ONCAMPUS IFP (Business Pathway) Economics: Microeconomics Assignment 1

This report is a comprehensive microeconomic analysis of Thailand's economy. It begins with an overview of Thailand's economic nature, including its mixed economy system, key sectors like agriculture and manufacturing, and factors of production. The report then delves into specialization and the division of labor within the Thai economy, highlighting advantages and disadvantages. It examines supply and demand dynamics using examples like rubber and machinery, illustrating how various factors influence these forces. Furthermore, the assignment explores market failures, such as plastic waste, and government interventions, particularly in the rice market. The report concludes with a summary of key findings and suggestions for boosting the Thai economy, supported by references to relevant sources.

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ZAHID HOSSAIN SHAHBAZ
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ZS0291
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UFP)
IFP (BUSINESS PATHWAY)
Programme Start
Date (e.g.
September 2018) 2nd November 2020
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Planning my First Economics Coursework
Title Page
Report/Essay Title: Assignment 1 - Research assignment: Micro-economics
Your Name: ZAHID HOSSAIN SHAHBAZ
Programme title: ECONOMICS
Tutor’s name: Benjamin Anosike
Word counts: 1770
Date 2020
Table of Contents
1.0 Introduction
2.0 The economic nature of my given country
3.0 Specialisation and division of labour
4.0 Supply and demand in the economy
5.0 Market failure and government intervention
6.0 Conclusions
7.0 References
1.0 Introduction
Thailand is found within the middle of the geographic area with a locality of 510890
km². It consists of 2 broad geographic areas, a bigger main sector within the north
and a smaller earth extension within the south. Secondly, the population of Thailand
is 69875158 (December 5, 2020) that is equivalent to 0.9% of the overall world
population and its population density is 137/km².
Its gross domestic product size is some USD500 billion (by the market rate of
exchange method) and that is the second-largest economy in the Association of
Southeast Asian Nations behind Indonesia. The unemployment rate in Thailand is a
pair of 0.9%. Therefore, the amount of jobless jumped by 342.8 thousand from the
previous year to 723.9 thousand people thanks to prolonged COVID-19 Shocks.
Finally, the three principal economic sectors of the country are agriculture, services
and producing.

Main Body
2.0 Describe the economic nature of your given country
An economy is a system whereby goods are made and exchanged. While not a
variable economy, a state can collapse. Therefore, there are 3 main kinds of
economies free market, command, and mixed economy. Besides a traditional
economy relies on ancient times and is the most basic type of economy and such
economies focus on agriculture, cattle herding, fishing, etc. A free-market economy
typically happens in democratic states and individuals and businesses will make their
own decisions. Whereas, a command economy is where the state’s central
government make all of the country’s economic decisions. Finally, a mixed economy
combines elements of free-market and command economies. Therefore, Thailand
follows a mixed economy system in which a variety of private freedom combined
with centralized economic planning and government regulation with the private
sector, the main engine of growth (GDP around USD500billion).
Food, water, healthcare, and, housing are the fundamental needs of a country
(Needs are limited). On the opposite hand, wants are desires that can be glad by
goods and services (Wants are unlimited). However, in Thailand location, wellbeing,
and socio-economic standing are what people say they need, and the extent to
which they feel they have satisfied their needs [Gough et al, 2007].
The main factor of production in Thailand are agriculture, medicine, electronics,
and many others. Thailand has a labour force of 38.9 million people and its economy
is heavily based on agriculture which contributes 8.1% of the GDP and employs
20.4% of the active population. The country is the largest producer of rubber and
one of the leading producers and exporters of rice. The manufacturing sector
accounts for 34.9% of the GDP and is well-diversified, employing 23.4% of the active
population.
The economic system of Thailand incorporates both renewable and no-renewable
resources/energy which includes wind power, hydropower, and many others. The
Thai government has emphasized renewable energy sources within the country. The
ministry of energy issued a revised Power development plan (PDP). Specializing in a
goal that generating capacity of renewable projects will represent 15-20% of total
power consumption in the country by 2036. By the tip of 2017, Thailand's existing
power generation capacity was 49,047.54MW.

Opportunity cost is the next best alternative forgone. Therefore, I am going to use
Thai silk and fruit soap to demonstrate the opportunity cost and construct the PPF
graph.

3.0 Specialisation and division of labour
The economy is divided into five sectors primary sector, tertiary sector, secondary
sector, Quaternary sector and Quinary sector. Primary sector of the economy is that
extracts or harvest products from the earth. Secondary sector of the economy
produces, finishes well from the raw materials extracted by the primary economy.
Whereas, the tertiary sector is known as the service industry. This sells goods
produced by the secondary sector. However, the Quaternary and quinary sector are
closely linked with the services of the tertiary sector. Thailand is Southeast Asia's
second-largest economy with the primary sector being the main engine of growth. It
also has a strong industrial sector (40% of GDP). Although historically agricultural
development has competed for a serious role in the transformation of Thailand’s
economy and it accounts for 9% of the country’s GDP
Thailand specializes in natural rubber and rice production and is the biggest
exporter in the world, it has a 33.3% share of a worldwide export market that is
worth USD13.9 billion annually. Secondly, the global rice export market is worth
USD25.4 billion annually and is the second-largest exporter with a 22.7% market
share. However, there are some advantages and disadvantages due to specialization,
for example, specialized workers tend to get higher pay and their specific skills will
be improved. Hence, workers become quicker at producing goods and productivity
also increases. Secondly, the biggest disadvantage is the workers get bored of doing
the same job, which hampers the quality of the product and eventually they will be
replaced by machinery.
MC plastic co. LTD one among Thailand’s rubber manufacturing companies.
Nonetheless, the company may use the division of labour to its maximum potential
to its advantage. Division of labour means the separation of tasks where each worker
performs a specific duty. Therefore, the efficiency of the work increases significantly,
the workers become more skilled and the company can make mass production.
Although it can generate some complications as well, for instance, workers get
skilled and get bored which may hinder the product quality. However, the problem
can be tackled by giving bonuses and extra pay to the worker to motivate and make
them more dedicated to their work.
4.0 Supply and demand in the economy

