Assignment on Micro Economics

Micro Economics

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
CONCLUSION................................................................................................................................4
REFRENCES...................................................................................................................................5

INTRODUCTION
Micro economics principles are the rules which relates to the economics on the individual
levels and deals with the problems relating to an individual. The card less debit card for an
individual is also a micro economic factor.
Now a days where cash is the prime necessity of doing any transaction there is also the need of
proportion of the payment through online medium of cash payment.
The report will study the effect of income management policy of an individual and its
better allocation by the government in valuable sources and also restricting the use of money in
irrelevant purposes.
MAIN BODY
1. (a) What are the economic justifications for distributing welfare payments via the cashless
debit card?
Ans. The cashless debit card is issued by the government in order to divert and direct the
earnings of individual by allocating the funds to their best uses. Through the allocation of cash to
most essential uses of that individual. The basic idea of income management is that controlling
over some part of income and pay on individual behalf like- rent and bills. The funds are
distributed to their best uses and thereby applying the cash to desired ways. This allocation of the
cash resources helps the individual in saving their limited resources (Baumol and Blinder, 2015)
. As there is limitation in the expenditure by the government in gaming and alcohol products it
helps on being on right track.
Also, the card cannot be used to withdraw cash which helps in the savings of money on
unnecessary thing. Therefore, the distributing welfare payments via cashless debit card is
economical to its users.
(b) Are they consistent with the standard economic argument that payment in kind is inferior in
welfare terms to payment in cash?
Ans. The payment through the card less debit card is payment in kind. The card less payment
is easy, safe and secure to the individuals using the money (Cooter and Ulen,2016).
. The payment in cash refers to the payment of the transaction amount in the form of cash and not
in kind. Payment in cash is superior than the payment in kind. As the payment in cash in creates
the liquidity power of the individual and helps them to purchase their desired goods and services.
On the other hand, payment in kind some how bounds the people in earning power, as the there
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are some shops who are not so developed to accept the online payment, therefore it can create
problem regarding the liquidity of cash. The payment in kind have some limitation whereas
payment in cash is easy and a quick method to purchase any desired goods and services between
the parties in respect to the money transaction.
2. (a) What ethical framework underlies the case for the cashless debit card you described above?
Ans. The card less debit card was introduced by Australian government in the year 2007. The
main concept relating to this based on income management of an individual. The income of
individual is divided in two parts which are 80:20 ratio. 80 % of their income is further slip ith
the payment of their essential payments which can be payment of rent and bills (Cowell,2018).
The other 20 % is transferred to recipient’s bank account for personal use. This policy is
important for the effective use of cash available to the individual. The card also limit individual
for using the card for gaming and alcohol products. Therefore, it is ethical policy by the
government for the social welfare of the people of country. Through this policy individual can
best allocate their money for good purpose and not for illegal purposes. This policy not only
focusses on the individual person but also helps in the social welfare of the country. This
improves the infrastructure of country and also increases the possibilities of becoming a
developed country (Friedman, 2017).
(b) Would it matter for this case if people using the cashless debit card were worse off
compared to being able to allocate their own expenditure? Why or why not?
Ans. Yes it matters to allocate their cash in an efficient manner, if the people are worse in the
allocation of there cash than it would be waste of money by them. The money in their hands
could not be utilized in proper manner. If the individual uses this card less debit card than they
can limit their expenditure by the control on their utilization by the government. Also, if the
people are capable of managing their cash then there is no requirement of this card less debit
card. If they use their money to required fields than this policy of card less debit card would not
be helpful to them, even it will be burden on them to pay the specified amount to government for
the payment of various expenditure and not according to their needs (Harrison,2017).
3. What arguments are there against the program based on the ethical framework you identified
in Question 2?
Ans. Although the policy introduced by government is good for income management and
allocation of the resources to their desired expenditure. The policy uses 80% of the total income
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and only 20% is available to individual which is very less amount in meeting another
requirement. There cannot be any amount of saving as the funds are utilized mainly on the health
and care. This reduces the ability of an individual to save and secure its future needs and
requirement of cash. Also, there is no control of individual on its own money. This increases the
difficulties in meeting the other essential requirement of cash. There can be some stores where
there are no online payment machines which restricts an individual to purchase from those stores
which is a major drawback of using this policy (Iossa and Martimort, 2015).
4. What arguments can be made for and against the program based on an opposing ethical
framework?
Ans. This framework for the effective income management is utilized by individuals on large
scale to mange their income and uses their income to the most effective ways. The policy is
advantages to the person having constant type of expenditure and there is no need of extra
income and saving for them. The funds are utilized for maintain health and education of children.
On the other hand, this policy is not good for the persons having varied income expenditure and
where the person needs to save their money for future expenditure. Also, the expenditure done
by the income managers are only on few fields. This policy limits the use of money to some
resources (Kreps, 2019). There must be online payment system to each and every store so that
there cannot be problem of running out of cash and there can be quick payment through online
modes.
5. (a) Taking into account both the economic and ethical argument, is income management via
the cashless debit card justifiable on balance or not?
Ans. The income management via cashless debit card uses the funds of an individual and
allocates the resources on the priority basis. There can be no use of cash resources on the
unnecessary things and services by the persons. These activities of income management made it
economical for the individual in managing their scarce resources. Also, the income management
limits the use of cash by the online debit card to the sources like alcohol and gaming which is not
good for an individual. Therefore, the income management is both economic and ethical in use
(Perea, 2017).
(b) If so, should it be applied to all recipients of government payments (e.g. pensioners,
students)? If not, why not?
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Ans. No, it cannot be used to all recipients of the government payments like pensioners and
students. As the different age group can have their different priorities in utilizing their funds. The
pensioners may allocate more towards their business plans and might be more funds to their
heath and care, the income management restricts them to use their own funds in the way they
need. Also, the students at young age requires amount mainly in their academics and more
investment of funds on their education rather than spending on there health. Therefore, the plan
of income management cannot be applied to every group of individuals. It can only be applied on
the medium age group payment receiving persons for maintain uniformity in their expenditure
procedure. And use their funds to the most effective uses and not wasting it like on gaming,
gambling and consumption of alcohol (Stein, 2017).
CONCLUSION
The report concludes that in 2007 the Australian government introduced the concept
income management which is helpful in the management of cash by proper allocation of the
resources. This results in the welfare of individuals and the overall society.
The report concludes that the income management assists and helps an individual in
distributing their earning for welfare purpose like heath and care. The report also states that it is
ethical to use this income management.
Furthermore, report states that the income management approach cannot be applied to all
recipients of government payments as each age group can have different expenditure program.
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REFRENCES
Books and journals
Baumol, W.J. and Blinder, A.S., 2015. Microeconomics: Principles and policy. Nelson
Education.
Cooter, R. and Ulen, T., 2016. Law and economics. Addison-Wesley.
Cowell, F., 2018. Microeconomics: principles and analysis. Oxford University Press.
Friedman, L.S., 2017. The microeconomics of public policy analysis. Princeton University Press.
Harrison, A.J., 2017. Economics and land use planning. Routledge.
Iossa, E. and Martimort, D., 2015. The simple microeconomics of public‐private
partnerships. Journal of Public Economic Theory. 17(1). pp.4-48.
Kreps, D.M., 2019. Microeconomics for managers. Princeton University Press.
Perea, A., 2017. D Microeconomics. Journal of Economic Literature.55. p. 218.
Stein, J.G., 2017. The micro-foundations of international relations theory: Psychology and
behavioral economics. International Organization.71(S1). pp.S249-S263.
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