...assignment covers text chapters 1 through 6. 1. What is the mechanism by which the "invisible hand" pushes markets to equilibrium? Invisible hands uses households and firms interacting in the markets that can lead to desirable market outcomes. It usually leads markets to allocate resources efficiently. 2. Explain the two main causes of market failure and give an example of each. Two causes of market failure are externality – which is the impact of one persons actions on the well being of innocent bystanders; and market power, which is one group / persons unduly influence on market prices. An example of externality is well designed public policy enhancing economic efficiency and an example of market power is everyone needing water but there is only one well and that owner doesn’t face competition. 3. Use a production possibilities frontier to describe efficiency. (This question can be answered either with or without the use of a graph, depending on whether you have a graphing program on your computer. It is possible to describe the various points on the PPF without a graph.) 4. What is the difference between a positive and a normative statement? Give an example of each. A positive statement claims to attempt to describe the world as it is, i.e. minimum wage law causes unemployment and Normative statements claims that attempt to prescribe how the world should be, i.e. the government should raise minimum wage. 5. Explain how absolute advantage differs from comparative...
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...encompass people’s behaviors and thinking identifying irrational self-interests (Cassidy, 9). Cassidy then explains in detail how economic theory and practice influenced the “Great Crunch” (i.e. collapse in sub-prime mortgage lending during last decade). The timeliness of Cassidy’s publication of a book to address how markets fail is certainly ideal in light of the recent crash in sub-prime mortgages. The financial impact of this economic crisis continues to dictate the pace of the current economy. Not only is the topic stimulating to a graduate MBA student, but has value to inform and enlighten individuals in all disciplines. Cassidy uses the history of economics over the last few decades to demonstrate that his idea of utopian economics versus reality based economics is not new, but has been forgotten and/or consciously overlooked in the interest of other gains causing historical cycles of economic crisis. Cassidy’s political views are evident and he does not...
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...whether or not biological weapons should be used in warfare or should be gotten rid of completely. To answer this question, an in-depth analysis should be conducted as to the cost and benefits of said weapons. On one hand, the benefits of these weapons are numerous with the cost of the weapons being low and the potential loss of life high. On the other hand, using these weapons in times of war could prove to cause problems for the side that unleashed them with potential outbreak of disease not only affecting the target, but eventually spreading across the world like a plague. Both sides of the argument present valid points as to why they feel the way they feel about the weapons, but I feel that the side that has the best viewpoint is that these weapons should be discontinued and destroyed. I will first start with the benefits to using biological weapons in warfare. One of the biggest benefits in using these weapons is the cost in which these weapons can be produced. In comparison to many of the other weapons being produced, no other weapon comes close. According to Raymond Murray Dawson and Chun-Qiang Liu, a 1969 expert United Nations panel “estimated the cost of operations against civilian populations at $US1 per square kilometer for biological weapons, versus $600/km2 for chemical weapons, $800/km2 for nuclear weapons, and $2000/km2 for conventional armaments” (89). As you can see by the statement, the financial aspect, from the standpoint of cost per kilometer wiped out...
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...10 Principles of Economics Supply and Demand * Supply and demand are inversely proportional: When supply rises, demand falls. For instance, when the housing market in a certain region is flooded with homes for sale, sellers drop the price to attract a buyer. However, single homes for sale in exclusive neighborhoods might have more potential buyers than sellers. In these instances, the price of the home rises. Inflation and Unemployment * Gregory Mankiw, Harvard Economics professor and author of "Principles of Economics" explains that society experiences a short-run trade-off with rising prices and unemployment: As the monetary supply expands and inflation occurs, unemployment rises. However, the Phillips curve indicates that in the long-run, inflation has no bearing on levels of unemployment. Effects of Price Controls * Price controls, like setting food prices in the former Soviet Union or rent control in New York, have negative effects for both buyers and sellers. Price ceilings create shortages and rationing of goods, and price floors create disincentives to improve on the quality of a good when it cannot be sold at the equilibrium price. Elasticity * Elasticity measures price responsiveness of a good or service. If the demand for a product changes significantly when the price changes, it is considered elastic. Examples of elastic goods include makeup and concert tickets. Inelastic goods show little or no change in demand when the price changes. Examples...
