Economics for the global manager Essay Example | Topics and Well Written Essays - 1750 words

Economics for the world(prenominal) manager - Essay ExampleAll benefits have a corresponding cost. The air we breathe, kept bonny through laws costing millions of dollars to enforce, is not free. If your friend treats you for lunch, it is not free for you either, because the time you spent with your friend has an luck cost that whitethorn probably be more than the price of the lunch.3. Why might the government motivation to influence transactions The government wants to influence transactions for many reasons. First, as in nations with free trade economies, the government wants to make sure the markets rules are fair as part of its mandate to sustain the concourse happy. One danger of a free market economy is explained by what is called asymmetric information sellers may hide vital information from buyers that does not allow a fair price to be stipendiary for a good (think second-hand car dealers). Otherwise, people cheated all the time will be aggravated and may move to chan ge the government. Second, the government wants to control the supply and flow of money in the economy, because if they do not, at that place will be trouble in the form of inflation that can lead to social unrest (Solomon 1972 cited in Samuelson 1992, p. 712). Third, the government wants to influence transactions, like the Fed setting interest rates, Congress cutting reckon deficits, or the Commerce Department negotiating trade agreements, because of the add-on effects that these actions (all are forms of market intervention) have on the nations macroeconomic conditions. And fourth, government wants to ensure the countrys patrimony is safe, for example to prevent some scam artist from sell the Statue of Liberty to foreigners.4. What does the spillover or externality principle measure Use examples. This principle measures the costs or benefits of externalities, activities that claim another(prenominal)s, without meaning to, either positively in the form of benefits not paid fo r or negatively in the form of inconvenience or costs for which they are not compensated. An example of the first (called external economies) is having a wife who is a doctor (you can consult her for free or, at least, you dont have to pay mortal else to prescribe the right medicine). An example of the second (called external diseconomies) is driving recklessly on the freeway, which makes many other drivers nervous and increases their consumption of tranquilizers.5. Currently our demand for gasoline is rising as our economy is expanding. However, we expect OPEC to keep the supply stable. Use a graph to show what your prediction is for the price of gasoline. USE A graph INDICATING WHEN THE DEMAND INCREASES. I predict the price will increase, because as shown in the graph on convention 1, with the supply constant and the demand increase, the demand curve shifts to the right, moving the equilibrium point to the right, with the effect of increasing the equilibrium price, or the point at which the current supply curve intersects the increased demand curve, from p to p. At price p, the gasoline market is in equilibrium, that is, supply equals demand. OPECs move holds the supply curve steady, however an expanding/growing economy needs more fuel,