"Discuss and evaluate the proposition that perfect competition is a more efficient market structure than monopoly."
ECONOMIC'S ESSAY "Discuss and evaluate the proposition that perfect competition is a more efficient market structure than monopoly." Adam Smith said that competitive forces function like an "invisible hand" to ensure that people pursuing individual interests simultaneously serve interest of society. Competition among economic agents would therefore narrow selfish interest of each person in a sociable desirable direction1. Therefore perfect competition would lead allocative or economic efficiency. On the other hand monopolies could lead to lower cost due to economies of scale. Although in the real world it is very difficult (almost impossible) to have a pure perfect competition or monopoly, both of them, in theory, bring benefits to society. In order to evaluate whether perfect competition is a more efficient market structure than monopoly, there has to be a direct comparison between the two market structures to draw conclusions. In theory, the existence of positive economic profits in any given industry attracts new firms, therefore the supply increases and the price lowers to the point where normal returns are earned by the representative firm. Perfect competition is a market model. It has various characteristics. The market contains a large number of buyers and sellers. Each buyer and sellers has a perfect knowledge about prices and product. The product being sold is
"Discuss the Effectiveness of Supply Side Policies in Improving UK Economic Performance"
Kanak Shah Economics AS/b David Conquest "Discuss the Effectiveness of Supply Side Policies in Improving UK Economic Performance" Supply side policies are those designed to increase an economy's long-term growth and so increase aggregate supple or production. In terms of a graphical analysis, if supply side policies work, the long run AS (aggregate supply) curve would shift to the right. A number of various policies have been implemented to increase aggregate demand (AD). The first is deregulation. This involves removing laws and regulations which restrict competition. With deregulation, more firms will compete in the industry and the total supply of the good or the service will increase. A good example to look at is airline deregulation. All Europe flight routes were regulated by governments. There was not very much competition. With the introduction of deregulation, any airline company can fly on any routes that they bid for e.g. EasyJet and Buzz (all low cost airlines). This increases passenger numbers and there is more aggregate supply in the industry. There are a couple of advantages of deregulation. Less regulation means that fewer regulators need to be employed by the government or local councils. Also less regulation should encourage more competition. However, many rules affecting business were to stop exploitation: is this acceptable nowadays? Another
Examine the roles and place of trade blocs in the global economy.
Economics - Mr. Russell " Free Trade and comparative (economic) advantage are the main justification for international trade." i) Examine the roles and place of trade blocs in the global economy. A trade bloc or free trade area is a group of countries between which there is free trade in goods and services but which allows member countries to set their own level of tariffs against non-member countries. The European Union is the largest multi-national free trade bloc, followed by NAFTA (North American Free Trade Agreement), MERCOSUR and AFTA (ASEAN free trade area). NAFTA is a free trade agreement involving Canada, Mexico and the USA. Of the free trade unions NAFTA is the most limited, as it is restricted to eliminating tariffs, quotas and other trade impediments amongst the 3 countries involved. There is no common customs or tariff agreement for imported goods and services or any free movement of citizens allowed. It is a very powerful trade bloc, because of the economic and political power of the USA. NAFTA is in the process of becoming a free trade zone, as it has not reached this goal completely, since there are still a number of industries, which receive protection, such as citrus, lumber and Mexican petroleum. MERCOSUR is a trade agreement has members in the South America and within ten years will represent possibly almost all the countries on the continent. Not
Globalization is undoubtedly not a single phenomenon.
Globalization is undoubtedly not a single phenomenon. The concept of globalization has become a catch-all concept to describe an array of developments and forces changing the social and economic structures of the world. Thomas L. Friedman, author of The Lexus and the Olive Tree, describes globalization as "a movement that enables individuals, corporations, and countries to reach around the globe farther, faster, deeper, and cheaper than ever before" (Oneworld.org.) Globalization is based on the concept that the globe is a single unit for decision-making. It is the expansion of free market capitalism, or simply put, is the means of free movement of goods, services and capital throughout the world. In addition, with current technological advancements, globalization has become more accessible. Now, businesses can manage overseas operations with more control through the use of the Internet and improved telecommunications. Advances in communication and transportation technology, combined with free-market ideology, have given goods, services, and capital extraordinary mobility. Northern countries want to open world markets to their goods and take advantage of abundant, cheap labor in the South, policies often supported by Southern elites. They use international financial institutions and regional trade agreements to compel poor countries to integrate by reducing tariffs,
Monopolies that make super normal profits aren't in the public interest because they could charge a lower price than they do.
Title: Monopolies that make super normal profits aren't in the public interest because they could charge a lower price than they do. Introduction: Monopoly is an emotive word, and the immediate reaction is that it should be replaced with competition. In this investigation we are going to look at what is a monopoly, what are barriers to entry and what types of barriers there are, what are normal and supernormal profits and to they bear any benefits to the public. What is a monopoly? Monopoly is a market situation in which there is a single seller of a product and there are no close substitutes of this product in the market. The firm has all the market to its self and the customer depends on the firm for the supply of the product. The monopolists are the industry and the firms demand curve is also the market demand curve. In this case the firm has some discretion over the price it charges. The firm may increase or decrease the price with out fear of retaliation form other firms. We may consider that there is no interdependence in this market, there in one firm only. Finally it is worth mentioning that the firm may change its demand curve by for example, advertising. (Introductory Economics, a first approach to the study of economics by Mike Cunningham 1994) Why do monopolies exist? There are several reasons. The source of Polaroid's monopoly power is its
What's the definition of Globalisation?
