In the next chapter we learn how sellers set the prices in which we pay for an item, why things cost what they do and not what they are worth. The key to prices are sellers that can sell their products as close to the cost of making the item. In a regular market, prices are the key. Businesses cannot afford to charge a higher price, customers are normally looking for a lower price and the lower the better, in today’s economy. Many customers ask the question, “What affects prices?” We learn that things happen beyond the sellers’ and buyers’ control to raise and lower prices in today’s market.
Durkheim sees anomie as responsible for the world’s disorder of economics- the lack of morality and regulation resulted in overpowering the weak; thus, he feels that only norms can prevent the abuse of power and calls for regulation and equal opportunity from birth- the greater the equal opportunity the less need for restraint. Marx looked at how capitalism separated humanity by making work a simple means of individual existence. In addition he describes society in terms of class and economic conflicts. Marx saw proletariat or people of a working class as being underneath the bourgeoisie or the capitalist of a modern society. Marx looked at how alienation of production of commodities by workers also leads to alienation of social life.
Negative Externalities Of Consumption - Smoking With help of a diagram, explain why cigarette smoking is an example of market failure? Market failure happens when resources are not used in a way that produces the best allocation for consumers. It occurs when the Free Market Mechanism fails to achieve economic efficiency. An externality is an effect whereby those uninvolved in the decision making process are affected by the consequences that are a result of the actions of others. This is known as a spillover effect.
But it becomes wrong when you are selling your products at such a low price that you put all other companies out of business. When you are using this form of dumping, you put people out of work because their company can no longer afford to keep them on. Either way I don’t see any moral reasoning that would support dumping products overseas if it’s illegal. First you are breaking a law that has been setup to protect people. You are also intentionally causing harm to others, if you follow either definition.
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.
Describe at least two negative outcomes of having too little money and credit in the economy. (2-4 sentences. 2.0 points) It would cause scarcity of currency, over balancing demand, producing too much of something meaning major markets could fall to the floor and would cause major losses for the companies producers. Describe at least two negative outcomes of having too much money and credit in the economy. (2-4 sentences.
List problems that stem from globalization related to economic development, labor issues, and the environment. Explain the origins and effects of labor migration, outsourcing, and offshoring. Describe possible approaches to dealing with the problems presented by globalization. Key Ideas Critics of globalization believe that it is harmful because it is driven by narrow economic interests. The benefits of globalization are unevenly distributed, and it causes hardship for poorer countries.
One fallacy is that trade is a zero sum activity, if one trading party gains, the other must lost. 2. Imports reduce employment and act as a drag on the economy, while exports promote growth and employment. This fallacy stems from a failure to consider the link between imports and exports. 3.
The paradox of efficient market hypothesis is that some investors have to believe that market for the market to continue to be efficient. Explain your understanding of the above paradox. Include in your discussion the forms of market hypothesis. The paradox of efficient market is that if every investor believed a market was efficient, then the market would not be efficient because no one would analyze securities. In effect, efficient markets depend on market participants who believe the market is inefficient and trade securities in an attempt to outperform the market.
o Another argument is that firms in developing countries keep costs down by paying their workers depressed wages and by subjecting them to inhumane work environments. Hence limiting the imports of such goods discourages such exploitation. Employment protection o Engagement in international trade often results in structural unemployment as workers in the contracting sectors may lack the skills to transit to the expanding sectors o Temporary protectionist measures allow such