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Introduction

Assignment 1 Economics QUESTION 1 Within today?s unstable economy, it can be difficult for any business to produce goods and services to satisfy the wants and needs of an ever growing number of consumers. This assignment question will demonstrate the above at through models, diagrams, symbols, number tables and detailed analysis. In the current economic climate, the majority of entrepreneurs work within a mixed economy with most businesses and consumers coming across some forms of politico-economic issues. A farmer for example has many economic priorities. Firstly a farmer will look to utilise natural resources of his land which includes the ground beneath and air above. Land has been defined as ?one of the four basic categories of resources or factors of production? (www.econguru.com) In order to utilise all possible resources the farmer will consider production possibilities of the land, what the value of production will be and if there will be any labour cost which would impact overall profit from the product. The farmer will need to consider alternative combinations of goods produced if the economy fully uses all available resources (www.econguru.com) For example Crop A is cheapest to grow but is not popular resource within the local economy. If the farmer chose a combination that does not fulfil the needs of the consumer then there will be a delta value and a state of disequilibrium will be created as the production value of the chosen combination of resources will not offset each other which will create a shortage of a needed resource (not chosen by the farmer) and a surplus of an unwanted resource. In order to be a successful entrepreneur the farmer will need to consider the need of the consumer and organise will need to consider the need of the consumer and organise production to fulfil the need by bringing together labour, capital and land as well as managing the risks therein. ...read more.

Middle

Imperfect competition is imperfect because supply, demand, and price are not the only factors that have to be considered. In theory, imperfect competition occurs where the competitive situation in any market where conditions required necessary for perfect competition are not fulfilled, a market structure which does not meet the necessary conditions for perfect competition. It will exist where the numbers of sellers or buyers are finite, the product is not the same amongst sellers, if one must pay for the right to buy and sell a product or service, buyers do not know about everything about the seller, or where sellers do not know about everything about the buyers. If anyone of these conditions is met, then competition will be imperfect because there will be at least one more variable, which will make the economic curve more complex than a simple price as a function of supply and demand. There are three types of competition within imperfect competition, these include an oligopoly, monopolistic competition and a monopoly. 1. An Oligopoly This is where there are a number of firms with only a small number that are dominate in the market where an Under an oligopoly every firm has a distinguished product which often comes with a robust brand identity. As several brands can be competing within am identical market. Therefore brand loyalty among customers gets encouraged via advertising as well as promotions. The firms in the market are regularly believed to contend in a form of non-price competition. Therefore prices will often remain stable for extensive periods which only get disturbed by pricing wars. While brand loyalty will allow a degree of price control many businesses will often follow the changes to price of its leader. Therefore they will tend to be interdependent. Although in extreme cases firms may even fix prices. This is sometimes illegal and can be known as a restrictive trade practice. ...read more.

Conclusion

The migration of labour, as the United Kingdom is in the EU this allows free movement of labour. A rise of people looking for work in the United Kingdom makes labour migration an significant factor when determining the labour supply obtainable to various industries. The wage differentials will in some way act as compensation for individuals who will work antisocial hours and either who are open to various degrees of hazards at the workplace, both in short or the long term run. The elasticity of labour supply to various occupations will measure the amount to where labour supply will respond to changes in wage rate within a period of time. In minimal skilled occupations labour supply is expected to be elastic. Which this will mean that labour is readily available and people are employable at a objectively low wage. Whereas jobs that require particular skills including lengthy training then labour supply will be more inelastic. In various professions there will be artificial barriers to worker entry. For example surveyors will need higher level qualifications which will make the supply of recently qualified candidates to the occupation relatively inelastic in the short term and is a reason as to why they may have a higher salary than the average. The income effect, this is where higher real salaries increases the possible income that can be earned from a job, however that will also mean that time that has to be spent at work in order to earn adequate amounts to pay for a specific items declines. Basically with higher wage levels that mean that a potential target wage may be accomplished with less hours of a labour supply. Therefore the income effect may persuade individuals to work fewer hours and therefore enjoy more leisure/free time. The substitution effect of a greater salary should explicitly give individuals an reason to work longer hours because of the added financial rewards of doing the extra work is raised and with the opportunity cost of not working being increased. ...read more.

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