...‘The Price Mechanism Can Be Relied Upon To Provide Efficiency’ I will first discuss this in very simple terms concerning such matters as the law of supply and demand. I will then present the situations in which inefficient results are created and also areas in which Pareto efficiency is of particular significance. Generally, if the demand for a good increases its price will increase as supply becomes limited for consumers. This in turn acts as an incentive for producers to supply higher output and as supply increases the price will eventually go down and equilibrium will be achieved. This also works for the opposite as demand falls. In addition to this, in a perfectly competitive market firms will aim to produce where marginal revenue (MR) equals marginal cost (MC). This creates efficiency because if marginal revenue is higher than marginal cost then consumers are worse off because they are being charged high prices and thus rival competitors will take advantage with a lower supply price. On the other hand, if marginal cost is higher than marginal revenue then the firm is not using their resources efficiently as each additional unit incurs a marginal net cost. The only exception to this would be if the point at which MR is equal to MC was lower than the average cost (AC) curve, since the marginal revenue would not even cover the average cost. Therefore, we can see how the law of supply and demand and the result of a perfectly competitive market allows the price mechanism to...
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...`The price mechanism can be relied upon to provide efficiency'. Discuss. In order to discuss the above, it is necessary to provide not only a definition of the price mechanism, but also an explanation of its application in real-world microeconomics. John Sloman describes the price mechanism as ‘the system in a market whereby changes in price in response to changes in demand and supply have the same effect of making demand equal to supply’ (Sloman, 2012). We will also look at the theory of the price mechanism. The fundamental economic problem is that, human needs are, for intensive purposes, infinite, whereas resources are scarce, and are capable of alternative uses. Because of this, choices must be made about: what to produce, how much to produce and how to produce it, and for whom. In response to the fundamental economic problem, for producers to be efficient, they must allocate their resources efficiently. The price mechanism, in theory, allows for more efficient production. In practice, under the price mechanism, all goods and services produced have a market price, which is determined by the market forces of supply and demand. The price mechanism means that with shortages in supply of a good the price will rise. As the price increases, producers supply more (as they will be more profitable), and demand falls due to the rise in prices, so consumers buy less. s The diagram above shows the rise in price (from P1 to P2) and...
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...‘The price mechanism can be relied upon to provide efficiency’ Discuss. The price mechanism is the phenomenon where the market forces of supply and demand interact to reach an equilibrium price and quantity such that the quantity demanded by the buyers is exactly equal to the quantity supplied by the sellers. In a free market economy, where there is no government intervention, the allocation of all resources happens through the price mechanism. Meaning that the price mechanism is what balances the production and consumption of goods. When the demand for a particular good increases, its price will increase since the increase in demand means that there is currently a shortage of the good in the market. The new higher rate works as an incentive for sellers to supply more of the good with the expectation of increasing their profits. However, the increase in supply will lead to a fall in the price, and the sellers will reduce the quantity of the good produced. Thus, the price will eventually be pushed back to the equilibrium market price. In contrast, should the demand for a particular product fall, then there will be an excess supply in the market for the specific commodity. The producers of the product will then be forced to reduce the market price to eliminate the surplus of the good. The new lower price will indicate to the sellers that they should produce less of the particular product since they can’t make as much profit as before by selling it. The fall in the supply...
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...In 2001, the nation was rocked by the collapse of Enron, a multibillion dollar corporation that employed thousands of people and had affiliations right up to and including The White House itself. It is important, in starting, to understand how Enron rose to power and later imploded. Enron itself came to be born as the result of a 1985 merger of Houston Natural Gas and InterNorth-a Nebraska based gas pipeline company. Its most valuable asset and the largest source of honest income, the 1930s-era Northern Natural Gas, was eventually purchased back by a group of Omaha investors, who moved its headquarters back to Omaha, and is now a unit of Warren Buffett's MidAmerican Energy Holdings Corp. NNG was put up as collateral for a $2.5 billion capital infusion by Dynegy Corporation when Dynegy was planning to buy Enron. When Dynegy looked closely at Enron's books, they backed out of the deal and fired their CEO, Chuck Watson. The new chairman and head CEO, the late Daniel Dienstbier, had been president of NNG and an Enron executive at one time and was forced out of Enron by Ken Lay. Dienstbier was an acquaintance of Warren Buffett. NNG continues to be profitable today. As was later discovered, many of Enron's recorded assets and profits were inflated or even wholly fraudulent and nonexistent. One example of fraudulent records was in 1999 when Enron promised to pay back Merrill Lynch & Co. investment with interest in order to show profit on its books. Debts and losses were put into entities...
