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Economics

In: Business and Management

Submitted By hammad08
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Manajemen Kompensasi
Modul 12

Tujuan Instruksional Kusus
Setelah mempelajari manajemen kompensasi, mahasiswa diharapkan dapat : a. Menjelaskan syarat-syarat yang dibutuhkan untuk mengelola system kompensasi yang baik b. Membahas tujuan manajemen kompensasi yang efektif c. Menjelaskan aturan dan tantangan yang dapat mempengaruhi rencana pembayaran. d. Menggambarkan bagaimana menentukan upah dan gaji. e. Membahas faktor-faktor yang mempengaruhi keberhasilan manajemen kompensasi memutuskan bagaimana cara terbaik untuk mengembangkan sistem pembayaran yang dapat dipahami, diterapkan dan dapat diterima oleh karyawan.

Pengertian dan Tujuan Kompensasi
Kompensasi adalah bentuk pembayaran (langsung atau tidak langsung) dalam bentuk manfaat dan insentif untuk memotivasi karyawan agar produktivitas kerja mereka semakin tinggi. Kompensasi dalam bentuk finansial langsung, seperti upah, gaji, komisi dan bonus. Sedangkan kompensasi tidak langsung seperti asuransi, bantuan sosial, uang cuti, uang pensiun, pendidikan dan sebagainya.

Menurut keith Davis dan Werther W.B (1996), secara umum tujuan manajemen kompensasi adalah untuk membentu perusahaan mencapai tujuan strategis dan menjamin terjadinya keadilan internal dan eksternal. Keadilan eksternal menjamin bahwa pekerjaan dikompensasi secara adil dengan membandingkan pekerjaan yang sama di pasar kerja. Kadang-kadang tujuan ini bisakonflik dan trade-offs harus terjadi. Misalnya untuk mempertahankan karyawan dan menjamin keadilan, analisis upah dann gaji merekomendasi pembayaran jumlah yang sama untuk pekerjan yang sama. Akan tetapi perusahaan mungkin menarik pekerja yang berkualifikasi dengan upah yang lebih tinggi, maka terjadilah trade-offs antara tujuan rekrutmen dan konsistensi tujuan manajemen kompensasi.

Beberapa prinsip yang diterapkan dalam manajemen kompensasi, antara lain sbb : a. Terdapat rasa keadilan dan pemeratan pendapatan dalam perusahan b. Setiap pekerjaan dinilai melalui proses evaluasi pekerjaan dan kinerja c. Mempertimbangkan keuangan perusahaan. d. Nilai rupiah dalam sistem penggajian mampu bersaing dengab harga pasar tenaga kerja yang sejenis. e. Sistem penggajian yang baru dapat membedakan orang yang berprestasi baik dan tidak dalam golongan yang sama. f. Sistem pengganjian yang baru harus dikaitkan dengan penilaian kinerja karyawan

Tujuan Manajemen Kompenasi yang Efektif a. Memperoleh personil yang berkualifikasi b. Mempertahankan karyawan yang ada c. Menjamin keadilan. d. Penghargaan terhadap perilaku yang diinginkan e. Mengendalikan biaya. f. Mengikuti aturan hukum g. Memfasilitasi pengertian h. Meningkatkan efisiensi administrasi

Tujuan manajemen diatas bukan berbagai aturan, hanya sebagai petunjuk saja. Untuk memenuhi tujuan tsb, ada tiga tahapan manajemen kompensasi : a. Mengevaluasi tiap pekerjaan dengan menggunakan informasi analisis pekerjaan untuk menjamin keadilan internal yang didasarkan nilai relatig setiap pekerjaan ( fase identifikasi dan studi pekerjaan. b. Melakukan survei upah dan gaji untuk menetapkan ketidak adilan eksternal didasarkan pada upah dipasar kerja ( fase keadilan internal c. Menilai harga tiap pekerjaan untuk menetukan upah (pembayaran) didasarkan pada keadilan internal dan eksternal ( fase keadilan eksternal