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...MBA 604 D. Opp Pure Private versus Pure Public Goods and the Mixed Cases: Economists categorize goods and services with respect to two basic characteristics: 1) the degree or rivalry or absence of involuntary sharing (the amount of unavoidable joint consumption), and 2) the ability or cost of excluding others from consumption (the ease with which sharing can be prevented). A complete taxonomy, which covers all goods and services, based upon these rivalry and exclusion characteristics, may be put in the following table: Rivalry Characteristic Full Rivalry No Rivalry Full “Private good” “Monopolies” Exclusion (Efficient (Not enough competition) competition) Exclusion Characteristic No “Common “Public good” Exclusion property” (No competition) (Too much competition) Pure private goods are the case where both rivalry and excludability are high, so that competitive markets are most efficient at provision. Individual consumers have the freedom to choose consumption...
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...Economic Productivity? Global terrorism is a large concern for all countries. What one nation or country does to inflict terrorism on another or several countries is often felt by many of the other countries, including those not directly involved. Global trade and economics in several countries can feel the impact of one small group. In the example of milk versus guns, if a country produces more guns, then its resources are reallocated and shifted such that it creates an effect on their milk production. Their local economy may suffer more since the local abundance of milk and consumer goods starts to lack. The local impact causes a shift in their production probability curve. This almost starts a ripple effect in that they are now causing an impact on another area where they may have been trading local goods or services for those of someone else. This small effect is multiplied several times over all around the country and then bleeds into the global economy. And although it causes a shift in the production probability curve, other factors can influence this. In an effort to support the war on terrorism, the government may provide subsidy ($$) to areas that produce more guns and products for this fight, which gives them buying power. However, in other areas where they are doing the same thing, there is now less milk and consumer goods produced countrywide. So, no matter how much money you have, there are still no resources to produce the goods that are needed. Demand goes up...
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...Some may argue that capitalism is a cruel economic system that has been known for the corruption, exploitation of poor people and where greed overcomes anything good. However, the majority will agree that capitalist system is best system in the world of economics. It drives people to do better, as the certain amount of effort will bring the same level of result. There are examples in the history where individual’s wealth was affected by the corporate greed, but with the government regulations history will not repeat itself the same way. Capitalism is all about choices and these choices are made based on the amount of economic benefit we receive at the end of the trade. The connection between the right to own property and the individual liberty has always been emphasized by classical liberalism. Whatever man produces through his honest work, through his own efforts, or what he acquires through voluntary trade with others must be considered rightfully his. The idea behind the free markets is to allow each individual to use his own knowledge and his abilities to improve financial freedom, and based on the knowledge and ability some men may generate more wealth then the others. When the founding fathers agreed that all men are created equal, the liberty, they thought, would come before the equality. The capitalism may not deliver equal earnings for everybody; it does provide an equal opportunity to earn higher income (EBeling p.607). In “A Capitalist Conception of Justice”, Irving...
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...International Business Environment BE2501 – Summary Chapter 1 Globalization – refers to the shift toward a more integrated and interdependent world economy. Globalization of markets – refers to the merging of historically distinct and separate national markets into one huge global marketplace. Globalization of products – refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land and capital) General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO) – is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in the trade treaties signed by WTO member states. International Monetary Fund (IMF) and the World Bank (WB) were both created in 1944 by 44 nations that met at Bretton Woods, New Hampshire. The IMF was established to maintain order in the international monetary system; The WB was set up to promote economic development. United Nations (UN) – was established on October 24, 1945, by 51 countries committed to persevering peace through international cooperation and collective security. International trade occurs when a firm exports goods or services to consumers in another country. Foreign Direct Investment (FDI) occurs when a firm invests resources in business activities outside its home country. Stock of foreign direct investment – refers...
