, and to make sure that no one individual, or group may employ physical or coercive force upon any other group or individual. The success of capitalism is well evident. The surpluses that this system produces have enabled individuals to experiment; to create new products, and market new ideas. These private surpluses are traded in a free market in direct competition with other buyers and sellers. Such competition is best represented by the efforts of two or more parties acting independently to…

Additionally, another imbalance is generated by the reduced bargaining power of the employees, who are no longer able to switch jobs. Additionally, when a monopoly is formed, the employees are rarely presented with the opportunity / possibility of forming or joining unions.

In an oligopoly situation, the situation is similar to a monopoly, with the specification that the employees are better able to negotiate terms and conditions as they have the ability to switch employers. An oligopoly is formed when the employment power -- or the demand for labor force -- is held by two or more organizations which joined forces on the market and an example is offered by the American automobile industry. Here however, other forces include the disequilibrium, such as more and more popular outsourcing operations or the search for hi-tech technicians. The annexed table reveals the market equilibrium for the auto industry in various contexts.

Finally,…

Due to increase in exports the trade deficit decreases. Whereas, the contractionary monetary policy has a negative impact on the balance of trade account as it leads towards a decrease in government expenditure, production and exports. Because of the decrease in exports, the trade deficit increases. (Schiller, 2010)

Money and Its Functions

Money can be defined as anything which is generally accepted in exchange for goods and services and which acts as a medium and store of value. The three major functions of money are; 1) it acts as a medium of exchange and is accepted as a payment for goods and services, 2) the value of different products is measured in terms of money, 3) it acts as a store of value because it is generally accepted as a medium of exchange and has a stable value. Banks usually create money in the economy by issuing loans and by…

With natural monopolies, these are excludable, but not rival. Examples in this area can range from fire protection to cable TV, anywhere along the lines of the general characteristics of this category of goods.

In terms of the labor market and labor market equilibrium, the functionalities are similar to all of the other market, with supply and demand on the market working towards establishing the right price and quantity for the respective resource (in this case, the labor force). An exceeding supply of workers on the labor market amounts to a lower price for that respective resource, as well as to potential unemployment. Realistically, this may also lead to unemployed, without the market providing the right amount of positions for that respective category of workers. When there is an excess in demand, the wage goes up, because those workers are more required on the market, in the conditions of a…

Maximizing Profits

In the present day and age, several market structures are existent in the global economy. Each and every market structure is distinct in its way of being run and the power that it has over market prices, trend setting and demand. The key element that helps in distinguishing between different market structures is mainly the amount of competition present between several producers of a single type of product. In this paper, the characteristics and means of maximizing profits alongside the barriers to enter the market will be seen and the role of each structure in an economy will be explained.

Markets in which there is a high amount of competition (mostly referred to as competitive markets) are such that no single producer or consumer has the ability to alone influence the price of products in them. This means that if a producer tries to exploit consumers by raising…

This means that during full agricultural seasons, prices will be lower, while during extra season, prices will increase. The price increase is explained by a lower and more difficult production of fruits and vegetables during winter times and also by the necessity to properly store the goods produced during the full season so that they remain fresh. In all, the retail price has to incorporate the production, transportation and storage costs and also the company's profit.

Price Increase

Currently, the average price promoted by Wokland is of 17 dollars per one kilogram of fruits and 10 dollars per one kilogram of vegetables. The net profit for 2005 was of 1.7 million dollars and the net profit for 2006 was of 1.5 million. In order to reach the desired 2 million dollars profit in 2007, the company has to increase their revenue sales by 33%. The easiest way to achieve increased…

Market equilibrium occurs when supply and demand are at their optimal level, when supply is equal to demand and ideally the price commanded earns a profit for the producer yet is not prohibitively high for the purchaser of the good. To reach this, there is always a period of negotiation. As price goes up, demand goes down, and as the price goes down, demand goes up. As the price goes down, suppliers are less willing to supply their goods, and as price goes up, suppliers are more eager to use more of their finite resources to supply that good or service. These are the laws of supply and demand, simply put. But when dealing with the supply and demand for many goods and services in the national economy, filled with substitute goods and many other external factors that impact these forces, or in government, this negotiation takes far longer to…

Price ationing and isk

Price ationing & isk

A price ceiling artificially sets the price of a good below the market equilibrium price. With a price ceiling in effect the price is lower, supply is lower and quantity demanded is higher than quantity supplied. Price ceilings are effective in keeping the price of a product low but this unbalance results in excess quantity demanded. When rationing is implemented it is a form of a command economy.

