Web Activities That Were to Be Completed Assessment

Pages: 4 (1261 words)  ·  Bibliography Sources: 4  ·  File: .docx  ·  Level: College Junior  ·  Topic: Economics

¶ … web activities that were to be completed in relation to this chapter.

Summary and Web Activitity

The main concepts in economics include; resource allocation, scarcity, competitive advantage, the market system, and the role of supply and demand. Resource Allocation is the efficient allocation or placement of resources, natural and financial, in various economic activities. Scarcity can be defined as the limited number of resources facing unlimited human wants. Another important concept is competitive advantage. When a firm earns a profit which is greater than the average of the profit of the industry in which it is operating then it is said to run in competitive advantage. A firm gains competitive advantage by providing benefits that are similar to its competitors at a lower cost or it can also attain competitive advantage by providing benefits that are greater than its competitors and thus creating superior value for its customers. (Schiller, 2010)

Market System

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A market system can be defined as a collection of markets for different goods and services. A market, on the other hand, is a place where buyers and sellers meet each other to buy and sell goods, or a set of goods, that are each other's substitutes. Demand and supply of goods play an important role in determining the value of goods in a market system. Demand can be defined as the quantity of goods that an individual or set of individuals is willing to buy at a particular price in a given period of time. Demand usually has a negative relation with price, that is, an increase in price will lead towards a decrease in the demand. For example, people would be willing to buy more sugar at a lower price but if its price increases, people will buy lower quantities then. Supply, on the other hand can be defined as the quantity of goods that the manufacturers or sellers are willing to supply to the market at a particular price, in a given period of time. The supply has a direct relation with price, that is an increase in price would lead towards an increase in supply. For example, in third world countries, suppliers stock various items and then sell them when the price of these products increases. (Schiller, 2010)

Assessment on Web Activities That Were to Be Completed Assignment

In a free economy, when a market runs out of equilibrium, the forces of demand and supply operate automatically to bring the market back into equilibrium. Market equilibrium is the state where demand of a product is equal to its supply. Where as in a command economy there is a central authority that intervenes in the market system when the demand, supply or price goes out of hand. It uses tools such as price ceiling (setting an upper limit for the prices above which the prices cannot increase) and price floors ( setting a lower limit for the prices below which the prices cannot decrease) to control the price, demand and supply. (Schiller, 2010)

Comparative Advantage and Its Importance

Comparative Advantage can be defined as an ability of a firm or a government to produce goods at an opportunity cost which is lower than its competitors. It enables the government to increase its exports and in turn increase its Gross Domestic Product (GDP) and it enables the organizations to increase its sales margin and earn greater revenues and profits. (Schiller, 2010)

Effects of National Economic Policy on: Inflation, Unemployment, and Growth

By altering its national policy effectively an economy can control inflation and can trigger growth and employment. By using expansionary monetary and fiscal policy, government can increase investment, employment and growth, by increasing money supply and government expenditures. Whereas, by using contractionary monetary policy, government can decrease inflation by decreasing the supply of money. (Schiller, 2010)

Effect of Fiscal Policy on Balance of… [END OF PREVIEW] . . . READ MORE

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