Aspects of microeconomics and macroeconomics

On this task will be looking at different aspect of microeconomics and macroeconomics, will be studied into consideration the definition and idea of the complete question as follow below.

Part 1 (Micro section)


To help understands by defining Demand that is the quantity of a good which consumers want, and are ready and in a position to pay for. In this case the demand of organic and natural drink and food has dropped sharply, and the key influence for fallen on demand for those products are: price; income; the price of substitute goods; the price of complements; flavour; demographic factors; advertising and targets. Price is one of the most important factors and it switch demand curve when it increases, the effect is shown by the movement over the demand curve, because individuals are likely to substitute cheaper choice goods.

http://upload. wikimedia. org/wikibooks/en/c/c1/DemandCurveMovementExample2. png

The demand curve is downward-sloping, showing that as a price falls, demand goes up, and vice versa. Within this graphic, a reduced amount of price from P2 to P1 causes a rise in demand from Q2 to Q1.

Usually, the more people earn, the greater they will spend. The demand for some goods increase as income increases, and these goods are known as normal goods. And organic drink and food are normal goods, because the demand falls as consumers' income comes, and vice versa.

Demand can change sometimes, due to expectation of price changes in the future. For instance, post-Christmas sales may motivate customers to postpone spending until January.

In articles entitled Food Price, Ellis makes the idea that () "The percentage of purchasers buying organic and natural food fallen by five % in the previous season. In July 2009, research completed by marketing consultancy Cohn and Wolfe also reported that British isles shoppers are turning their backs on top quality foods, organic produce and Fair-trade goods. According to the Cohn and Wolfe article, 69 % of purchasers say they plan to adhere to their belt-tightening shopping methods even following the downturn ends" (. . . ). www. bbc. co. uk/food/food_matters/foodprices. shtml#what_about_the_recession.


The production likelihood frontier illustrates the problems of scarcity and choice and the ability cost of resources allocation decisions. The opportunity cost of something is what you quit to obtain it.

To understand the theory the market, which produce two goods as creation and financial services, with all resources employed, producing more financial services can only just be achieved by some sacrifice on manufacturing services.

It can be illustrated on diagram below shown.




The frontier shows all the maximum possible outputs given the economy's existing level of resources. It could have any combo of goods over the range. Point A shows a contemporary society which is failing to use all of its resources fully, either through inefficiency or unemployment. Point B is currently unachievable, but may be accomplished throw economic development.

The shape of the curve is bowed outwards to the foundation, is based on the notion of that society gradually allocates more resources to the development of a specific good, the chance cost of doing so increase. Quite simply the curve is bold because the more suggestions the less is the outcome.

For example, UK market is based on services because the government decide not to invest on creation and thought the easiest way to generate income is by providing financial services especially bankers and shopping's only 13% of UK GDP comes from manufacturing. Now the services have been beaten by the recession, many banking institutions are facing financial problems, because they use to give money to people who have been at low income. Several people cannot pay back their mortgage loan because they lost their jobs and they are haven their home been repossessed, it is triggering serious problems on overall economy; records is seen on graphic below.

http://news. bbc. co. uk/1/hi/business/7789844. stm


It is important to be aware of the distinctions between theoretical models: a perfectly competitive company; monopolistic competitive; oligopoly and a monopoly. But here only two will be considering.

Perfectly Competitive


Very many small suppliers

One company only

Homogeneous goods; Suppliers' products are a perfect replacement for one another

One kind of product only; no close substitutes available

One market price

Price placed by one organization. Possibly price discrimination

Demand curve of specific organization is horizontal.

Demand curve of company and industry is downward-sloping

Perfect information

Imperfect Information

No hurdle to entry in the long run

Barriers to entry

Clearly the assumptions essential perfect competitive extremely aren't more likely to apply in real life; there is no market which obeys all the conditions.

On the other palm, there are a few that come close. The stock marketplaces and foreign exchange are good examples. Also complying with polices the market is costly, as is training and equipment needed to operate in such a superior, highly computerised market. As you can plainly see, the conditions are not obeyed wonderfully, but it could be that the markets are near enough the formal meaning that displays the primary characteristics of the theoretical flawlessly competitive firm.

The monopolist produces less, and charges more, than the properly competitive firm. He makes supernatural profits, which would be competed away in a flawlessly competitive market in the long run. He might also be theoretically inefficient, operating at above least average cost.

The monopolist equates marginal cost and marginal income. The properly competitive market equates marginal cost and average earnings. In perfect competition, each company produces at the point where P=MC.

PART 2 (Macro section)


The economy is within recession because development is below its potential capacity, the word recession mean lack of money provider. To answer this crisis the federal government is intervene through fiscal and financial policy to increase aggregate demand, and the way for doing it is by helping bank balance sheet; chopping in direct taxation(VAT -2. 5); quantitative easing (loan provider of England) and occupation level.

Fiscal policy is actually about administration taxation and expenditure. To greatly help in this crisis the federal government has reduce the consumption tax VAT -2. 5 to 15% to energize investment costs, but there is a large criticism about this idea, because lowering VAT did not cause long term impact in the economy, would cause more impact if indeed they spend the 12 billion building an general population infrastructure to increase an aggregate demand.

Monetary policy the bank of England can be an independent monetary insurance policy institution there a committee people appointed by authorities to make decision about interest rate, monetary policy is concentration in regulating the money supplier throughout the market through interest rate it has a major effect on aggregate demand.