Evaluasi dan Analisis Pekerjaan a. Penyusunan peringkat pekerjaan b. Penilaian kelas pekerjaan c. Perbandingan faktor d. Sistem poin
Analisis pekerjaan meliputi pengumpulan informasi pekerjaan melalui survei, observasi dan diskusi antara para pekerja dengan penyelia untuk menghasilkan deskripsi posisi dan pekerjaan. Dengan informasi dari analisis pekerjaan sebagai bagian dari sistem informasi SDM, para analisis kompensasi memiliki informasi minimum yang dibutuhkan untuk melakukan evaluasi pekerjaan.
Evaluasi pekerjaan merupakan prosedur sistematis untuk menentukan nilai relatif dari pekerjaan. Meskupun terjadi perbedaan pendekatan, setipa pendekatan mempertimbangkan tanggung jawa, keahlian, upaya dan kondisi kerja yang inheren dalam pekerjaan. Evaluasi ini menentukn pejerjaan mana yang memiliki nilai lebih tinggi. Tanpa evaluasi pekerjaan , departemen SDM tidak mampu mengembangkan pendekatan yang rasional dalam kompensasi.

Penyusunan Peringkat Pekerjaan
Adalah metode evaluasi pekerjaan yang paling sederhana dan tidak rumit. Para spesialis me-review informasi analisis pekerjaan dan menyusun peringkat tiap pekerjaan secara subyektif sesuai dengan kepentingan relatif kemudian membandingkannya dengan pekerjaan lain

Penilaian Kelas Pekerjaan
Kelas pekerjaan atau klasifikasi pekerjaan lebih memuaskan dari penentuan peringkat pekerjaan. Deskripsi standar yang digunakan hampir sepadan dengan deskripsi pekerjaan yang menentukan nilai relatif yang diekspresikan sebagai kelas pekerjaan. Semakin penting sebuah pekerjan semakin besar pembayarannya. Contoh metode penentuan kelas pekerjaan.

Tabel. Metode Penentuan Kelas Karyawan
|Kelas Pekerjaan |Deskripsi Standar |
|I |Pekerjaan mudah dan dilakukan sangat berulang-ulang, syarat pelatihan minimal, tanggung jawab dan |
| |inisiatif relatif kecil dan supervisi ketat |
| |Contoh : portir, pembersih kontor dan klerk arsip |
|II |Pekerjaan mudah dan berulang-ulang, membutuhkan pelatihan dan keterampilan, supervisi agak ketat. |
| |Karyawan diharapkan memiliki |
| |tanggung jawa atau inisiatif. |
| |Contoh : klerk, pengetik, dan pembersih mesin |
|III |Pekerjaan mudah, variasi sedikit dan supervisi umum. Pelatihan dan |
| |keterampilan dibutuhkan. Karyawan memiliki tanggung jawab minimal dan harus mengambil inisiatif untuk |
| |melakukannya dengan memuaskan. |
| |Contoh. Ekspekdisi surat, montir mesin, klerk kelas II. |
|IV |Pekerjaan agak kompleks dengan bebera[pa variasi dan supervisi umum.Tingkat keterampilan/keahlian |
| |tinggi. Karyawan bertanggung jawab untuk peralatan dan kemanan, dan secara teratur menunjukkan |
| |inisiatif. |
| |Contoh : operator mesin I dan pemegang saham. |
|V |Pekerjaan kompleks, bervariasi dan supervisi umum. Tingkat keahlian lanjutan. Karyawan bertanggung jawa|
| |terhadap peralatan dan keamanan, menunjukkan derajat inisiatif yang tinggi |
| |Contoh. Aperator mesin II dan spesialis. |

.

Perbandingan Factor
Metode ini meliputi langkah langkah berikut : a. Menentukan faktor-faktor penting b. Menentukan pekerjaan-pekerjaan kunci c. Membagi sedara adil upah berlaklu untuk pekerjaan d. Menempatkan pekerjaan-pekerjaan kunci pada daftar faktor pembanding e. Mengevaluasi pekerjaan-pekerjaan lain

Sistem Poin
Menurut Keith Davis dan Werther W.B (1996), metode ini meliputi langkah langkah berikut : a. Menentukan faktor-faktor penting b. Menentukan tingkat faktor-faktor c. Memberi poin pada tiap subfaktor d. Memberi poin pada tiap tingkatan e. Mengembangkan manual poin. f. Menerapkan sistem poin

