Impact of Technology and Innovation on the Labor Market
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Added on  2022/12/22
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Technology and innovation have a dual impact on the labor market. On one hand, they improve productivity and create new job opportunities. On the other hand, they can lead to job displacement and unemployment. This article explores the benefits and drawbacks of technology and innovation on the labor market.
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Running head: ASSIGNMENT1 ASSIGNMENT Student Name Institutional Affiliation Facilitator Course Date
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ASSIGNMENT2 Question1 A good example where the demand and supply changes are observed in daily activities is the case of the demand and supply for umbrellas. During the rainy season, the demand and supply for umbrellas changes significantly as many people require them. This is a case of seasonality in demand and supply. Also, if it rains even if it’s not during the rainy season, the demand for umbrellas increases and consequently their supply. The demand for umbrellas during these periods exceeds the supply and hence their price increases. Another example is the case of gumboots. During the rainy season the demand for gumboots changes and increases significantly. Due to the increase in demand-supply also changes and increases in order to counter the increased demand in the market. The demand and supply for gumboots during the other seasons is always low as compared to the rainy season and hence during these other seasons, the price for gumboots decreases as compared to the rainy peak season. Question2 Income elasticity of demand is an indication of the manner in which the demand for goods and services changes as the consumer level of income is altered. The demand for normal goods tends to react positively to an increase in consumer level of income while inferior goods tend to react negatively towards an increment in consumer level of income. This means that the demand for normal goods increases as consumer income level increases while as the consumer income level decreases the normal goods demand decreases also. Inferior goods show controversy in that their demand decreases as consumer income level increases and increase as consumer level of income decreases.
ASSIGNMENT3 Examples of goods which show significant income elasticity is luxury goods. They have an income elasticity of demand which is greater than 1. For instance, the demand for beer increases significantly as the consumer income level increases. Also the demand for diamond increases as the consumer income level increases. The demand for these goods increases by a greater percentage than that of the consumer income level increase. Unitary demand elasticity as an economic theory bases its assumption on equal proportionality change between the quantity demanded and the price. This means that in case the price for good changes then the quantity of that good demanded change exactly by the same proportion. Unit elasticity is mostly observed in close substitutes. For instance, if the price of butter increases by a certain percentage then consumers reduce their consumption of butter by the same percentage and increase their consumption of margarine by the same percentage since these goods are close substitutes and hence can be used in place of each other. A good is said to be income inelastic if its consumption or rather demand shows little response to consumer income level alteration. This means that such goods change by a smaller percentage than that of the change in consumer income level. Necessities are mostly associated with income inelasticity in that they must be consumed and are essential for human survival. They have income elasticity within the range of 0 and 1. For example, rice and other staple foods such as maize flour are income inelastic. They tend to retain their consumption percentage as consumer income level is altered or changed by a small insignificant percentage. Question3 A market structure generally describes characteristics experienced in a given market which can be competitive or organizational in nature and they define the competition level and
ASSIGNMENT4 pricing adopted by the market. There are four types of market structures namely the oligopoly, monopoly, monopolistic and perfect competition. The two commonly experienced market structures in Australia are oligopoly and monopolistic competition. An example of an oligopolistic market structure is the Australian banking industry. An oligopoly market structure is composed of a few interdependent firms and hence the market being dominated by a few firms is said to be highly concentrated. The Australian banking industry is dominated by four major banks namely the National Australia Bank (NAB), Westpac (WBC), Commonwealth Bank of Australia (CBA) and New Zealand Banking Group (ANZ). These banks have a high concentration in the industry and account for almost more than 85 percent of Australian banking output especially the domestic home loans. High concentration and market dominance increase the barriers for entry of new firms into the industry and hence new investors find it hard to enter the industry even if small other firms operate in the industry. Hence the Australian banking industry is oligopolistic in nature as it is dominated by a few firms which have high concentration and higher market share and barriers exist for entry of new firms into the industry. An example of a monopolistic competition market structure in Australia is the restaurants and pizza places. A monopolistic market structure consists of a vast number of buyers and sellers and is competitive in nature. Some examples of key players in Australian pizza and restaurant market include Domino’s Pizza, Pasta, Pizza Gusto, Australia’s Pizza House and Borusso’s Pizza among others. Players in this industry compete in offering the same item but it’s differentiated to create uniqueness to customers. Hence the Australian Pizza and restaurants are monopolistic in nature as they are many and compete with each other through various means
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ASSIGNMENT5 such as product differentiation to win a huge market share. Also, barriers to entry into the market do not exist as firms can enter and leave the market at their own wish. Question4 Australia has 11 free trade agreements in force. I have experienced the benefits of these free trade agreements as Australian goods and services have improved in quality and are priced fairly due to competition resulting from free trade agreements. This is because free trade agreements encourage foreign investors to enter various Australian industries and hence force Australian producers to innovate new means of producing high quality cheaper goods and services in order to remain competitive in the market. Free trade agreements are beneficial. Free trade agreements increase the market for the nation’s businesses and avail opportunities for them to expand their operations to overseas markets for which free trade agreements exist (Freund & Ornelas, 2010). Free trade agreements also benefit consumers in that they involve elimination of tariffs and quotas among other trade barriers. This increases consumer choice and enables them to enjoy high quality cheaper goods and services. Free trade agreements encourage businesses to innovate new efficient production technologies as it introduces competition in the market and hence businesses must strive to survive and remain competitive. Free trade agreements reduce a nation’s unemployment level due to labor mobility as its citizen move to various nations sharing the agreements to secure jobs overseas. Free trade agreements promote regional integration as nations join together to address various economic issues and ways in which they can foster their economic growth. Free trade agreements also encourage foreign investment as various investors gain interest in investing in various nations having free trade agreements due to the ease of doing business around the region.
