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Report on Essay Question of Economics

   

Added on  2020-06-05

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ESSAY QUESTION

Table of ContentsINTRODUCTION...........................................................................................................................1Question 1: Why and how government regulate the price setting in the monopoly marketstructure............................................................................................................................................1Economic principles...............................................................................................................1Different principles of the economics....................................................................................2Different market structure......................................................................................................3Why government set the price in natural monopoly..............................................................5How government fix the price in natural monopoly..............................................................6Question 2: Stable economic Equilibrium stage and assessment to find that Australian economyis at the Equilibrium stage................................................................................................................7Economic Equilibrium............................................................................................................9Australia Current Equilibrium state......................................................................................11CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12

INTRODUCTIONEconomics is the process of evaluating manufacturing, distribution and consumptionof products and services. In simple words it can be said as it is the choice of people make theproducts and why and how they make them when they are making the purchase. The study ofeconomics is classified under two categories that is microeconomics and macroeconomics.Economic principle is the statement that states the inter-relationship between the variouseconomic factors such as cost, demand, supply, revenue, market structure etc. that explainswhat factor may cause what to the economy and what is going to happen in the certaincircumstances, it is also known as economic law. Micro-economics is the study of economicswhich are always referred for the individual or a specific company whereas macro economicsare refereed to the big picture of the economics and analyse the different companies andglobal economic factors.Question 1: Why and how government regulate the price setting in themonopoly market structureEconomic principlesIt is basically satisfying the unlimited wants of the consumer with the limitedavailability of the resources. In other words it can be said as it is the study of different choicesof customers and how the consumer choices affect the market and different countries. Theconsumer can be a organisation, company, government, household, tourist, individual orgroup and the consumer goods can be both finished and unfinished goods. When the clientsbuy something, it is that they hold the possession of that goods which may be in terms ofwearing, listing, watching etc. Buyer is the person who purchase the goods and services fromthe market place, it can be for the re-sale or the consumption (Choi and Seppi, 2016).A single buyer have various choices where the four marketing principles that can beapplied that is buyer can trade of the goods and services, he or she has to give something inreturn to that products and services, they should consider some margin and they need torespond for the incentives. Trade off is the different between the demand and supply so theeconomy should decide properly what shroud be offered. Something is return is what whenthe customer buy something from the seller, he or she has to give something in return for thatequal value, that can be in terms of goods, services or money (Bradley and Turon, 2017).1

There are two types of economics that are micro-economics and macro economics,micro-economics is the branch of economics which studies the behaviour of the single personor firm in making the decision regarded the allocation of the scare resources andcommunication between the organisation and individual. The key objective of this economicis to evaluate the mechanisms that helps to establish the relative price of the different productsand services with the proper allocation of the limited resources (Luo and Subrahmanyam,2016). It is the sum total of economics that deals with the basic issues such as unemployment,growth and inflation. There are several factors that are involved in the micro economics suchas demand, if the product is preferred by the consumer and he wants to buy it again and againat that time the demand will increase which leads to enhance in the price of that products.Other than that supply is other factor where if the supply of the goods is more than thedemand then the price of that product will fall. There is good relationship between the demandand supply, where if the price of the product fall, the demand increases and the supply willdecrease and vice versa. Whereas macro economics is the study of economics as the whole where all the globalcompanies have been considered and includes such concept like gross domestic product,growth rate and unemployment rates. The study of macro economics is very significant for thegovernment for making policies, regulations and economic decision (Buss and Dumas, 2017). Different principles of the economicsThere are several economic principles that every country need to follow so that theycan create stable balance between demand and supply, price, flow of money etc. the principlesare as follows:Scarcity: it I the most significant economic problem which each country is facing, asthe demand of every individual is unlimited and that can not be fulfilled by the limitedresources. The products or services that have non-zero price are being considered as the scarce(Pollak, 2016). Markets: It is the place where the buying and selling of goods and service take place,every market have its demand and supply curve which state that the quality of goods arewilling to purchase and sell at the different price points. The demand curve is generallydownward sloping and the supply curve are upward sloping (Choi and Seppi, 2016).2

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