Economics Commentary. This article deals with the development of African countries through export-led growth and export performance.
This article deals with the development of African countries through export-led growth and export performance. Export-led growth is economic growth based on increasing exports and export revenue, a key factor in Aggregate Demand. This would mean GDP increases, resulting in higher incomes and growth in the domestic economy. This can be achieved by exploiting a country's comparative advantage. For this to happen, several criteria must be met, such as liberal trade and minimal government intervention. However, there must also be a strong provision of infrastructure. This is highlighted in the "weak supply capacity-limited ability... in Africa". Indeed, the UNCTAD senior economist Samuel Gayi raised the issues of a "shortage of reliable electric supply ... banking services and efficient transportation". Additionally, Africa's primary export is agricultural products. Due to technological improvements such as enhanced fertilisers and increased mechanisation in developed countries, supply of agricultural products has dramatically increased. Protectionist policies such as subsidies have also lowered prices. Because demand for agricultural commodities is very income inelastic, demand has barely changed. This means that prices of agricultural products have fallen dramatically. At the same time, people are now consuming more manufactured goods, which are income elastic. This increases
To what extent does the present economic crisis spell the end of capitalism as we know it?
To what extent does the current economic crisis spell the end of capitalism as we know it The debate on the credit crunch and the subsequent recession of the economy both in the US and Europe has drawn a lot of emotions among analysts and more so sociologists. In the popular media, press, textbooks and social commentary forums have moved quickly amid the current recession and credit crunch to demonize capitalism. Historically, the word capitalism has been used time and again to describe and explain the absolute worst in human nature with little credit given to it. Going from the African slave trade, the Great Depression of 1930's, the decimation of Central America, colonization of Africa to the Enron, inside dealing, corruption greed and evil have been used synonymously with the term capitalism. Unfortunately, these critics, not guided by economic wisdom have managed to convert a few fellows into their school of thought, untested and unclear as it is with the best example in terms of the Soviet Union long forgotten. In the confusion presented by modern life and change in market conditions, critics of capitalism are clasping their fingers (Butters, n.d.). They feel so satisfied that their predictions are coming into reality. Alas! Where is the reality? That capitalism cannot sustain itself as shown by the credit crunch. I say unto them that believe so, woe unto you. This is
![Economics Commentary- Market Failure. In the article, the negative externality was the spilling of toxic chemicals that caused large-scale environmental pollution[1]. The full cost of this polluting is not reflected in the market prices of](https://mbt-essays-prod-public.s3.eu-west-1.amazonaws.com/936864/listing/936864_1.jpg)
Economics Commentary- Market Failure. In the article, the negative externality was the spilling of toxic chemicals that caused large-scale environmental pollution[1]. The full cost of this polluting is not reflected in the market prices of
Commentary 1 Negative externalities occur, when the production or consumption of a good or service creates an external cost that is damaging to a third party. These externalities produce costs to the society and environment, which are not reflected fully in the free market prices. The producers or consumers that cause these side effects impose those costs on others not responsible for instigating the effects, thereby leading to a market failure. For example, if a paint factory releases toxic fumes that are harmful to the local populace, then the social costs outweigh the private costs (costs born by a firm or an individual from the production or consumption of a good or service) and factors of production that the firm has to pay. The fumes emitted may cause cancer or respiratory problems in the people living nearby, thereby creating a larger social cost. Goods with a negative externality are called demerit goods. In a free market economy, demerit goods are overprovided, and therefore overconsumed. Cigarettes, for example, are demerit goods, as smoking has a negative effect on a third party, like the consequences of second hand smoking. In the article, the negative externality was the spilling of toxic chemicals that caused 'large-scale environmental pollution'1. The full cost of this polluting is not reflected in the market prices of the goods that the Biaoxin Chemical
IB Price Floors Commentary. Rice from Thailand was being sold at 13,00 thousand baht, however the price floor that the government has introduced has pushed the lowest price for rice up to 15,000 baht
Price floors are instruments that are used by the government to raise the minimum price at which the goods can be sold at, hence increasing the quality of life of the people that are producing the good. Rice from Thailand was being sold at 13,00 thousand baht, however the price floor that the government has introduced has pushed the lowest price for rice up to 15,000 baht which is significantly higher than the previous price. This will cause the supply curve to shift to the right as shown in diagram 1 below. The effect of the price floor is shown in diagram 2 below. Before the government decided to add the price floor, the market equilibrium was at quantity Qe at the price Pe. The government decides to impose a minimum price of Pmin. This is done to increase the revenue of the farmers of rice, however this creates a new problem. At the new price of Pmin, only Q1 will be demanded, however Q2 will be supplied. If the government decides that it is not going to intervene any further, the quantity that is consumed will actually be reduced from Qe to Q1. The excess supply that is generated will create problems. As the farmer whave an excess supply from Q1 to Q2. They will try to get rid of the stock, even if it means that they have to sell it at a price that is lower than the market price that is set by the government. To resolve this issue, the government needs to intervene
Demand-deficient Unemployment article commentary.