The lender of England has reduced its interest to 0. 5% to boost the UK market and start financing money to business and individuals. As the current economic climate beginning to expanded some others area of the economy will be automatically adjust, for example a rise on employment. Some company's staff member has decided to have a pay slash on their incomes to reduce people being redundant (BA Lines).

Automatic adjust as the current economic climate beginning to expand the career rate will decline

http://news. bbc. co. uk/1/hi/business/7832714. stm

According to Kyosaki, Robert, Affluent dad poor dad 2, E, (2008), few people have expected the financial problems we face today were created more than 60 years back by politicians and lawmakers predecessors.


In the post-war period authorities have implemented four central objectives of macroeconomic insurance policy: low inflation; full employment; rising economic progress and balance of repayments. But full career is too much to archive especially there's a trend for national income to see cycle of progress and contraction, i. e. growth and downturn. These cause severe interpersonal problems as faltering level of economic activity throws people out of work and triggers business to fail.

The term unemployment means those of working time who are without work, but who are available for just work at current wage rates. Unemployment could still exist because of many causes mentioned below

Cyclical unemployment, this occurs anticipated to a scarcity of demand, often identifies the fact that in such circumstances it's possible that prices will land.

Frictional unemployment, send those who find themselves unemployed and careers available almost never match perfectly, leading to an inevitable degree of unemployment.

Technological unemployment, may appear when industry is growing and moving towards better capital intensive ways of operation.

Seasonal unemployment, relates to fluctuations popular for labour directly related to cycles in demand for final product. Travel and leisure and leisure establishments will be the best samples, these can donate to regional problems because they are strong in particular areas.

Some of the remedies that authorities can use to reduce the level of unemployment are: direct increase in government spending on general public infrastructure; encouragement of business investment by offering grants and loans; encouragement of exports; subsidise organizations in financial trouble, guarantee jobs for personnel facing redundancy also to limit imports of contending foreign goods and also using specific actions to get people back into work like new package programme etc.

The relation between unemployment and inflation can be discussed with Philips curve, by Teacher AW Philips in the 1862-1958. Philips witnessed that the rate of change in money income was inversely related to the level of unemployment. Rising money income were determined as a source of inflation and the inflation were inversely related to the level of unemployment.

http://welkerswikinomics. com/students/wp-content/uploads/2008/08/fig21-300x269. jpg


The globalization and the surroundings are connected, because for enlargement of monetary, environmental harm are produced that are essential to the process of globalization.

Mander claim that "Globalization is a human being creation that is designed to eliminate impediments, such as environmental laws that restrict companies' usage of resources and market segments, environmental damage is therefore an intrinsic part of the globalization system. " www. gale. cengage. com/pdf/samples/toc32870. pd

The intention of experiencing a globalized world and also to lower trade barriers, safeguarding free trade and my environment, thus having the financial development in poor countries, so that folks have access to information, improving their health insurance and responsibility to environmental safety. The process really helps to globalize the ideas run clear of one country to another, increasing the availability of knowledge and other opinions, assisting the development among the nations.

But for many environmentalists and anti-globalists Globalization will lead to environmental catastrophe and will steadily lead to the devastation of the surroundings, because the perspective of globalization and produced without precedents to environmental deterioration. Speth highlights that "Because the end of World Warfare II economic enlargement has produced great environmental harm and global economical development should be expected to effect a result of even more dire economical repercussions. " www. gale. cengage. com/pdf/samples/toc32870. pd

He believes that with globalization the few developed countries are benefiting because there was an checking huge markets for them, since many of these poor countries produce far better products and successful, doing so will be multinationals are establishing in places, enhancing investment foreign direct investment, and making many jobs available to residents, e. g. Asian Tigers of South Korea, Taiwan, Hong Kong and Singapore exhibited the great benefits associated with globalization and free trade. www. futureharvest. org/ news / globalization_pir.

In the other palm, there's a great inequality and between wealthy and poor countries. - Aislin "It has been argued that poor countries are often exploited and pressed in to the world trade discussion boards. For instance, it is noticeable when the abundant nations are allowed to pay huge subsidies to their farmers, which leaves LDN is a drawback industrial Workers. "

http://www. abcnews. go. com/sections/politics/dailynews/TheNote_March5. html


If imports goods are too high it could be possible to lessen demand for them in the economy by imposing tariffs to improve the price tag on imports goods to avoid unfair competition in the home market. Also to avoid buying product from the market were employees have been exploited to export their product cheap.

This policy may very well be achieved by retaliation from overseas countries, that may reduce exports placing the current profile back into deficit.

In addition, imposition of tariffs does not reduce expenses if demand for imports is relatively inelastic, federal policy favouring domestic suppliers may mean greater than necessary taxes to cover the bigger necessary purchase cost, and constraints generally encourage smuggling and black market

For example, an unhealthy country that in main income comes from the taxes on trade, if withdraw the duty trade its revenue will reduce significantly also the quantity of investment on open public infrastructure will be reduce, as a result many transfer goods may come into the market in a minimal price, creating the local goods serious problems on market as well as increase unemployment. The total amount of payment will be affected; because of insufficient exportation it could cause administration to borrow some cash to balance the balance of repayment.

Also We Can Offer!

Other services that we offer

If you don’t see the necessary subject, paper type, or topic in our list of available services and examples, don’t worry! We have a number of other academic disciplines to suit the needs of anyone who visits this website looking for help.

How to ...

We made your life easier with putting together a big number of articles and guidelines on how to plan and write different types of assignments (Essay, Research Paper, Dissertation etc)