Economic Model Of Price Determination In A Market Economics Essay

Economic Model Of Price Determination In A Market Economics Essay As an economic model of price determination in a market, the relationship between supply and demand is a topic being discussed for a long time. We may think of demand as a force which tends to increase the price of a good, and also that supply as a force which tends to reduce the price. According to the microeconomics theory, the price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D).It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium of price and quantity. When the two forces balance one another, the result will be that the price neither rise nor fall, but stay stable. This is the analogy that leads us to think of the stable or natural price in a particular market. It is called the equilibrium price. As we know, iPhone now has attracted great attention and become a heated topic. Here, we take it for example: if every consumer wants and can afford an iPhone, and APPLE Company is willing to provide each of them one iPhone, the demand and supply is in equilibrium status. In addition to the theory above, is there any relation among supply demand and the market? How to measure the relation? Is there anything else to measure the functions of supply and demand in market? Or they have some links when influencing the market? There are three theses concerning this topic for further discussion. The first thesis I have chosen is written by David Huffman. The author insists that supply and demand is measurable. (Another thesis I introduce below is the opposite: ) He tries to resort to retail Market Place to addresses these questions because he thinks the database of Retail Market Place can provide a direct comparison between retail sales and consumer spending by industry and it can therefore measures the gap between supply and demand. In his thesis, he holds the view that there are two ways by supply or demand to measure activity in a retail market. The article is mainly divided into three parts to probe into this topic: Market Supply (Retail Sales); Market Demand (Retail Potential); The Leakage/Surplus Factor (Supply and Demand). One point must be emphasized is that Leakage in an area represents a condition where a markets supply is less than the demand. For such factors, it seems that to measure the market by using supply and demand as a tool is doable and useful. There is another thesis by an anonymous author also discusses the relation of supply, demand and market. Ordinarily, there always exist different price levels where individual buyers and sellers are satisfied so that the sum total will create a market or equilibrium price. But in reality, there will be some exceptions, because a market price is not a fair price to all participants in the marketplace. Not only when there is no increase in the quantity of product demanded, but also when there is a shift in demand due to changing consumer preferences will influence the market price and reach a new equilibrium. So does the reaction to the short run or long run changes. The charts below are separately describing change in equilibrium price and shift in demand. In most regions, iPhone is not only a cell phone but more than an apparatus of making telephone calls and writing text messages. iPhone has been a symbol of some players, and people distinguish their identity from using iPhone: They have a keen sense of popularity; They enjoy being a member of their circle and they like communicating with real friends or net friends; They eagerly break the tradition and desire something newà ¢Ã¢â€š ¬Ã‚ ¦ Though the price of iPhone is high enough to restrain most consumers, many people choose iPhone for proving themselves different. Such relation of supply and demand decides that iPhone occupies in the High End of the market. If the price of iPhone decreases, on one hand, it will surely attract more consumers, but on the other hand, many previous buyers will quit because iPhone is no longer unique and rare. But in the article written by JUSTIN WOLFERS in 2009, the author argues that supply and demand are difficult to measure. At the very beginning of the article, the author raises the question of Catherine Rampell, Does lowering the price of broadband increase its use, which brings a research and a series of data and diagram trying to figure out the demand curve. However, the reality is always beyond the theory only in the textbook. Sometimes to our surprise, the result is different though the source of data is the same. The author gives an example to illustrate it: a supply-obsessed economist were interested in asking Does increasing use of broadband raise its price? so that he might examine data on broadband prices and adoption rates. He expects to see more broadband correlated with higher prices because the supply curve is upward sloping but undoubtedly the result will be opposite for a demand-obsessed economist. As we know, there are many types of