Menurut Keith Davis dan Werthner W.B, penelitian menunjukan bahwa sistem poin lebih banyak digunakan dari pada metode lainnya. Sistem ini mengevaluasi faktor-faktor pengimbang tiap pekerjaan dengan menggunakan unpah sebagai metode pembanding faktor. Sistem ini menggunakan anggka-angka. Sistem ini dijalankan melalui enam langkah dan biasanya melalui komite evaluasi pekerjaan atau analisdis individu. Berikut ini disajikan matriks sistem poin
|Faktor Pengimbang |Tingkat I |Tingkat II |Tingkat III |Tingkat IV |
|- Tanggung Jawab | | | | |
|Keselamatan lainnya |25 |50 |75 |100 |
|Peralatan dan bahan-bahan |20 |40 |60 |80 |
|Membantu petatar |5 |20 |35 |50 |
|Kualitas produk/jasa |20 |40 |60 |80 |
|- Keterampilan/Keahlian | | | | |
|a. Pengalaman |45 |90 |135 |180 |
|b. Pendidikan/Pelatihan |25 |50 |75 |100 |
|- Upaya | | | | |
|a. Fisik |25 |50 |75 |100 |
|b. Mental |35 |70 |105 |150 |
|- Kondisi Pekerjaan | | | | |
|a. Kondisi tidak menyenangkan |20 |40 |60 |80 |
|b. Kerusakan moral |20 |40 |60 |80 |
|Total Poin | | | |1000 |

Catatan
I = minimum II = Rendah III = moderat IV = tinggi Poin minimum = bobot (menghilangkan %) Poin maksimum = bobot x jumlah poin

Poin maksimum – Poin minimum Interval = --------------------------------------------- Jumlah tingkatan -1

Karena karakteristiknya, tiap faktor pekerjaan hendaknya diberi bobot, misalnya untuk keterampilan/keahlian 50%, tanggung jawab 30%, usaha fisik 12% dan kondisi kerja 8% upah/gaji

Survei Upah dan Gaji
Apa saja yang terkandung pada keadilan eksternal ? Untuk menentukan tingkat kompensasi yang adil, perusahaan percaya pada survei upah dan gaji. Pada survei ditemukan apakah pengusaha lain dipasar kerja memberikan pembayaran yang spesifik untuk pekerjaan kunci. Data survei merupakan dasar penetapan tinggi rendahnya upah dan gaji untuk membandingkan level/tingkat kompensasi. Salah satu sumber data adalah DTK atau BPS. Apabila data survei tidak sesuai lagi dalam menghadapi perubahan pasar yang cepat, sumber data lain dapat digunakan.
Masalah utama yang sering dihadapi dari hasil publikasi survei adalah tentang derajat perbandingannya, seperti tingkat keakurasian, kepercayaan dan keabsahan.
Untuk mengatasi keterbatasan hasil survei yang dipublikasikan, beberapa departemen SDM melakukan survei upah dan gaji. Namun survei itu biayanya mahal, oleh karena itu hanya pekerjaan-pekerjaan kunci yang digunakan. Sebagai contoh dari beberapa perusahaan di pasar kerja diseleksi, dan mereka dikontrak melalui telepon atau surat untuk mempelajari berapa yang mereka bayarkan untuk pekerjaan kunci.
Untuk pekerjaan berskala internasional, khususnya pada level yang lebih tinggi. Sebuah survei mungkin tidak efektif karena sifat dari pekerjaannya yang unik. Banyak perusahaan yang membayar gaji sama dengan yang diterima didalam negeri dan tambahan diberikan untuk biaya ekstra karena melakukan tugas internasional.

Menentukan Nilai Pekerjaan 1. Tingkat pembayaran 2. Struktur kompensasi
Dalam menentukan nilai pekerjaan, nilai evaluasi pekerjaan disepadankan dengan nilai yang ada di pasar kerja. Ada 2 kegiatan yang terkait yaitu (1) mengembangkan tingkat pembayaran yang tepat untuk setiap pekerjaan dan (2) mengelompokkan tingkat pembayaran yang berbeda kedalam sebuah struktur yang dapat dikelola secara efektif.
Untuk menyusun tingkat pembayaran yang benar, peringkat internal dan tingkat upah survei dikombinasikan melalui penggunakan kurva yang disebut kurva scattergram
Analisis kompensasi akan lebih tepat untuk menyatukan pekerjaan kedalam kelas pekerjaan. Dalam pendekatan penilaian pekerjaan, pekerjaan siap dikelompokan kedalam kategori yang ditetapkan sebelumnya. Dengan metode evaluasi pekerjaan yang lain, pengelomkan dibuat dengan menciptakan penilaian pekerjaan didasarkan pada peringkatan, pembayaran dan poin sebelumnya.