Coupons are a way to manage the demand and to ensure that the maximum amount people who demand the good at such a low supply receive the good. In short, effective use of rationing coupons helps to efficient allocation of scarce resources. Without couponing, those whose demand allows them to purchase more at the artificial price would consume more of the good leaving less for others. Some contend coupons are ineffective since the supply…

Firm, Labor Markets, and Imperfect Information

Economics

Perfect Competition and Monopolistic Competition

A perfectly competitive market does not have barriers to entry or exit and is characterized by many producers and many consumers, all of whom are price takers -- a term that means the suppliers and the buyers cannot effect the price as they do not have market power ("Competitive Markets," 2014). Monopolistic competitive markets are do have some barriers to entry and exit. Consumers can find substitutes for all of the goods in a competitive market, whereas high product differentiation is seen in a monopolistic competitive market ("Competitive Markets," 2014). Indeed, one of the reasons that a firm can achieve a monopoly for a product is that the business has been successful in its efforts to differentiate a product, as perceived by its customers. The ability of a business to make profits in the long-run is referred to…

The concept of the multiplier effect is closely related to the concept of marginal propensity to spend and consume. Marginal propensity can be understood as the increase in personal consumer consumption and saving that occurs with an increase in disposable income. When fiscal policy creates more disposable income for a family, the concept of marginal propensity predicts how much more they would be save and spend. Thus marginal propensity predicts the actual impact of fiscal policy when it is enacted and thus it can calculate the multiplier effect.

Prepare an essay describing Keynesian economic theory. Be sure to fully explain what is being critiqued and why. You should also be clear on why you find this particular critique so compelling. (600 words).

Keynesian economic was developed in the 20th century by the British economist John Keynes. Keynesian economics is basically a reinvention of classical economic theory, it focuses upon a…

Proctor & Gamble- Milestone

Head & Shoulders remain one of the most celebrated and recognized names in the hair care market for over fifty years. This renowned global brand was launched by Proctor & Gamble (P&G). The company is the leading producer of hair care products across the world, with their Head & Shoulders product securing over 20% market share. ecently, P&G's beauty unit made 30% in net sales and 30% of net earnings. esearch estimates that at least 50% of the world population is suffering from dandruff at least once in their lifetime. This renders it the most common type of scalp issue. Head & Shoulders has become one of the most widely known across the globe; selling a gigantic 150 bottles of the anti-dandruff formula each minute. Head & Shoulders are excelling regarding their marketing strategy. For a new product to penetrate, brand endorsements with powerful and related…

The third degree discrimination is when businesses set prices depending on the location and the market segments. Here the supplier will identify the various market segments and have varying prices for the same item due to the varying consumer classes in these regions. The sales managers always have to look at the characteristics of the market and the customers in general.

The factors that the sellers consider here are age of the potential clients and their population in a given area, the economic standards and their purchasing history. This will enable the recommendation of varying prices for the different market segments. This is a discrimination criterion frequently used by the textile industry run by my father in Indonesia and particularly on the export textile. He has countries that will generally buy at higher rates than others hence he does his research and sets the prices accordingly.

It is noteworthy that…

If regulation upon the monopoly did not exist, the monopolist could charge whatever price it desired, so long as people did not stop buying the product altogether. A monopoly means that a company has no rivals in the market producing the same or a similar product and there are few comparable goods and services that act as substitutes. For a necessary good or service (such as transportation or utilities) the effects upon consumers can be potentially devastating, without price ceilings curtailing the monopoly's ability to charge high prices and ration its supplies.

To replicate a competitive market the price ceiling must reflect the natural equilibrium price, taking into consideration current demand and supply and reflecting the costs of production. However, this can be extremely difficult to institute, given that equilibrium price reflects micro-level changes and readjustments to shifts in supply and demand that the government cannot immediately take into account…

Entrepreneurs

The Kirznerian Entrepreneur vs. The Schumpeterian Entrepreneur

The following brief essay will discuss two kinds of entrepreneurs, as evidenced in the title above. These two kinds of entrepreneurs, Kirznerian and Schumpeterian, will be theoretically and practically espoused, in order to see which of the two is more common in business life. The essay will also speak as to which type of entrepreneur is more important in today's business world, thereby linking theory and practicality prior to concluding.

First, it is important to define each entrepreneurial theory. The Kirznerian Entrepreneur, for instance, derives from economist Israel Kirzner's theory. Kirzner utilizes an analogy between what he names "the entrepreneurial element in individual decision -- making" and "entrepreneurship in the market interaction." (Kirzner, 1967) According to the economist, a first step in establishing the roots of the theory is to discuss an individual's 'action.' Kirzner thus isolates the first step of the…

The regulations are necessary to the extent they reduce externality likely to about from the merger. There is also concern that the government may incur a higher cost in paying for unemployment benefits which necessitates it regulations in mergers.