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...Discuss Culture and Quality 1.0 Introduction As the world becomes more global each day, the borders among countries have started to disappear. The integration between nations highlights the importance of ‘culture’ in almost every aspects of human life. Today, people, companies and even governments shape and orient their acts correlated to this interaction process. Increased impact of national identity leads companies and marketers to build up unique strategies in order to be successful worldwide. The biggest reason of this is the different needs and expectations of people in different countries. Every culture has distinctive norms and values which have shaped the perception of customers for years. Nowadays, the concept of perceived product quality is increasingly becoming more important on the minds. Although there are a lot of definitions, each of them are defined as common meaning; that is, quality is basically ability to meet the customer’s needs and expectations. Perception of quality varies from person to person and even from culture to culture. Therefore, the national identity and cultural values and norms might have an important role on the customers’ quality perception. Even if all the features and the prices of the product are same, it can create different opinions and perceptions in different countries and cultures. How may culture affect the ‘product quality perception’ of consumers? 1.1 Culture ‘Without culture, and the relative freedom it implies...
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...to guise trains, and no bridges to cross rivers, Would that be a place where you would want to live?”. These according to Matthy Levy and Richard Panchyk (2000 Engineering the City; How Infrastructure Works), is the story of infrastructure which teaches us about the history of human development from the time we lived in caves and first set establishment villages. It also shows us the contribution of science, mathematics, and industry to our built environment. Invisible infrastructure contributes to the quality of people’s life. 1.0 The Concept and definition of Infrastructure Projects Infrastructure refers to economic services from utilities such as electricity, gas, telecommunications and water. Transport works such as roads, bridges, urban transit systems, seaports and airports which are central in promoting economic activities in the country. Good infrastructure helps by providing economic services efficiently, promoting economic competitiveness and supports high productivity. Poor infrastructure on the other hand impedes economic growth and can be seriously detrimental to the efficient use of scarce resources. The role of infrastructure in the economy, the essential nature of its services, the size of individual projects, and its important social dimensions call for a governmental role in planning and promoting, and ensuring independent regulations that provide a level playing field for both public and private sector enterprises. When projects are operational, the role...
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...EVOLUTIONARY CHANGE: THE INVISIBLE HAND AND MONEY Instead of being designed by men, civilization has evolved, according to one view. Social institutions [government, the rule of law, the social division of labor connoting production activities, markets (credit, labor, commodities, etc.), money, languages, mores (morals and values), et. al.] are determined not simply by preceding causes but as part of a process of unconscious self-organization of a structure or a pattern. These social institutions spontaneously come into existence. They are complex and self-maintaining mass phenomena. Reinforcing this point, Adam Smith wrote in The Theory of Moral Sentiments that men aiming at the “gratification of their own vain and insatiable desires” are “led by an invisible hand” in such a way that they “without intending it, without knowing it, advance the interest of society and afford means for the multiplication of the species.” The Origin of Money Theory, formulated by economist Carl Menger, in 1871, provides an account of the evolution of the social institution of money. Money, according to the Theory, is not a creation of the state as many think it is today. Rather it came into existence spontaneously through an unconscious, self-organizing, self-maintaining, evolutionary process. An outline of the theory is presented below. A. The Seven Steps of Carl Menger’s Origin of Money Theory: * The seven (7) steps below explain the emergence of a commodity money like gold or silver in the...