Beberapa Tantangan
Dalam menerapkan manajemen kompensasi, perusahan tidak akan luput dari beberapa tantangan yang mungkin dihadapi, baik internal maupun eksternal, seperti : a. Tujuan strategik b. Tingkat upah berlaku c. Kekuatan serikat kerja d. Kendala pemerintah e. Pemeratan pembayaran f. Penyesuaian dan strategi kompensasi g. Tantangan kompetensi internasilan h. Produktivitas dan Biaya

Penyunan Struktur Pengganjian 1. Permasalahan PT Jangkar Mustika memproduksi minuman ringan dan aqua berencana akan menyumparnakan sistem penggajian karyawan?staf pimpinan. Tujuan penyem,purnaan agar karyawan.staf lebih bergairah bekerja dan mengurangi turmn ofer yang sering terjadi karena tingkat penggajian yang lama kalah bersaing dengan tingkat penggjian dipasaran. Direksi PT Jangkar Mustika minta kepada tim konsultan agar semua job tutle yang ada dievaluasi agar benar-benmar memperoleh jobs point yang pasti. Berikut ini diberikan data-data yang diperlukan

|No |Position |Actual Monthly Base Salary |
|1 |Production Manager |1.850.000 |
|2 |Marketing Manager |1.600.000 |
|3 |Nat. Sales Manager |1.250.000 |
|4 |Technical Manajer |1.400.000 |
|5 |Q.C Manager |1.650.000 |
|6 |Finance Manager |1.500.000 |
|7 |E.D.P Manager |1.250.000 |
|8 | |850.000 |
|9 |Processing Manager |1.100.000 |
|10 | |850.000 |
|11 |Maintenence Manager |900.000 |
|12 |Brand Manager |800.000 |
|13 |Regional Sale Manager |750.000 |
|14 |Promotion Manajer |800.000 |
|15 |Purchasing Manager |750.000 |
|16 |Chief Account |1.100.000 |
|17 | |900.000 |
|18 |Personal Dev. Manager |650.000 |
|19 | |800.000 |
|20 |General Affairs Manager |850.000 |
|21 |Personel ADM Manager |450.000 |
|22 |Filling & Packing manajer |600.000 |
|23 | |500.000 |
|24 |Logistic Manajer |400.000 |
|25 | |350.000 |
|265 |Sales ADM & Office Man |550.000 |
|27 | |450.000 |
|28 |R & D Manager |400.000 |
|29 | |500.000 |
|30 |Management Acount |450.000 |
|31 |System Analisis |550.000 |
|32 |Micro Biologist |400.000 |
|33 | |600.000 |
|34 |Process Chemist |450.000 |
|35 | |570.000 |
| |Area Sales Manajer | |
| | | |
| |Canning Head | |
| |General Aqqount | |
| | | |
| |Electrical Head | |
| |Programmer/Analisys | |
| |General Affair Officer | |
| |Security Officer | |
| | | |
| |Distribution Officer | |
| | | |
| |Pers. Adm Officer | |
| | | |
| |Transport Office | |
| | | |

28.820.000

Penyelesaikan Masalah
Struktur penggajian tanpa penggolongan jabatan (Hay System) . Gaji ditentukan 30% midt poit, berarti 130% dari midt point dan gaji dasar ditentukan 30% midt point yang berarti 70% dari midt point. Untuk melihat hubungan nilai jabatan dengan nilai gaji karyawan, dapat dilakukan dengan menggunakan metode regresi dimana secara umum Persamannya Y = a + bX dimana : Y = nilai gaji karyawan X = nilai/bobot jabatan a = konstanta b = slope/gradien Berdasarkan data salary structure pada bagian permasalahan, untuk mencari nilai a dan b dapat dicari dengan menggunakan 2 persamaan