Provision of market activity

Other than the above two likely reasons for government involvement, the government may have non-economic reasons. Such activities include the national security which is a public good which is related to welfare. The government intervene in market activities so that they can provide welfare commodities and products that otherwise cannot be provided for under the market mechanism. The provision of public goods such as defense and security is only possible through government interventions. Government regulations and interventions ensure that society does not miss production of welfare commodities that the market cannot produce.

Cultural Identity Promotion

This includes aspects such as sustaining productive capacity, producing for the future…

Identify four of these ideas, describing what they are, why they are considered dangerous, and how they might be avoided or mitigated as dangerous ideas

The absence of free will is defended by some scientists today: "British psychologist Susan Blackmore recently contended that our minds are actually nothing but collections of memes that we catch from each other like viruses and that the familiar sense of 'I' is some sort of fiction that memes create for their own agenda" (Davies, 2004, p.37). This idea postulates there is no central truth or morality and can be used to justify almost any moral action. Richard Dawkins has called human beings survival machines, rather than culpable moral actors (Davies, 2004, p.36). But if free will is merely an illusion, how is any action of a being that is subject to the whims of biology or evolution any different than someone who commits a…

First of all, the Internet, as well as local press and articles, will be important in defining the general characteristics of the market and consumers. Subsequently, specialty articles, edited by business organizations such as the local Chamber of Commerce will provide useful information on all the companies in a certain economic sector, namely the company's direct competitors. Relevant information in terms of the consumers can also be available from public information.

The off-site category will likely provide more in-depth perspectives on local issues. This will include a survey of the local consumers through interviews and questionnaire, as well as the development of a local network of information that could provide helpful information on companies active on the local market and their potential future moves.

Organizational structure and resources

The unit will be organized on the two separate on site/off site categories, each led by a director. The two directors will…

There is also a question of costly salary increases in general, even if the comparable worth system is fairer. This fairness may cost the business extra in needless salary costs, when the employees would be unlikely to look for jobs elsewhere, given that they could not do so for more pay. A private company has a responsibility to make money for its shareholders, and a hospital has a responsibility to the sick to keep costs contained.

Staff discontent is another issue. Undoubtedly, the staff members in the positions that are judged to be too highly paid will feel slighted. If these employees are unionized, they may force the business (in this case a hospital) to undergo costly legal negotiations. If the pay readjustment affects one group disproportionately, for example males, they may allege that reverse discrimination…

The nation will enforce law and order to protect its public property, regulate monetary frameworks and correct market failures. The government will be responsible for protecting private life of its citizens and property (Grant & Vidler, 2000).

Market and Competition Forces: the country's economy should be designed in such a way that it will promote competition. This is because competition means a fair deal in obtaining results. The government should increase sellers and buyers in the market because this would promote competition thus increasing the quality and efficiency. With competition, the country will be able to control and manage different functions of its economy (Grant & Vidler, 2000). Demand and supply are the prime market forces determining the production of a country produces and the suitable ways to do so.

Market equilibrium, price and output, are determined by market forces. Therefore, I would recommend that any least developed nation to…

Price ceilings only shift the burden of achieving average cost equilibrium around to different people within the system.

The author does touch on reduced amounts of competition as a factor in increasing costs. There was more competition in the 1990s, leading to lower costs and lower cost growth. Competition can be expected to lower costs, but to some extent it might not be sustainable. There are issues with supply in health care markets, for example. If there are insufficient numbers of providers, the equilibrium point is going to be higher. If demand is higher -- whether the effects of an aging population or aggressive pharma marketing campaigns to get more people on more pills -- that also drives the equilibrium higher. It is at the equilibrium point where the best solutions lie. The article dances around this to a point -- it gets to the part where it is explained…

Marketing, Supply and Equilibrium: Head and Shoulders by Proctor and Gamble

The Head and Shoulders product of Proctor and Gamble is price inelastic for those who have brand loyalty and will buy the product no matter what the price is. For those who like the product but will go with a cheaper off-brand if the option is available, so long as the off-brand is as effective, will do so causing the product to be price elastic for this group of people.

Two non-price factors that impact the demand of Head and Shoulders are quality of the product and marketing of the product. Quality (effectiveness of the shampoo to stop dandruff) is the number one reason it is purchased, as it is a specialty shampoo that is used for this explicit purpose. If the quality is high, the demand increases. Marketing is the other factor: if it is marketed well, the…