Should the government influence the economy or stay away from it? Should economic policy be focused on long term results or short term problems? This and other such beliefs form the difference between the two major schools of thought in economics: Classical and Keynesian economics. For one thing, Keynes refuted Classical economics' claim that the Say's law holds. The strong form of the Say's law stated that the "costs of output are always covered in the aggregate by the sale-proceeds resulting from demand".
How does Adam Smith's concept of the invisible hand explain why markets move toward equilibrium? Do market participants need to know about the invisible hand for it to function? Explain your answer. Answer: Adam Smith’s concept of the invisible hand explains why markets move toward equilibrium because it allows consumers to freely choose what to buy and producers to choose freely what to sell and ultimately how to product it. It is important for market participants to know how the invisible hand functions so they can all benefit by understanding how self-interest regulates the markets supply and demand.
ECON 1312 Homework Assignment # 2 Chapter 4 1. Why do we need a units-free measure of the responsiveness of the quantity demanded of a good or service to a change in its price? Answer: To measure or to compare the demand of the two unrelated goods or services. 2. Define the price elasticity of demand and show how it is calculated.
These types of conditions keep firms from monopolizing the market. The final regulation ensures awareness of organizational goals which provides insight regarding how organizations will react to different price levels. Regulations for the perfect competitive market directly correlate supply to marginal cost methods. Without these regulations for the competitive market the formal concept for supply will be obsolete. Insights from the
• A competitive firm has a u-shaped average cost curve whereas a monopolist does not. • A monopolist can influence market price whereas a perfectly competitive firm cannot. • There are many substitutes for a monopolist’s product whereas there are no substitutes for a competitive firm’s product. Want help? Click to download ECO 365 5).
HW Assignment #1 Global Perspectives Justin Kim 1/24/2012 What do you find notable about the comparative economic development of the U.S. and Germany? Compared to that of the U.S., German economic development suffered negatively due to a political system that underwent many more bouts of disruptive, radical change. Moreover, a prolonged period of war and its resulting consequences worked to undermine total productive output and delayed the establishment of a true market based economy. Prior to World War I, the German economy had primarily been driven by its export orientation and its focus on heavy industry. These capital-intensive industries were primarily financed by large “universal banks” who wielded significant influence over these large firms, with large long-term investments in key firms.
Study the demand elasticity for its products and discuss the availability of close substitutes for its products. How does that affect pricing decisions? Analyze the company’s profitability. Identify the economy or industry influences on its costs, operations, and profitability. Describe the competitive environment in which the firm operates, the distribution of market power, and the strategic behavior of the firm and its competitors.
Highlight statistics that you think would indicate that your country runs a market-oriented economy. Conversely, highlight statistics that would indicate government intervention in your market. Use this data to place your Country on the Economic System continuum document, alongside the rest of your teammates. On your continuum, place the flag of your country in what you think the correct spot is. Include a brief characterization of your economy
Competition-based pricing: This can be simply stated as the prices are being set with keeping in view what price tag the competition are putting up on their products. Customer value-based pricing: In this method of price setting value-based pricing is given significance. The perceived customer value of the product has leverage in price setting and therefore the price revolves around how a company such as Heinz could increase customer value. This method of price setting
Incentives: The Roots and Core of Economics Economics is a social science that analyzes how society produces, distributes, and consumes its resources such as goods and services. The tools of economics can be easily applied to subjects of everyday life. According to Steven D. Levitt in his Freakonomics, economics at its root is essentially the study of incentives: something that induces people to act. Levitt illustrates that economic, and even social and moral decisions, are made by comparing the costs and benefits of incentives. Incentives are offered to people in order to induce them to make certain choices or behave in a certain way.