∑XY = a∑X +b∑X ∑Y = a ∑X + b.n

Nilai b = 3.387 dan a = -651.358
Dengan demikian didapatkan persamaan regresi Y = 3.387X – 651.358 Berdasarkan persamaan regresi tsb maka nilai/bobot pekerjaan dapat dihitung midt point. Gaji dasar 70% dari midt point dan gaji puncak 130% dari midt point

Kesimpulan a. Kompensasi karyawan apabila dikelola dengan baik dapat mencapai strategi perusahaan dengan baik dan sebagai alat efektif untuk memperoleh, memelihara dan mempertahankan karyawan yang produktif b. Karena kompensasi mampu memberikan sinyal dimana perilaku dapat dievaluasi, dapat berpotensi mempengaruhi produktivitas individu secara nyata. Jika tidak dikelola dengan baik hasilnya mungkin akan terjadi perputaran karyawan yang tinggi, tingkat ketidakhadiran yang meningkat, ketidak puasan dalam bekerja, produktivitas rendah dan tidak tercapainya strategi kompensasi karyawan. c. Agar komponen program-program kompensasi pembayaran tepat, maka gaji dan upah harus adil secara internal dan eksternal. Nilai relatif dari pekerjaan ditentukan melalu teknik evaluasi. Hal ini menjamin terjadinya keadilan internal. Survei upah dan gaji akan menentukan keadilan. Eksternal. Sekali keadilan knternal danm eksternal ditentukan, semua pekerjaa diharga untuk menentukan tingkat pembayaran spesifik yang dikelompokkan kedal range it agar mudah dikelola dengan baik. d. Jamlah aktual yang dibayarkan mungkin dipengaruhi oleh tantangan, seperti tujuan strategik, tingkat upah yang berlaku, kekuatan serikat kerja, kebijakan kompensasi, kendala tata pengembilan kepuitusan, globalisasi bisnis dan produktivitas karyawan.

Kasus

Direksi PT Agro Nusantara telah mengundang tim konsultan manajemen untuk menyempurnakan sistem penggajian karyawan, pimpimam/staf sesuai perkembangan ekonomi sekarang. Tim konsultan diminta mengajukan opsi atau pilihan sistem penggajian yaitu sistem Hay (profile) dan sistem penggolongan gaji. Direksi telah memberikan 35 nama jabatan beserta uraian kerjanya dan besar gaji pokok yang diterima. Satu bulan kemudian tim konsultan membawa hasil pekerjaannya dan ditunjukkan pada direksi sebagai berikut.
Persamaan garis regresi (trend) sebagai hasil penjabaran nilai jabatan (X) dan gaji pokok (Y) yang diterima yaitu :
Y = 3.950 x nilai jabatan – 424.500
Tugas selanjutnya yang harus Anda kerjakan sebagai anggota tim konsultan adalah :
1. Buat struktur penggajian model Hay system dengan ketentuan a. Nilai jabatan 270-690 b. Jarak gaji dasar (GD) dengan gaji puncak (GP) adalah 30% dari mid poiny yang melalui garis regresi bernilai 100%
2. Buat struktur penggajian model sistem penggolongan gaji (5 golongan) dengan ketentuan : a. Untuk golongan III jarak GD dan GP adalah 100% (25th x 4% kenaikan berkala), dimana mid poin dari golongan III tetap berada pada garis regresi hay system (tetapi tidak bernilai 100%) b. Kenaikan golongan gaji berikutnya adalah • Dari golongan III ke IV 25% • Dari golongan II ke III 30% • Dari golongan I ke II 35% • Dari golongan IV ke V 20% ( catatan : grafik dua struktur gaji berimpit)
3. Bila pada sistem Hay ada karyawan dengan gaji pokok sebesar Rp 700.000 (nilai jabatan 390) dan gaji pokok Rp 1.850.000 (nilai jabatan 430), Apa status gajinya (op, in, atau up) ? Buktikan dengan perhitungan dan apa tindakan direksi ?

