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.
Policymakers in the government can respond to the monopoly problem by trying to make industries more competitive, regulating the behavior of monopolies, turning some private monopolies into public enterprises, or do nothing. Price discriminate means the exactly same product could sell to different consumers for different prices, even though the costs of producing for the products are the same. Price discrimination is impossible when product is sold in competitive markets. For a firm to price discriminate, it must have market power. There are three lessons to be learned about price discrimination are price discrimination rational strategy for a profit-maximizing monopolist, price discrimination requires the ability to separate customers according to their willingness to pay, price discrimination can reduce the inefficiency inherent in monopoly.
So price gauging may not be easily defined but it does mean something to those it affects. The Cause of Price Gouging Demand is actually the cause of price gouging, usually when something out of the ordinary occurs. The law of demand states that “if the price of a good increase, holding other
Caledonia Products Integrative Problem Fin/370 Caledonia Products Integrative Problem 1. Why should Caledonia focus on project free cash flows as opposed to the accounting profits earned by the projectwhen analyzing whether to undertake the project? Caledonia should focus on free cash flow rather than accounting profits because the free cash flow is what the organization receives, which can then be reinvested. Through thoroughly analyzing the free cash flow, Caledonia would be able to determine the actual benefit or the cost involved. The organization should primarily focus on the incremental cash flow because the incremental cash flow holds a marginal benefit from the project.
A principle in which the suggestion is that the market should be proficient in providing society with all the goods and services that is needed. This should be done efficiently and through the markets relationship with the individual. Neo Liberalists believe that state interference could cause economic problems for its government as it offers a financial incentive without working, thus, delivering a pessimistic moral and social outcome (Powell and Hewitt, 2002). Additionally, there should be an emphasis on individual choice with a free market. With the choice of competition that the global market creates, there would be fewer restrictions on businesses to operate by the government.
Not all tax deductions are created equal as some can have a more favorable impact on your tax bill than others. And this is the case with above-the-line and below-the-line deductions. Although both types of deductions ultimately reduce your taxable income, the amount of above-the-line deductions you take can directly affects the amount and types of below-the-line deductions you're eligible for. If a deduction does not fall into the category of itemized, or “below the line,” it must be what is known as an “above the line” deduction. Above the line deductions are helpful because you can claim them regardless of whether you choose to use the standard deduction or your itemized deductions.
PSYC 2100 12/6/11 Money Giveth, Money Taketh Away: The Dual Effect of Wealth on Happiness This study questions whether or not money can buy one’s happiness. Evidence from this study have proven that the income a person shows an important impact on happiness. Those who are more luxurious, when experiencing the best things in life, they tend to forget the simple joys that life brings them instead. When being reminded of wealth, it can apply a deep insight of effects on thought and behavior. In simpler terms, when people are thinking of money, it may lead them to think that any experiences they desire is likely to be attainable.
So just as profits reward producers for making things people want to buy at prices they are willing to pay, losses punish producers for wasting resources and producing things people don’t want at a cost consumers are not willing to cover. Negative profits and business failures serve a productive function in the process of business growth and development. When one business enterprise in a market economy finds a way to lower its costs, competing enterprises have no choice but to scramble to try and do the same. Any change in the economy, such as an increase in demand for a product, requires further changes and adjustments in many aspects. Any kind of change in the output of one product will most likely require changes in other markets, as well, and will start a chain of adjustments.
Weber’s concept of rationalization refers to the “disenchantment” of the world-the displacement of “magical elements of thought”by ideas which “gain in systematic coherence and naturalistic consistency”. Rationalization should be interpreted, in the broader sense as the intensification of means-oriented reason in social and technical organization as well as action/thought Formal rationality of economic action…used to designate the extent of quantitative calculation or account which is technically possible and which is actually applied” and substantive rationality involving the degree to twhich the provisioning of given groups of persons…with goods is shaped by economically oriented social action udner some criterion (past, present or potential) of ultimate values regardless of the nature of these ends. “the maximum of formal rationality in capital accounting is possible only wehre workers are ubjected to domination by enrepreneurs” Weber asserts that his “is a futher specific element of substantive irrationality in the modern economic order’ Domination: the situation in which the manifested will (command) of the ruler or rulers is meant to influence the conduct of one or more others (the ruled) and actually does influence it in such a way that their conduct to a socially relevant degree
The services provided by welfare states differ from country to country, some have highly developed systems than others (Giddens, 2009). In most societies, poverty and social exclusion at the bottom are alleviated by the welfare states. This essay is therefore going to discuss how these welfare states use ideological state apparatus to secure legitimacy of continued inequalities in capitalist societies. Ideology can be defined as shared ideas or beliefs which serve to justify the interests of dominant groups” Giddens (1997:583). Its relationship to power is that it legitimizes the differential power that groups hold and as such it distorts the real situation that people find themselves in.