Contemporary Marketing Issues Globalisation From: Petra Belo To: Indra Athi Course: BA Marketing Management What's the definition of Globalisation? Globalisation is a term that is frequently used but hardly ever defined. It refers to the rapid increase in the share of economic activity taking place across national boundaries. This goes beyond the international trade in goods and includes the way those goods are produced, the delivery and sale of services, and the movement of capital. Globalisation it is also an idea of our time, highly contested and widely accepted at the same time. It relates to the economy, politics, culture, society, and generally, with everything we deal with in our everyday lives. Can be thought of as a process, in which economic markets, technologies, and communications gradually can to exhibit more "global" characteristics, and less "national" or "local" ones. In this scene, it is the millions of daily decisions concerning technology choices, market structure, and communication patterns that "drive" the globalisation process. In altering these patterns, globalisation will generate a variety of consequences, both for the world as a whole, and for individual countries. These consequences will be both economic and environmental in nature. Introduction Held et al (1999) separate the theorists of globalisation into three different schools the
Market for alcoholic drinks
Section B data response Q26: Markets for Alcoholic Drinks (a) Define the term 'demerit good'. A 'demerit good' is a good or service, of which consumption causes negative, affects on the consumer themselves. An example of a demerit good is alcohol. Due to the effect these goods or services cause, the government often imposes heavy taxes on the product to persuade people not to use them. Often a ban is imposed to help this, for example smoking in public places was banned by the Government in 2007. (b) Using Extract A identify two points of comparison between the prices charged for alcoholic drinks by different retail outlets in London in March 2008. From Extract A, we can see the price of a pint of beer, glass of wine and measure of spirit; all vary in price from different retail outlets. In a public house in central London, it costs almost 3 times more to have a pint of beer than in a supermarket which would only cost you around £1.20. From the table we can see on average buying alcohol from an off-licence would cost you only a few pence more than in a supermarket. The most expensive place therefore to buy your alcohol from would be the public houses, costing around £2.50 a drink. It is more expensive to go to a pub in London than somewhere further up North. The reason it's very expensive to drink in a pub because you, as a consumer, are paying for the overheads. The
Flower Industry in Netherlands
Flower Industry in Netherlands Haw Hsin Yang Rutgers University-Camden A) International Trade * Balance of payments-analyses and implications Netherlanders create a total GDP of €453 billion in 2003 which equals €27,900 per capita. Export and import of goods as % of GDP respectively reached 58% and 68%, and she is the sixth largest exporter and investor in world. A sizable current account surplus is produced by food processing, chemicals, petroleum refining, and electrical machinery. The country continues to be one of the leading European countries for attracting foreign direct investment. Though economic growth slowed considerably in 2001-03, as partly the global economic slowdown, for the four years before recession, annual growth of GDP averaged nearly 4%, which exceeded the EU average. Year 998 999 2000 2001 2002 Trade balance Amount Million $ 20430 6034 7519 20913 25754 Current account balance Amount Million $ 3031 2996 4561 8144 9866 Capital and Financial account balance Amount Million $ -15370 -17607 -4341 -8495 -9999 Overall balance Amount Million $ -2339 -4611 220 -351 -133 Source: IMF Financial Statistics Year Book 2003 * Trading relationships The Netherlands has been a leading trading nation for many centuries. Her prosperous and open economy depends heavily on foreign trade. In 1602, the very first international
‘To What Extent Can the Period 1945-70 Be Termed the Pax Americana With Regard To the Management of the the international economy?
LONDON GUILDHALL UNIVERSITY DEPARTMENT OF ECONOMICS ES325 INTERNATIONAL ECONOMIC HISTORY SINCE 1870 Essay title, 'To what extent can the period 1945-70 be termed the Pax Americana with regard to the management of the international economy' By: Abzar Choudhury Author: Abzar Choudhury Student ID: 97/281-766 Date: 26/04/00 Word count: 2,279 Pax Americana The Roman Empire evolved from centuries of hard labour and intellectual economic co-ordination such as their road networks of which the remains that has still survived in Europe and Asia to this present day is no comparison to the development of the Bretton Woods agreement of 1944. Although, the old Bretton Woods agreement had a short life, which lasted from 1944 to 1971, the period of 1945 to 1970 can certainly be termed the 'Pax American' with regard to the management of the international economy. The period as mentioned above with regard to the Bretton Woods agreement is termed 'Pax American' because America was the main driving force behind the management of the international economy. Now, the questions we should be asking are how was America able to lead the international economy and was it successful? Following the experience of disharmony during the 1930s let to the establishment of the Bretton Woods system after a NU's Conference that took place during July of 1944 at Bretton Woods, New Hampshire,
Keynesian Policy
Sabrina Sharawy Introduction to Macroeconomics October 9th, 2004 Keynesian Policy Keynesianism is an economic thought, building upon the ideas of John Maynard Keynes. Keynesian economics is a theory of total spending in an economy and of its effects on output and inflation. This economic approach is characterized by a focus on aggregate demand, the amount firms and households plan to spend at each level of income, rather than supply. J. M. Keynes' book, General Theory, has proved to be probably the most significant social science study of the 20th century. It quickly and permanently changed the way the world looked at the economy and the role of the government. However, in practice, this economical view had proved itself to have its advantages as well as its disadvantages. One of the key propositions of Keynesianism is that there is no natural tendency for capitalist market economies to correct economic stocks and maintain equilibrium at full employment. Before Keynes it was well known that there was a regular pattern of "boom and slump", but it was assumed that economies quickly righted themselves without government intervention. Keynes denied this. He stressed the role of government is "to run counter-cyclical budgets, rather than the permanent fiscal prudence advocated by others". We cannot say that Keynesians advocate government spending, taxes, and the money