Commentary 3 Demand-deficient unemployment is a type of unemployment associated with a cyclical downturn of the economy. If an economy is in recession, a period of negative growth over two or more consecutive quarters, aggregate demand (AD) falls, as consumers are less willing to spend on goods and services, leading to a fall in demand for labour, as firms decrease their production. Inflation is the persistent increase in the average price level in the economy over a given period of time, usually measured through the Consumer Price Index (CPI). It is the rate at which prices of goods and services are increasing and the value of money decreases. A minimum wage is the lowest wage an employer may legally pay to employees. In the article, the minimum wage of low-paid workers has not been increased, although this means that 'their wages fail to keep pace with inflation'1, in order to stave off demand-deficient unemployment caused by the economic crisis. The decision was made to 'stop vulnerable workers from losing their jobs in a labour market that had deteriorated rapidly.'2 However, this means that low-paid workers have less disposable income available which may lead to purchase power decreasing and increasing inequality in the economy. Graph showing a decrease in AD (Fig 1) Demand-deficient unemployment (Fig 2) Average AD AD LRAS Average AS Price Real
Scottish government reintroduces alcohol pricing bill commentary
Scottish government reintroduces alcohol pricing bill - commentary http://www.bbc.co.uk/news/uk-scotland-scotland-politics-15525950 Scotland has long acknowledged its country's unhealthy relationship with alcohol as one of its biggest area for health concerns. A recent proposal submitted by one of its political parties, the Scottish National Party, seeks to change this by implementing a minimum price for each unit of alcohol, which has resulted in much controversy and debate. A price floor is a price level above the equilibrium price that a government chooses to set as the minimum price at which producers are allowed to sell their goods and services. In the case of this news article, the main reason why Scotland's government wishes to impose a minimum price per unit of alcohol is that it wishes to discourage people from consuming as many alcoholic products. If their proposal is adopted and officially put into place, Scotland will be the first country in Europe to have such a limit on alcohol purchases. The more odds is that there will be a noticeable decrease in the quantity of alcohol consumed. This will in turn lead to fewer problems, in the form of drunk drivers, health issues, etc. The largest effect would probably be on the cheapest and strongest drinks, which is why the proposal has attracted a wide range of support from health campaigners. The diagram below shows
Explain how barriers to entry may affect market structure
* Explain how barriers to entry may affect market structure Barriers are defined as anything that deters entry into an industry or that prevents exit from an industry. Examples of barriers to entry include patents, economies of scale, and trademarks. Market structure is an organizational and characteristic of a market. There are four different market structures that could be used to explain how firms operate. In perfect competition and monopolistic competition, there are no barriers to entry. This means that other firms can enter or leave the industry freely. In oligopoly and monopoly, on the other hand, high barriers to entry exist and this prevents other firms from entering the industry. This essay will examine the relationship between barriers to entry and market structure In perfect competition and monopolistic competition, where there are many small firms, firms are able to enter or leave the market freely. This means that the existing firms do not have the ability to stop new firms from entering or leaving the market if they so desire. In the case where the existing firms are making abnormal profits, the positive economic profit arising when AR > AC, new firms are attracted into the industry because of the absence of entry barriers and by the opportunity to make abnormal profits. As more and more firms enter the industry, the supply curve for the product will start
Allocation of Resources
Economics Assignment Rishika Assomull Using demand and supply analysis, explain how resources are allocated through changes in a market economy. We are all aware of the fact that in this world, there are limited or scarce resources. We have infinite wants, but we cannot have it all, so we have to pay an opportunity cost being something sacrificed in order to gain something else. In an economy, those who produce goods (this case being individual organizations) have to know what to produce, how to produce, and for whom to produce to satisfy consumer desires with their resources of land labor and capital. Markets are usually a good way to organize economic activity as individual firms allocate resources through the decentralized decisions of who they interact with each other. All individual firms aim to make profit, but the forces of demand and supply control the profit. Market forces of consumers and producers determine the price of goods and services. There is perfect competition, causing the prices of the goods to be constantly remaining the equilibrium of supply and demand - this way consumer preferences influence demand curves which translates into prices, and suppliers react to the prices so they can alter their factors of production according to what the consumer's desire. As prices increase, the demand for
The luxembourg Economy (Complete Review)
The Luxembourg Economy Y11 Economics - Miss Mikhael / Mrs Gabrael Edward Dababneh 22620266 Table of Contents Luxembourg- Prologue 3 Luxembourg- Quality of life and Social indicators 3 Luxembourg- Quality of life and Social indicators CONTINUED 4 Luxembourg- Employment and Unemployment 4 Luxembourg- Employment and Unemployment CONTINUED 5 Luxembourg- Recent patterns of inflation 5 Luxembourg- Recent Patterns of and Domestic Production and Trade 6 Luxembourg- The role of Government within Luxembourg 6 Luxembourg- The role of Government within Luxembourg CONTINUED 7 Luxembourg- The effects of Globalisation 7 Luxembourg- Prologue Luxembourg is a highly industrialised and prosperous economy, which is currently recovering from the economic turmoil of 2009 and more recently the European debt crisis. These downfalls have followed long periods of economic success and constant growth giving Luxembourg a Gross Domestic Product (GDP) to envy. Luxembourg has been commended for its financial services and banking ability which have consistently been industries fuelling its economic development. As a nation it is a relatively small state with a population of around 480 000. Due to this minute labour force there are a range of implementations guaranteeing a constant flow of employment, which have also aided in insuring an adequate quality of life. The Luxembourg
Notes on Market and Demand
MARKETS A market is any effective arrangement for bringing buyers and sellers together, not necessarily face to face Eg local, national and international Because resources are scarce they must be allocated to their best (most valued) use. In a free market economy price changes are signals to producers - who are then able to respond to the demands of consumers -, in knowing the demand that consumers have over their product. i.e. supply and demand. So when the price of the product rises - ceteris paribus (e o price do resource continues the same) - the producers know that consumers what more, and therefore gain more profit. DEMANDS Demand is: - 'that quantity of a good or service that would be bought at each and every price over a period of time' - demand is the amount the consumers are willing and able to buy given the price of the product This means that demand combines: EFFECTIVE EMAND * The desire for a product * A willingness to pay for it * The ability to pay for it In other words to count as demand, the demand for something has to be what is known as effective demand. This means that the demand has to be backed by a willingness AND ability to pay The law of demand This assumes that consumers act in a rational manner, so that, other things being equal, the lower the price of a good, the greater the quantity demanded and the higher the price, the less