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...The Marshall Plan and its Legacy The Marshall Plan, which pumped $13.3 billion into the European economy between 1948 and 1952, was probably the most effective piece of lasting cultural propaganda of the twentieth century, despite stiff opposition from the Nazis and the Rise and Fall of Soviet Communism, and the possible eventual winner of the Chinese version of Communism. Learning from the mistakes of the First World War, when the allies of America, principally France sabotaged Woodrow Wilson’s dream of a League of Nations, President Truman ensured that not only did Europe re-emerge as a strong economic force, but that American culture has been the dominant force in the world ever since . The Plan was named after the Secretary of State of the time, General George Catlett Marshall, who was army chief of staff in World War II, Secretary of State 1947–49, and Secretary of Defence from September 1950–September 1951. He was awarded the Nobel Prize for Peace in 1953 for launching the Marshall Plan for European economic recovery in June 1947. However, James Reston, among others has suggested that maybe the Acheson Plan would have been more appropriate name. Acheson was working in the State Department with Marshall and the internal memos certainly give a clearer indication of the aims of the plan than the rather toothless speech that Marshall made at Harvard in June 1947 to launch the program. An anonymous scribe in the Department outlined the aims of the programme succinctly...
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...& Expansion * Weaker currency favors exporters (trade deficit) * The role of the IMF * Make emergency loans to countries with balance of payment problems * Ensures stability of national monetary system * Fiscal Policy * Government changing taxes and/or government spending in effort to increase or decrease business activity * Expansionary FP leads to increased spending but downside is budget deficits * Contractionary FPleads to budget surpluses or smaller deficits * AKA Austerity (attempt to shrink growing deficits) * Monetary Policy * Central Banks changing the MS to increase or decrease the availability of credit in an effort to increase or decrease business activity * Primary tool is Open Market Operations * Buying and Selling short term securities * Dual Mandate Inflation & Unemployment * ECB does not have a dual mandate like the Fed THE EUROPEAN UNION (EU) * Explain the purpose of an “economy” from a European perspective * Equity & Leisure more important than consumption * Social goals more important than individual goals * Market for production; Government for...
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...Fit to company’s strengths and weaknesses allocating investment to businesses strategies for growth and downsizing * Developing functional plans: the grid Market penetration, market development, product development, and diversification * The annual and long-range plans deal with the company’s current business * The strategic plan involves taking advantage of opportunities in the constantly changing environment Marketing plays a key role in the company’s strategic planning by: * Providing a guiding philosophy * Providing inputs to strategic planners; and * By designing strategies for reaching objectives Mission Statement: A statement of the organisations purpose - what it wants to accomplish. It acts as an invisible hand that guides people. * What business are we in? * What customers should we serve? * How should we develop the company’s capabilities? Example: Disney – Product, “we run theme parks”. Market, “we create fantasies” Understanding external influences (e.g. consumerism, environmentalism) and Environmental Influences SWOT: (Micro) Understanding the marketing environment - used to evaluate a companies (S) strengths, (W) weaknesses, (O) opportunities, and (T) threats. PEST: (Macro) analysis of external environment that can affect the company – Political, Economic, Technological, Social * Political:...
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...that not only is she questioning the choice of the veil, which is used to rebel against Western principles, but she is also questioning her own Islamic identity. In the documentary, Ahmed argues that the religion is “where people [specifically women] are treated as invisible outside of their respected religious establishments”(Islam Unveiled) . One of the main religious, conservative arguments for the veil can be found in the Quran. It states that “And say to the believing women that they should lower their gaze and guard their modesty.' (24. 31). Not only does this show that part of the veil argument is deep in religious doctrine, but it gives us a better understanding of the reason for the rebellion of Western principles and revival of religious piety in the Islamic community. However, this particular passage in the Koran leads to many misconceptions of other, especially the social mistreatment of women and its effects in Palestine, Jordan, and Saudi Arabia. These countries help us gain a better understanding of not only the veil and its effects that it has had on society, but it also helps us understand of the veil and how either optionally or forcefully is used for establishing a society for the respected governments to maintain control over its respected people. These particular countries also help us understand the veil through different countries and its effect on their respected societies. In Saudi Arabia, the veil is best represented called a niqab, which is also prevalent...
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