Thailand’s total USD239.9 billion in 2019 imports interprets to abruptly USD3500 in
yearly product demand from every person which includes many merchandises, one
amongst that is electrical machinery and equipment. It bares 18.1% of the total
imports and worth USD43.4 billion annually (2019). However, it falls under both
individual and market demand which varies depending on the factors of the
demand. Firstly, the price of the product, the higher the price of goods & services the
lower the quantity demanded and vice versa. Secondly, the extent of income of the
consumer, as wishing for something doesn't establish a demand however
additionally the flexibility to afford it. Demand fluctuates from person to person
based on their preferences (taste & fashion) and different age of people. Lastly,
speculation on future price where potential buyers hold back for the potential rise
within the market value that end up in a financial gain or profit.
Thailand’s total USD245.3 billion in 2019 exports translates roughly USD3600
(Supply) for every resident which includes several supply/exports, one of which is
rubber (Thailand is one of the biggest suppliers of rubber in the world). It bares 6.3%
of the total exports and worth USD15.3 billion annually (2019). However, it falls
under a different category of supply which swings based on the factors of supply.
Firstly, the price of the good, when the market price is low, the business/firms supply
less of the product and vice versa. Secondly, expectations of price increase in future,
an increase in supply as well. A decrease in labour & technology enhancements also
expands supply. Lastly, supply is also affected by government tax & subsidies, laws &
regulation and weather & geographical factors.
A shift in supply and demand is demonstrated in the graph below using two products
of Thailand, rubber & machinery respectively (R1 and M1 are on the equilibrium
point)

5.0 Market failure and government intervention
Thailand produces concerning 2 million tonnes of plastic waste per year or around
12% of the total waste, as claimed by DPC (Department of pollution control), of
which only 25% is recycled. Hence, it is a partial market failure and the reason
behind it is negative externalities or lack of knowledge. However, a market failure
occurs when the price mechanism fails to ensure allocation & distribution of scarce
resources. Externalities are of two types positive and negative; it impacts on the
third party who did not decide to consume nor produce the good. Therefore, these
are called demerit goods which hinders or damage the consumer of the good.
Furthermore, the country’s focus is to have 100% recycled plastic waste by the year
2027.
Thai Government intervenes each year in the rice market to support millions of
farmers. The govt is paying 15000baht (370pounds) per tonne for benchmark 100%
B grade white rice, that is twice the market price. Government intervention is when
the government gets involved in the market & take action to correct the market
failure to improve economic potency. However, during this case, the government
does it by market stabilization (Price Control), they are of two varieties, Minimum &
Maximum prices. Therefore, the government sets the guaranteed minimum price of
the rice that no business will charge below. They are used to increase the income of
the farmers. Nonetheless, it is a victim of advantage and disadvantage. The
advantage is businesses will abide by the rules and regulations designed by the
government which will limit monopoly power. Scale back differences and poorness
through the tax and profit system. The disadvantage is that the government

generally get influenced by powerful pressure group, deterrence effects of upper
taxes and welfare programmes and many more.
6.0 Conclusions
Based on the top analysis, this can be concluded that Thailand is a developing
country. Starting from opportunity cost, division of labour and its advantage, supply
and demand of the Thai economy and the way it changes over a while and last,
government intervention & market failure, everything has been explained. Moreover,
many suggestions got to boost the economy of Thailand.
7.0 References
 Demand & Supply (2019). Thailand Exports & Imports. [online] Available from:
http://www.worldstopexports.com/thailands-top-10-imports/ [Accessed 5th
December 2020]
 Factors of Production (2018). Economic nature. [online] Available from:
https://www.nordeatrade.com/fi/explore-new-market/thailand/economical-
context [Accessed 3rd December 2020]
 Geography of Thailand (2009) Introduction. [online] Available from:
http://www.sailingtourphuket.com/hidden/geography-of-thailand.html
[Accessed 1st December 2020]
 Government Intervention (2012). Thai government’s rice intervention. [online]
Available from: https://uk.reuters.com/article/us-thailand-rice-factbox/factbox-
how-the-thai-governments-rice-intervention-works-idUSBRE8771IP20120808
[Accessed 7th December 2020]
 Thailand population (2020) Introduction. [online] Available from:
https://www.worldometers.info/world-population/thailand-population/
[Accessed 1st December 2020]
 Thailand’s GDP &economy [2020) Introduction & Main body. [online] Available
from: https://thaiembdc.org/about-thailand/thailand-in-brief/ [Assessed 1st
December 2020]
 Trading Economics (2019). Thailand Unemployment Rate. [online] Available
from: https://tradingeconomics.com/thailand/unemployment-rate [Accessed 1st
December 2020]
 Wilailuk Okanurak and Wanwisar Nakarat (2018). Renewable energy in Thailand.
[online]. Available from: https://www.lexology.com/library/detail.aspx?
g=ff8dba22-6fd0-40a8-814d-770336b674dd [Accessed 3rd December 2020]