factors taking effect. On one hand, the determinants of supply include production costs, the technology of production, the price of related goods, firms expectations about future prices, number of suppliers, etc. On the other hand, the determinants of demand comprise income, tastes and preferences, prices of related goods and services, expectations and number of Buyers. Whats more, it is believed that factoring in of Marketing also has something to do with the curves because marketing drives demand in some way. In a wide variety of historic and current examples, we find more and more evidence that with shifts in demand or in supply causing changes in price and quantity, we can explain changes in quantities as well as prices as the equilibrium of supply and demand. The changes in price and quantity are coordinated in many ways that can be not only understood but also predicted, at the premise that we understand the theory of supply and demand. As the topic of the article, the author thinks that the factors influencing the equilibrium are far more complicated so Supply and Demand Are Hard to Measure. To some extent, that is because prices and quantities are determined by both supply and demand. The author has a new idea that nationality has influence and it indeed makes a difference. It is pointed out that prices and quantities differ across countries, which breaks the traditional theory of If both curves were the same in every country, broadband prices and use would be the same in every country. Some people may even argue that income skews the opportunity cost of broadband ownership. It seems strange that iPhone sells extraordinarily well Mainland China. Maybe you will surprise that in such a developing Asian country, though a small portion of people can lead a tremendous change. Its true, and its certain that China has been the greatest purchasing power only after the USA on luxury goods, let along iPhone. Consequently, what makes supply and demand hard to measure is the reality: the world is indeed a mixture of both cases. The author owes this to an identification problem, with a bit sense of humor, which arises precisely because prices and quantities are determined by both blades of the supply and demand scissors. The example of iPhone indeed proves that demand and supply are hard to measure. Many people bought iPhone not because they need it but for other reasons. Some bought for keeping up with the latest trend, some bought because other people recommended, some bought for showing off, and some bought for having a tryà ¢Ã¢â€š ¬Ã‚ ¦ Here comes the consequence of over demand. Whats more, if the APPLE Company restricts the supply so that iPhones seem scarce to consumers, many people will squeeze and swarm forward to get simply one iPhone, even late at night before its release. Some luxury companies also promote their articles in limited edition and as a result supply and demand is unequal. We can bring the same example to every day life. If we compare the price of water to the price of diamonds, there is a dramatic difference. The price of water is very cheap and we use it everyday, not only for drinking, but also for washing cars, watering plants, and for flushing the toilets. Most importantly water is crucial for our life. Diamonds on the other hand, has no significant influence to our lives other than showing off. Diamonds are for sure luxury products, but its components are simply carbon. If we assume that the price of water is extremely expensive, would we still use water to wash our cars or flushing the toilets? If the price of diamonds are as cheap as water, will people still ware it on their fingers or as an engagement gift? It all comes down to the theory of scarcity. Water is cheap simply because its easy to get and the world has sufficient of it, diamonds are expensive because it takes millions of years to form and its hard to find. Generally, there is still something worth digesting after reading and some problems remain unsolved. With much doubt, some readers raised a list of questions. For instance, supply and demand curves must be linear? If supply and demand curves shift around in different geographical regions, or in different periods of time, then shall we get to assume that economic equilibrium is well-defined? Whether the author assumes the shifts occur because of how preferences are distributed or because preferences change, it seems that theres no guarantee that exchanges are approaching an efficient allocation of resourcesà ¢Ã¢â€š ¬Ã‚ ¦ The three theses above have a sequence from concrete to abstract. In fact, in the marketplace, it is rarely possible for supply and demand to go the path we have designed. On one hand, supply and demand can be used to describe and measure the market, but on the other hand, for the factors are numerous, the curve is a result of price and quantity as well as a combinat ion of demand and supply, and surely these reasons make the relationship of supply and demand hard to measure.

