Economic Issues of Scarcity and Allocation of Resource : Report

Added on - 22 Jul 2020

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BUSINESS ECONOMICS
Table of ContentsINTRODUCTION...............................................................................................................1TASK 1...............................................................................................................................11.1 Economic problem of scarcity and demand resource allocation.............................11.2 Equilibrium in a market is achieved.........................................................................21.3 An Importance of differing market systems.............................................................21.4 Role of opportunity costs in determining how economies make decisions.............31.5 Importance of elasticity in market interactions........................................................3TASK 2...............................................................................................................................42.1 Implications of pricing and objectives on a business firm’s operations...................42.2 Prices are set in different market structures............................................................42.3 Firm’s behaviour is impacted by:.............................................................................52.4 Affect of regulation on market power in given condition.........................................5TASK 3...............................................................................................................................53.1 Structure of an economy has changed in the 21st Century....................................53.2 Tools available to meet macroeconomic policy challenges....................................63.3 Success of a government’s policies in achieving macroeconomic objectives........63.4 Economic performance of an economy in the global market..................................7TASK 4...............................................................................................................................74.1 Theory of comparative advantage using relevant illustrations................................74.2 Advantages and disadvantages of free trade for development..............................84.3 Impact of emerging economies on the developed economies................................84.4 Affect of recent domestic and global economic shocks to economy......................8CONCLUSION...................................................................................................................9REFERENCES................................................................................................................10........................................................................................................................................11
INTRODUCTIONBusiness economics refers to a study of challenges and financial problems whichare faced through business organisations operating in particular economy. It deals withmany kinds of issues like management, strategy, corporations and also expansion. Abusiness economics is an applied economics. Marks & Spencer is a UK based retailorganisation. It manufactures many different products such as clothing, food items,home and furniture etc. In this business report mentions about the economic issues ofscarcity and the allocation of resource in high demand in terms of managing aneconomy. In this, there is determination about the role of opportunities costs fordetermining the economies in regards to making decisions (Sahut and Peris-Ortiz,2014). Under this, present business report also mentions about structure of UK’seconomy that has been changed in 21stcentury. The theory of comparative advantageby using some relevant illustrations from emerging economies are discussed in thispresent assignment.TASK 11.1 Economic problem of scarcity and demand resource allocationThe basic and main economic problems are the availability of efficient andeffective resources or can say scarcity of resources. Scarcity means that the resourcesare limited so that the needs and wants of humans are not fulfilled easily. Due to thescarcity, the choices to consumers are limited. The economic issue of scarcity refers tothe insufficient resources to satisfy needs and demands. In this, there is a properopportunity that cost is includes in making the decisions related to economic. Thisproblem is solved by economics with the help of placing more cost on the scarcity ofproducts and services. The maximum cost always demotivate demand and alsomotivate the business organisations to create the many alternatives. From this, thedemand will be affected (Czarnitzki and Hottenrott, 2011). From the scarcity, cost ofgoods will be impacted. Its result is in decreasing the demand and also increasing thecost of goods and services. The demand resource allocation and also scarcity ofresources are the main economic problems and also issues.
1.2 Equilibrium in a market is achievedAn equilibrium refers to a market where the supply and demand is equal at themarket place. When market is equilibrium, then there will no nay kind of tendency formake some changes in the cost. The producers and also customers react to changes inprices. The maximum cost minimises demand while motivating or increasing the supplyand also lowering the cost. If the cost of goods and services minimizes, then the qualityof product will be demanded until an equilibrium will be done. In regards to this, thesurplus minimizes the cost.If market cost is reduced than equilibrium cost, then the supply of quantity isminimum as comparison to the demand of quantity. An equilibrium in market can beevaluated when the supply as well as demand curve is meet (Wennberg and Lindqvist,2010). The demand curve represents the demand of quantity through customers atvarious places and on the other hand supply curve represents manufactures of quantitythat are able and also willing to supply at various costs. When at a particular point,demand and supply both are meet the price of market is equilibrium.Illustration1: Market equilibrium(Source: MARKET EQUILIBRIUM,2017)
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