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...Mercedes Benz AAV Project 1. Q. What is the competitive environment faced by MB? Ans; Mercedes Benz is a world know Luxury car brand. Their main competitors are BMW, Lexus, Acura, Audi etc. At that time, not many of their luxury brand competitors were into AAV cars, companies who had AAVs in the market were GM, ford Jeep etc. But this was a rapidly growing market. 2. Q. How has MB reacted to the changing world for luxury automobiles? Ans: Luxury Car makers were hit hard by the recession the early 1990s. The car sales plunged and companies were showing losses. Mercedes Benz struggled with product development, cost efficiency, material purchasing, and problems in adapting to changing markets to face the tough market conditions Mercedes made several changes within its business. Mercedes streamlined the core business, reduced parts and system complexity, established simultaneous engineering programs with suppliers. In search of additional market share and new segments, MB started developing new range of products. New products introduced were the C-Class in 1993, the E-class in 1995, the new sportster SLK in 1996, and A class and M class all-activity vehicle (AAV) in 1997. In addition, MB moved its manufacturing facilities closer to the market that is the USA. Most, importantly it became more customer oriented and used customer opinions for developing almost every part of the car 3. Q. Using Cooper’s cost, quality and functionality chart, discuss the factors on which...
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...1 Auction Based Mechanisms for Electronic Procurement T. S. Chandrashekar, Y. Narahari, Charles H. Rosa, Devadatta Kulkarni, Jeffrey D. Tew, and Pankaj Dayama Abstract— This article reviews recent research and current art in the area of auction based mechanisms for electronic procurement. These mechanisms are becoming increasingly relevant in modern day e-procurement systems since they enable a promising way of automating negotiations with suppliers and achieving the ideal goals of procurement efficiency, cost minimization, and agent based deployment. The survey delineates different representative scenarios in e-procurement where auctions can be deployed and describes the conceptual and mathematical aspects of different categories of procurement auctions. We discuss three categories: (1) multi-unit auctions for a single homogeneous type of item; (2) combinatorial procurement auctions where the buyer seeks to procure a bundle of multiple items and the suppliers bid for subsets of the bundle; and (3) multi-attribute auctions where the procurement decisions transcend cost considerations alone, to take into account lead times, logistics costs, and other important attributes. In all three cases, the winner determination problem and the determination of payments turn out to be interesting and challenging combinatorial optimization problems. In our review, we present mathematical formulation of procurement scenarios under each category, bring out the challenge involved in solving...
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...Contract Law Notes Contracts ‘A’ Offer - Bilateral contracts - Unilateral contracts - Offers to the public at large What is an offer? - Mere puff - Supply of information - Invitation to treat Categorizing transactions - Advertisements a) Advertisements in a catalogue or a curricular b) Advertisements in newspapers or magazines c) Advertisements appearing on the internet d) Display of goods - Auctions a) Advertisement of auction b) Auctions with reserves c) Auctions without a reserve - Tendering - Standing offers ➢ Options Communication of an offer Termination of an offer - An offer may be terminated by a) Revocation by the offeror b) Rejected by the offeree c) Lapse of time d) Failure of a condition subject to which the offer was made e) Death Acceptance Requirements of acceptance Acceptance must correspond to offer - Offeree must have knowledge of and act in reliance to an offer Page 9 Page 9 Page 10 Page 12 Page 13 Page 14 Page14 Page14 - A counter offer is not acceptance - Acceptance must be unqualified - Mere enquiry does not constitute acceptance Notification to the offerer of the fact of acceptance - Method of acceptance a) Method of acceptance stipulated by offer b) Acceptance by silence c) Acceptance by conduct - Instantaneous communication: Acceptance must be communicated a) General rule b) Meaning of instantaneous...
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...Contract Law Notes Contracts ‘A’ Offer - Bilateral contracts - Unilateral contracts - Offers to the public at large What is an offer? - Mere puff - Supply of information - Invitation to treat Categorizing transactions - Advertisements a) Advertisements in a catalogue or a curricular b) Advertisements in newspapers or magazines c) Advertisements appearing on the internet d) Display of goods - Auctions a) Advertisement of auction b) Auctions with reserves c) Auctions without a reserve - Tendering - Standing offers ➢ Options Communication of an offer Termination of an offer - An offer may be terminated by a) Revocation by the offeror b) Rejected by the offeree c) Lapse of time d) Failure of a condition subject to which the offer was made e) Death Acceptance Requirements of acceptance Acceptance must correspond to offer - Offeree must have knowledge of and act in reliance to an offer Page 9 Page 9 Page 10 Page 12 Page 13 Page 14 Page14 Page14 - A counter offer is not acceptance - Acceptance must be unqualified - Mere enquiry does not constitute acceptance Notification to the offerer of the fact of acceptance - Method of acceptance a) Method of acceptance stipulated by offer ...