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...Thesis Economics Thesis The goal of an economics thesis is to solve a problem regarding the exchange of goods and services in an innovative way. To this end, the student may explore macroeconomics, the study of large economics systems, or microeconomics, the study of person-to-person exchanges of goods and services, in a completely unique manner or in a manner that simply expands on or addresses previous ideas. Students who are struggling to develop ideas for their economics theses may benefit from asking themselves what problems they have a passion for solving. For example, perhaps the student feels greatly irritated about gas prices and could develop an idea on how to cut costs. Perhaps the student has a fascination with the failure of communism and would like to develop a thesis on where the economic system went wrong and why. If the student cannot identify a topic that would produce a viable economics thesis, he or she should talk with the major professor and see if together they can brainstorm a usable idea. Economics theses may have concerns that most disciplines do not have, particularly in formatting. Because pictures can carry a great deal of information in a much more succinct way than text and because economics theses often handle highly complex issues, writers of economics theses may find it useful to include a number of charts, graphs, and tables both in appendices and in the body of the thesis itself. Depending on the complexity of those graphics, the......

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...stirred up a massive cause for debate, and for the correct reason. The decision the English citizen is going to comprehend is crucial for the welfare for the English economy, and is known to be the ‘’most important decision you’ll make in a generation’’ As quoted by George Osbourne, Chancellor of the Exchequer, in an article about foreign relations with Brussels. It is a very important decision to the English taxpayer, but is equally important for the British economy, but I think, is arguably most important for the small or large, private or public, English Business. The English economy is growing by 1.5% per annum, this is not enough. Compared to foreign relations such as China, with a G.D.P growth rate or economic growth rate of nearly 9% a year, China has a faster economic growth rate by 6x. Now what do these numerical figures mean in contrast to leaving the EU? Well, whether or not to leave the EU has a massive effect on our economy, influenced by trade. But how does this correlate to affecting British businesses? Well a faster, well protected economy will allow businesses to run faster, trade faster, produce faster, and become efficient, which...

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...• ECONOMICS a science which studies human behavior as a relationship between ends and scarce mean which have alternative uses Economics is essentially a science of choice. And the problem of choice arises due to the problem of scarcity. In general, economics is basically a study of the ways in which people apply their knowledge, skills, and the efforts to the gifts of nature in order to satisfy their material wants. Economics is all about satisfaction of materials wants. The truth is that it is people's wants which provide the motive for economic activity. People go to work in order to obtain an income which will buy them the things they want. IT the resources available to people are insufficient to satisfy all their wants, such resources are said to be scarce. In fact is that we almost always find ourselves in a situation of scarcity. We cannot have all the things we want. The resources available to satisfy our wants are, at any time, limited in supply. Our wants however, appear to be unlimited. This is the economic problem faced by us - by each member of society. And, this problem of scarcity forces us to make choice. We can have more of food by having less of clothing. Economics is a lot more lively than many people have thought of. It's basically about decision making which we do everyday. And we live by participating in daily economic activities, influencing other people by making choices in our own interest and at the same time are subject to all other people's......

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...Economic Decisions Individuals and societies alike face many decisions. Individuals tend to make economic decisions when faced with trade-offs, and because of that, individuals are required to compare costs and benefits of their alternative actions referred to as the opportunity cost. Rational individuals tend to think of marginal change during the process of decision-making, and therefore, may respond differently to incentives whilst making economic decisions. This paper discusses the four principles of economics, a decision associated with marginal change, the incentive(s) that could lead to making different decision, and finally, how the principles of economics affect decision-making, interaction and the workings of the economy as whole. The Principles of Economics A trade-off is often referred to as the “technique of reducing or forgoing one or more desirable outcomes in exchange for increasing or obtaining other desirable outcomes to maximize the total return or effectiveness under given circumstances.” (BusinessDictionary.com, 2009) In brief, individuals choose something over something else, or give up something in order to get something else. Whatever “it” is that individuals sacrifice in order to get something, is generally “its” cost, and cost is often linked and associated with money, an opportunity cost however, could be the cost of anything i.e. time or health sacrificed in order to get something. Marginal changes are incremental adjustments individuals make...