Evolution of globalization

In 1492 the process of globalization began when Christopher Columbus unintentionally â€Å"discovered† the â€Å"new world†. The   cultures   of   the Nahua, Inca, Maya, and Spanish   peoples during the contact and conquest periods (1400s-1600s) was one of the factor that led to globalization.   The different   cultural, economic, social, philosophical, and political systems of these peoples, both before and after conquest  Ã‚   cast an shadow of   these cultures, though conquered, shape the Spanish-American colonial system as it developed in these regions. The blend of different civilizations: The present linguistic situation in ‘Merida’ has engrossed its roots from the pre-colonial period of Mexico. The first   Crenellation   took   place   during the final voyage of, Christopher Columbus in the year 1502.   When his ships entered   Spain   the people over there didn’t know they were listening to the Mayan language. The first Mayan word they heard was â€Å"turquin† which translates to gold and money as wealth was the main goal of Christopher’s expeditions. Two Spanish explorers who were stranded in Mayan land   were     later found by conquistador Cortes . One of the stranded explorers was Aguilar who served as a interpreter between the two civilizations. Later ‘castellano’ language was developed and till now it is in use. The two entirely different civilizations was plunged as thick roots into the nation. Castellano Vs Maya-Yucateco : The new linguistic politics began with the catholic missionaries in the sixteenth century The Spanish priests had to learn the language of the pupils who were mostly Mayans. Formal studies of Maya- Yucateco   was done and the first dictionary was brought out in 1546. The colonization of Yucatan   was mainly   because of   the Mendicant   Landa. The learning of Maya-Yucateco continued until the eighteenth century . For many reasons there was little teaching of ‘castellano’ language to the Mayans . Linguists have divided the variations spoken by Mayans into 30 different languages. They are all included in generic term ‘Maya’. Discrimination: The language was one of the factor that     divided people from the globalization. There were the people who supported the Mayan literature and some saying that ‘castellano’   Ã‚  was something uncontrollable and inevitable, the product of modernization. Discrimination arouse for the Mayans in Merida. They were denied access to certain places and discouraged from being in others. This is a situation that is still in the existence. Mayans developed a passive resistant syncretism to the spiritual conquest that was imposed upon them. Though cultures accepted military defeat, but in an effort to keep some semblance of former lives pays a service to the Spaniard religion, still practicing the hated idolatry in secret. While the conquerors were assimilating Mayans, the Mayans were assimilating the conquerors religion.this resulted in the extension of the interrogation by Spaniards to the new world in   paradox   of     Christianity   at the time. Conclusion  Ã‚   : The evolution invoked by Christopher Columbus led to globalizationIn turn it resulted in a revolution that brought discrimination Until now it continues to be the present situation.   The endless †¦   

Outsourced

The film profiles the lives of four young Indian women who work in outsourcing jobs at a company called Genpact. l They see their work as an exciting opportunity and an important source of income for their families. They take their Jobs seriously and believe their oles are an important step towards financial security and professional advancement. By way of contrast, the film also canvasses the experiences of four Australian call-centre workers who do not consider their Jobs as careers.They are young, itinerant workers who, despite earning up to five times the wage of their Indian counterparts, do not regard their Jobs as being long- About this study guide > Key themes discussed in this study guide are: globalization, economics, business, gender, trade, society and culture. The study guide includes questions and activities to be explored before and after watching the film. e questions can be incorporated into classroom discussion or students can provide individual written responses.Th e activities in the study guide include a mixture of individual investigation, class discussion, and small group work. Specific questions and activities for students of media studies are included under a separate heading. Curriculum Links In OUTSOURCED! , filmmakers safina Uberoi and Anna Cater examine Business Process Outsourcing (BPO), focusing on an Indian company that wins contracts to take over many ‘back office' functions of companies located in developed countries.With many Western white-collar Jobs being ost to the BPO industry, the subject is a controversial topic in the world's economies. Choosing to shoot the majority of the documentary in India, they concentrated particularly on the perspective of women because it is female employment in the Indian BPO industry that is creating tremendous social change for its participants. Both Uberoi and Cater have prior

The Benefits of Organic Food to Human Health - 1193 Words

The benefits of organic food to human health. Organic refers to the way agricultural foods is produced and processed. It is using methods and materials that are of low impact to the environment. And the primary goal is to optimize the health and productivity of interdependent communities of soil life, plants and people. Research published in a 2001 study showed that the current fruit and vegetables that are conventionally grown in the United States have about half the vitamin content of their counterparts in 1963. The study was based on a comparison of published USDA figures. Produced in organic farm, organic food is grown under government supervision. Therefore it is healthier for the environment which it is produce with an organic†¦show more content†¦Organic food also has no harmful and less food additives. Antibiotics, growth promoters and other additives are added to non-organic meat during the animal s life and while the meat is prepared for consumption. Normal intensive farming methods mean that animals live in o vercrowded, unhealthy conditions where disease would quickly spread through the herd where antibiotics not used. Although antibiotics are still used to treat organically reared animals, the healthier living conditions of the animals mean that antibiotics are used prudently to treat specific ailments, rather than as a preventative method. Once the animal has been slaughtered and the meat is being prepared for human consumption, additives are often added to it to improve the flavour, colour or texture of the meat, or to make it stay fresh longer. (T.H.Carson,2005). Organic food producers are prohibited from using additives that research has shown may be harmful to human health, such as sulphur dioxide or artificial colourings. But as our organic meat is reared more naturally, the meat has its own natural flavour, texture and colour, and does not need any artificial enhancers! 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