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...factors have made the company achieve the niche of market leader. The market structure the company operates in cannot be definitely stated. Some may consider it to be a monopoly. This is due to the fact that the company is a dominant market player in car exportation. In fact, its differentiation strategy has made it enjoy an almost monopolistic presence especially in the developing nations of the world. On the other hand, the market structure can be seen as an oligopoly. This is due to the fact that there are other key players like GM who are peer competitors. Toyota is keen to see what these competitors are doing and make sure it reacts to their actions in a way that will guarantee its market leadership. 2.0 Situation Analysis Toyota’s capacity to stay on top of productivity efficiency and quality rankings can be credited to its internal environment. This entails the way production process is managed by the top management who are famous for their competency. The production team has an insatiable obsession to improve the efficiency and effectiveness of its manufacturing operations. Therefore, to fully understand the situation analysis of Toyota Company, a SWOT analysis is determined and it mainly consists of the Company’s strengths, weaknesses, available opportunities, and finally the threats that the Company is experiencing or projected to go through. 2.1 SWOT Analysis Strengths and weaknesses are referred to as internal factors of the Company as their impact starts from...
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...Name: Professor: Institution: Course: Date: 1.0 Company Description The Toyota Company is a leader in the car manufacture, assembly and distribution the world over. A very efficient management style that the company uses has been one of the reasons for the firm’s good performance. There are many other salient factors that have made the company achieve the niche of market leader. The market structure the company operates in can not be definitely stated. Some may consider it to be a monopoly. This is due to the fact that the company is a dominant market player in car exportation. In fact, its differentiation strategy has made it enjoy an almost monopolistic presence especially in the developing nations of the world. On the other hand, the market structure can be seen as an oligopoly. This is due to the fact that there are other key players like GM who are peer competitors. Toyota is keen to see what these competitors are doing and make sure it reacts to their actions in a way that will guarantee its market leadership. 2.0 Strategic Focus and Plan There are three aspects of the existing corporate strategy that are developed in relation to their overall impacts caused to the marketing plan of Toyota Company. These are; 2.1 Mission Statement of the Company. Toyota seeks to create a more prosperous society through automotive manufacturing (Hiroshu, 2003). Therefore, the Company is aimed at achieving a stable and long-term growth in future, and this...
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...Running Head: MARKETING PLAN FOR TOYOTA MOTOR COMPANY Name: Professor: Institution: Course: Date: 1.0 Company Description The Toyota Company is a leader in the car manufacture, assembly and distribution the world over. A very efficient management style that the company uses has been one of the reasons for the firm’s good performance. There are many other salient factors that have made the company achieve the niche of market leader. The market structure the company operates in can not be definitely stated. Some may consider it to be a monopoly. This is due to the fact that the company is a dominant market player in car exportation. In fact, its differentiation strategy has made it enjoy an almost monopolistic presence especially in the developing nations of the world. On the other hand, the market structure can be seen as an oligopoly. This is due to the fact that there are other key players like GM who are peer competitors. Toyota is keen to see what these competitors are doing and make sure it reacts to their actions in a way that will guarantee its market leadership. 2.0 Strategic Focus and Plan There are three aspects of the existing corporate strategy that are developed in relation to their overall impacts caused to the marketing plan of Toyota Company. These are; 1 2.1 Mission Statement of the Company. Toyota seeks to create a more prosperous society through automotive manufacturing (Hiroshu, 2003). Therefore, the Company is aimed at...