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...single monopoly and share production and profit. However, if this price-fixing game is repeated indefinitely, it would come to a moment that one firm cheats on their collusive agreement. If the cheater cuts its price and the complier remains the agreed price. As shown in the figure, for the complier, ATC now exceeds price and for the cheater, the price exceeds ATC. The industry output is larger than the monopoly output and the industry price is lower than the monopoly price. The total economic profit made by the industry is also smaller than the monopoly’s economic profit. Therefore the complier incurs an economic loss while the cheater gains economic profit. If since both firms have an incentive to cheat as long as price exceeds marginal cost. In this price-fixing game, it will occur a situation that both firms cheat. If both firms produce more cigarettes than the number agreed, the industry output will be increased, the price of cigarettes will fall and both firms makes zero economic profit, as shown in the figure. -In monopolistic competition a company in the short run, makes its output and price decision just like a monopoly company does. The following figure illustrates the monopolistic competition in the short run. As you can see, when the marginal revenue equals its marginal cost (MR = MC), the firm charges the highest price (P) that buyers are willing to pay for this quantity, which is highly higher than the average total cost (ATC). Therefore the firm makes...

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...1.) Write an essay on the assumption of the “Rational Self Interest”. Make sure that you touch on each of the three components of this assumption that we discussed in class. Comment on the relevance of this assumption in our daily lives. Economics is defined as how we make choices with scarce resources to obtain our own needs, wants and desires. The Assumption of Rational Self –interests tells us that the definition of rationality means not doing something that will deliberately cause harm. We are told that with every decision we make, we must weigh the rewards against the punishments and that it is actually necessary for us to ask the question “What is in it for me”. There is actually a difference between acting selfishly and acting on the best of our own self- interest. Acting selfishly means that in doing so, you are causing harm to others. Acting in your own self- interest actually benefits others. Adam Smith is known as the father of Economics. In 1776 he purchased The Nature and Causes of the Wealth of Nations. Today the title has been shortened and is known as Wealth of Nations. Smith was asking the question, why powerful countries such as Spain and Portugal collapsed while a small country such as England thrived. The biggest difference he found was that while Spain and Portugal denied their colonies education, England encouraged it. Smith believed that governments have to give people incentive to do well. He stated that self-interest should be encouraged in every......

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...Principle of economics “Economics is about making choices when options are limited.” ((O'Sullivan, 2011 p.13) The world revolves around choice, and its made by all sorts of people. The economist job isn’t to choose for us but to help us understand the trade offs. Decisions are not made to be spontaneous. Therefore it takes a lot to consider what to buy, what occupation to pursue, and how money to save. Economist, understand this in all matters so the key questions are as follows; what products do we produce? How do we produce the products? Who consumes the products? (O'Sullivan, 2011 p.4) But this isn’t the only thing an economist considers, there also includes four elements to consider for decision-making. An economic way of thinking is through assumptions, isolate variables, think at the margin, and respond to incentives. (O'Sullivan, 2011 p.8) Real life situations, call for real life theories. One major real life problem is of alcohol abuse. Two economic solutions are to impose higher taxes, or increase the prices. Both of these would be considered a good solution because people act rationally in their own self-interest. (O'Sullivan, 2011 p.6) Imposing taxes or increasing the prices we would assume that every drink has the same alcohol effect towards people. To focus on the effects of alcohol abuse economist would make assumptions that imposing taxes and increasing prices would decrease alcohol consumption. Of course it also depends on the way that the inflation would...

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...elderly population is twice what it is today. Much of this growth will be prompted by the aging of the Baby Boomers, who in 2030 will be aged 66 to 84—the “young old”—and will number 61 million people. In addition to the Baby Boomers, those born prior to 1946—the “oldest old”—will number 9million people in 2030. This paper assesses the economic dimensions of the 2030 problem. The first half of the paper reviews the literature and logic that suggest that aging in general, and long-term care services in particular, will represent an overwhelming economic burden on society by 2030. Then, a new analysis of burden is presented to suggest that aggregate resources should not be a major issue for the midcentury economy. Finally, the paper presents four key challenges that represent the real economic burden of long-term care in the twenty-first century. These challenges are significant but different from macro cost issues. What type of economic burden might be considered overwhelming? Existing literature never explicitly defines this but the sense is that the burden might be considered overwhelming if: (a) tax rates need to be raised dramatically, (b) economic growth is retarded due to high service costs that preclude other social investments, or (c) the general well-being of future generations of workers is worse than that of current workers due to service costs and income transfers. The discussion has significant implications for public policy and for private actors focused on......

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