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Financial Economics Assignment Sample

   

Added on  2021-02-20

13 Pages3434 Words63 Views
Financial & Economic

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................11. Different types of goods and price elasticity of demands.......................................................1Determine to consume the goods in the basis of price elasticity and types of goods.................32. Types of production and growth strategies.............................................................................3Growth and expansion of gold mining firm................................................................................43. Theory of fiscal policy............................................................................................................4Fiscal policy implemented by UK government in 2018.............................................................54. Benefits of globalization and international trade....................................................................5Benefits of globalization and international trade to UK.............................................................7A. Ratio analysis ........................................................................................................................7B. NPV calculation.....................................................................................................................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10

INTRODUCTIONFinancial and economic literacy help the manager to get the information about the various fiscalpolicy, impact of globalization and the international trade. The report highlights the differentkinds of goods and elasticity of demand. It explains the various strategies to promote and expandthe business in the market. It also explains the fiscal policy and the different benefits ofinternational trade and globalization on the UK economy and business.MAIN BODY1. Different types of goods and price elasticity of demandsDifferent types of goods Normal goods : The quantity demand of the product is increase by increasing the incomeof the consumer or decrease by decreasing in the income of consumer. That kind of goods areknown as normal goods. Giffen goods : Giffen goods are also known as inferior goods. Normally people buy thegoods when the price of the goods is rises. It violates the law of demands of goods. In giffengoods case the close substitute of goods are not available which affect the income effect (Etzioniand Lawrence, 2016). The high level income consumer buy more goods in the market even theprice of the goods is high. Substitute goods : Substitute goods are those goods which can be used in the place ofother goods. For example tea is the close substitute of coffee because Tea can be use the place ofcoffee. The demand of the one substitute is increase than the price of the other substitute isdecrease. These goods provide choice to the consumer and different alternatives by creatingcompetition in the market. Complementary goods : Complementary goods are those goods which are consumedwith the another goods. For example ink is the complementary good of pen. The price of onecomplementary good is increase with increase in the price of the complementary goods (Jaquaand Schaffa, 2016). 1

Some other kind of goods are consumer and non consumer, durable and non durable,consumer and producer good etc. there are different criteria to differentiate the goods in themarket. Price elasticity of demandElasticity of demand refers to change in demand due to change in the price of theproduct. Demand can be elastic or inelastic in nature. When the change in demand is greater dueto the little change in price is known as elastic demand and when the change in less in respect tohigher change in price is known as inelastic demand (Khakee and Hull, 2016). The various kindsof elasticity of demand are : Perfectly elastic demand : In perfectly elastic demand, the rise in price fall the demandto zero and a little change in price of the goods reflect a major change in demand of the goods. Ithelps to find the slope and shape of the demand curve which help to analyse the trend in market.Perfectly inelastic demand : The change in the price of the product does not affect thedemand of the product are known as perfectly inelastic demand. The demand of the productalways remains constant in any value of price of the product. For example common salt becausethe common salt is an essential good so the demand of the product does not change with changein price. Relatively elastic demand : The proportionate change in demand is grater than theproportionate change in price is known as relatively elastic demand. For example the price of thegoods is increased by 25 % and the demand of the goods is decreased by 30% then the demandof the product is relatively elastic.Relatively inelastic demand : the percentage change in demand is lesser than thepercentage change in price are known as relatively inelastic demand. For example the price ofthe product is increased by 40% and the demand of the product is decreased by 20% is known asrelatively inelastic demand (Haynes and Grensing, 2018). Unitary elastic demand : The percentage change in demand is same as the percentagechange in price is known as unitary elastic demand. The degree of elasticity of demand is 1 inUnitary elastic demand. 2

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