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...INSERTED MY RECOMMENDED SOLUTIONS IN BOLD ITALICS AFTER EACH OF THE QUESTIONS ON THIS EXAMINATION PAPER." Question I For this question you can choose to answer either (A), or (B)' but NOT BOTH. A. Assume that the Asset Demand for money is relatively elastic or flat, and that the Investment Demand Curve, is relatively inelastic or steep. Compare and contrast the effect of an increase in Money Supply upon the overall level of economic activity, using both the traditional transmission mechanism, and in the IS'LM model. Are there any major differences between these 2 models? Your answer should include all relevant diagrams. (20 marks IN RELATION TO THIS QUESTION, STUDENTS WOALD BE EXPECTED TO IDENTIFY AND EXPILIIN THE TRADITIONAL TRANSMISSION MECHANISM AND BRIEFLY EXPLAIN ITS CONSTITUENT PARTS; NAMELY MONEY MARKET, THE INVESTMENT DEMAND CARVE, AND FINALLY THE 45 DEGREE LINE PRODUCT MARKET MODEL. THEY WOALD BE EXPECTED TO BRIEFLY DESCRIBE THE EFFECT OF AN INCREASE IN MONEY SAPPLY WHEN THE ASSET DEMAND CURVE FOR MONEY IS RELATIVLY FLAT AND THE INVESTMENT DEMAND CT]RVE IS RELATIVELY STEEP. BETTER ANSWERS WOALD EXPLAIN WHAT THE LATTER 2 SLOPES INDCATE ABOUT THE PARTICULAR MARKETS. ANSWERING THIS QAESTION STUDENTS SHOALD IDENTIFY THE 2 PARTICULAR WEAKNESSES THAT CHARACTERISE THE TRADITIONAL TRANSMISSION MECHANISM. THE ARTE THE 2 PROBLEMS OF TryHEN INTERDEPENDENT VARIABLES AND IN TARN UNCERTAIN OR ANPREDICTABLE OR INDETERMINATE OUTCOMES OR RESALTS...
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...A Conceptual Framework for the Design of Organizational Control Mechanisms Author(s): William G. Ouchi Source: Management Science, Vol. 25, No. 9 (Sep., 1979), pp. 833-848 Published by: INFORMS Stable URL: http://www.jstor.org/stable/2630236 Accessed: 12/12/2008 16:24 Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=informs. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with the scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that promotes the discovery and use of these resources. For more information about JSTOR, please contact support@jstor.org. INFORMS is collaborating with JSTOR to digitize, preserve and extend access to Management Science...
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...1990s as a part of the structural reforms have touched upon almost all aspects of banking operation. For a few decades preceding the onset of banking and financial sector reforms in India, banks operated in an environment that was heavily regulated and characterized by sufficient barriers to entry which protected them against too much competition. The banking reform package was based on the recommendation proposed by Narsimhan Committee report (1992) that advocated a move to a more market oriented banking system, which could operate in an environment of prudential regulation and transparent accounting. One of the primary motives behind this drive was to introduce an element of market discipline into the regulatory process that would reinforce the supervisory effort of the reserve bank of India(RBI). Market discipline, especially in the financial liberalization phase, reinforces regulatory and supervisory efforts and provides a strong incentive to banks to conduct their business in a prudent and efficient manner and to maintain adequate capital as a cushion against risk exposures. The administered interest rate structure, both on the liability and the assets side, allowed banks to earn reasonable spread without much efforts. Although banks operated under regulatory constraints in the form of statutory holding of government securities and the cash reserve ratio (CRR) and lacked functional autonomy and operational efficiency, the fact was that most banks did not efficiently. The...
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...1 THE DONALD MCGANNON COMMUNICATION RESEARCH CENTER WORKING PAPER MEDIA ECONOMICS AND THE BAD & MEDIA POLICY: THE GOOD Philip M. Napoli Director Donald McGannon Communication Research Center Associate Professor, Schools of Business Fordham University Donald McGannon Communication Research Center Faculty Memorial Hall, 4th fl. Bronx, NY 10458 718.817.4195 www.fordham.edu/mcgannon mcgctr@fordham.edu Presented at the Latin American Meeting of the Econometric Society, Santiago, Chile, July, 2004 2 Media Economics and Media Policy: The Good and the Bad Abstract This paper explores the role and function of economics in media policymaking and policy analysis. This paper begins with an overview of the distinctive economics of media industries in an effort to demonstrate the importance of focused and specialized economic analysis of these industries. The paper then chronicles the growing role of economics in U.S. media policymaking and examines both the positive and the negative implications of this transition for media policy. 3 Media Economics and Media Policy: The Good and the Bad Economists traditionally have devoted relatively little attention to media industries, though the level of attention has increased in recent years. This increase in attention is likely due in large part to the wide range of economic questions raised by both the changing media technology environment (see Mitra, 2000/2001), the adoption of new regulatory philosophies in many...
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