ASSIGNMENT6 This enables nations to improve their total output and also acquire new production technologies. Therefore for these reasons and many other free trade agreements are beneficial as they enable a nation to foster its economic growth. Question5 Technology and innovation is a two-edged sword when it comes to considering their impact on the labor market. The labor market can benefit from technology and innovation and also suffer. The labor market benefits from technology and innovation in that, new methods of production are found and utilized by workers to ease and improve the quality of their productivity. Also, innovation and technology enable those well versed will the skills required to secure jobs in carrying out production using the new technology and innovation. The labor market can also suffer from technology and innovation in that production which could be carried out by numerous employees is automated and performed by a few types of machinery based on technology. This leads to workers being laid off as they are replaced by new technology and innovation which aim at cutting business production cost. Disruptive technology and innovation involve coming up with new products and services which eventually replace the existing market. Disruptive technology and innovation involves the creation of new markets and with time displace markets and products established by leading firms. Disruptive technology negatively impacts the labor market in that it leads to workers being laid off due to established efficient new ways of production. Only a few workers are maintained for operating the newly innovated technology. Also, when newly innovated products replace competitor’s goods and services, the competitor’s companies collapse and as a result, the workers employed by these companies lose their jobs. One example of disruptive technology and
ASSIGNMENT7 innovation is robotics. Robots have been innovated to carry out production activities replacing workers and hence increasing unemployment. Another example is the invention of email and mobile phones which displaced letter writing hence affecting the postal industries. Question6 2. a.The demand and supply diagram is drawn below based on the data given. Price per gallon (in $)Quantity demandedQuantity Supplied 1.00800500 1.20700550 1.40600600 1.60550640 1.80500680 2.00460700 2.20420720 The respective supply and demand curves are:
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ASSIGNMENT8 400450500550600650700750800850 0 0.5 1 1.5 2 2.5 Demand Curve Supply Curve Quantity Price ($) The equilibrium quantity and price are found at the meeting point (equilibrium point) of the demand and supply curve as 600 and $1.4 respectively. b. If the price of gasoline is set at $1.6, the quantity demanded of gasoline is lower than that demanded at the equilibrium. This is in accordance with the law of demand in which bases its argument on the fact that an increase in price for a good lowers its demand while a decrease in its price raises its demand. A price of $1.6 makes the quantity supplied of gasoline higher than that supplied at the equilibrium. This is in accordance with the law of supply which argues that suppliers tend to supply more of a commodity when prices increase. The price increment of gasoline to $1.6 results to market surplus in that the demand decreases while supply increases. The market surplus, in this case, is 90 (640-550) which is obtained by subtracting the quantity demanded from the quantity supplied.
ASSIGNMENT9 Question7 3. Advertising in the context of business refers to the act of creating awareness about the business’s products. It enables customers to differentiate businesses’ products in various considerations such as branding, quality, and quantity among others. The monopolistic competition involves stiff competition although businesses operating in this market structure tend to have some degree of price control in that they can differentiate their products and set their own prices to maximize profits. The technique of advertising enables firms in monopolistic competition to differentiate their products from those of other competitors. This makes them control the market to some extent and hence charge their own prices to make higher profits. Advertising aims at convincing customers about the superiority of firm’s products as compared to competitors in the market and if customers are well convinced then the firm can charge higher prices and make more sales to maximize its profitability. Advertising enables firms in the monopolistic competition to increase the demand for their products and reduce the elasticity of demand. Advertising increases the quantities purchased by consumers and this leads to a shift in the demand curve for the advertising firm in the right direction. Also, customers tend to limit their shift or rather a reaction to the change in price for the firm’s commodities and this decreases the demand elasticity for the firm’s products making the demand curve steeper. Therefore advertising in monopolistic competition enables firms to reduce competition and create awareness about their products hence increasing their daily sales. This enables firms
ASSIGNMENT10 to maximize profits and therefore businesses in monopolistic competition keep on advertising as long as the advertising costs incurred are less than the profits realized from it. Question8 Australia is among the richest nations not only in the region of Asia-Pacific but also in the whole world at large. The nation has been embracing freeness in its economy and is ranked position 5 in terms of economic freedom having a score of 80.9 according to the 2019 Index. Its labor and trade freedom, as well as government integrity and fiscal health, have been maintained high and this has enabled the nation to keep its excellent economic performance. In terms of economic performance, Australia has been ranked the fourth position out of 43 nations in the region of Asia-Pacific. Its economic performance is higher as compared to that anticipated at the regional and world levels. Australia currently has a growth rate of 2.3 percent which is relatively a good growth rate as compared to many nations worldwide. Its unemployment rate still remains at 5.6 percent which is relatively high but currently, the nation is experiencing an increase in job opportunities. The nation’s inflation rate has been kept stable and relatively low at 2.0 percent. The nation’s exchange rates have also been maintained stable. This has enabled many businesses to predict their future with great certainty and as a result, the nation has continued to be a center of attraction for many investors. This has increased the nation’s foreign direct investments inflow to about $46.4 billion. The Reserve Bank of Australia has maintained cash rates at a low record of 1.5 percent in order to foster the nation’s economic growth (Lowe, 2012). In a nutshell, the Australian economy is doing well and better results are anticipated in the future.
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ASSIGNMENT11 References Freund, C., & Ornelas, E. (2010). Regional trade agreements.Annu. Rev. Econ.,2(1), 139-166. Lowe, P. (2012). The changing structure of the Australian economy and monetary policy.The Recent Economic Performance of the States 1 Trends in National Saving and Investment 9 The Distribution of Household Wealth in Australia: Evidence from the 2010 HILDA Survey 19 India’s Steel Industry 29, 79.