...omy. For example, China is considered a communist government. However for their economy to exist in the world market, some private ownership and factories have been allowed to exist with government oversight. And the United States while considered a capitalistic society has such institutions as public schools, energy, medicare, and services which all share in and benefit from equally. All economic systems also have their pros and cons. For example, Capitalism has been accused of ignoring the individual in pursuit of profit. While socialism does not reward the entrepreneur with wealth, but often punishes the rich with crushing taxes. In the end, the best way to understand how economies work in the world today is to research each ones basic history and definition. In this way a person can make an informed decision on what economic system they believe works best
Communism is an economic system where the government owns and operates the means of production and distribution. It is also known as a command system because individuals cannot succeed others, the government controls all. Capitalism is an economic system where private individuals own and operate the means of production and distribution. People have the freedom to own, choose, compete and earn a living but with little or no government help. They have the freedom to own, choose, compete and earn a living. Socialism is a mixed market economic system. The basic means of production is managed and owned by the government, with the public owning and operating many businesses. Cooperation is stressed over competition, goals are high standard of living and economic security and high taxes provide free health care and education.
From classroom to a cocktail party, having knowledge in today’s economics is definitely an asset when it comes surviving in the world of business. Cocktail Party Economics, by Eveline Adomait, and Richard Maranta undeniably satisfies as an economic training book, helping you understand the concepts of basic economics. The book brings to light many theories and thoughts, which are explained in a certain way that help readers easily, compare and relate them to each other. During the first couple chapters of the book, the main theories presented are scarcity, value, opportunity cost, production, and absolute/comparative advantage. Believe it or not, all of these theories are relatable to Supply and Demand; the two concepts introduced in chapters six and seven.
Macroeconomics studies the economy as a whole, while microeconomics studies the individuals and business decisions regarding the prices and goods and services (Investopedia, 2009). Macroeconomics looks at government and industry standard, rather than individual economic decisions. Microeconomics focuses on supply and demand and forces that affect price in an economy. Monopolies, such as GoodLife in the simulation, are a macroeconomic concept, because they are a top down view of a firm’s control of the economy. A monopoly is a market structure where one seller completely controls the market prices and fears no competition because none exist due to the barriers of entry. Price ceilings and price floors also fall under the macroeconomic scope because they are imposed by governments on whole economies or markets. A price ceiling is legal limit imposed by the government on how high the price of a good can be. Conversely, a price floor is the legal limit imposed by the government on how low the price of a good can be. Supply and demand of individual apartments are a microeconomic concept because it focuses on one product and not an industry. Suppliers are more willing to supply at a higher price, to cover their increased cost.
Economic systems are affected by the two opposing systems of Capitalism and Communism. They each can meet the needs of people; however, both affect the lives of people in good and bad ways, affecting industrialized nations and nations in the process of being industrialized.
Macroeconomics has furthered my understanding for informed citizens. Individuals in power, whether it be the president, the senate, the house or the Federal Reserve, hold a great deal of power in this nation economically speaking. The state of the nation’s and world’s economy affects everyone, multibillionaires to the lower middle class. It is extremely important to understand the current economy and to self assess the future to better one’s own finances.
For the pricing strategies of drugs, the market has seen a trend toward rising prices overall. Part of the rise may be due to the influx of new technology, but overall, the prices are rising at an increasing rate (Chandra). This raises substantial concerns in the health economics community dealing with drug commercialization. Basic microeconomics explains the relationship of supply and demand with the pricings structure of consumer goods. Changes in either supply or demand have an effect on the market or equilibrium price, and a consumer’s decision is majorly based on willingness to pay. Thus, it is necessary to focus on cost reduction to stabilize demand.
For many nations, it is essential to choose a system of organization that successfully and thoroughly meets the needs of all the people. While some countries have supported the idea of communism and strong government intervention in the economy, others have limited the role and power of their governing body in the marketplace. For instance, in the United States, the government has a small role in the planning and monitoring of their economy. Individuals compete heavily against one another to receive the maximum profit for themselves in an sufficient manner. The former USSR, on the other hand, used large amounts of government control to restrict competition and control the output and distribution of the goods they produced. While each country attempted to form a successful economic system for their nation, the systems that they chose to use and the amount of government intervention within these plans varied greatly.
The command system, also known as communism/socialism, the government owns most of the property resources and decisions are made under a central plan. This central plan makes decisions on the use of resources, the formation and distribution of output, and the organization of production. “The plan is implemented through laws, regulations, and directiveness. Businesses follow production and hiring targets.. And seek to replace the forces that operate in a free market economy.” (Amadeo 1) There is public ownership of property. This system also incorporates individual choices which is reflected in the central planning. Many limitations are involved which somewhat causes a problem.
In Microeconomics, there are many subjects that gave me interest in investigating to progress in my professional career as an Accountant. For three years and throughout this semester, my studies in Accounting at Dalton State College have given me more interest getting into the business program to get a job as finance accountant. Microeconomics shows which cause a departure from these economic efficiencies and the result in the decline of the social welfare at its maximum level. Economic efficiency involves in three efficiencies; efficiency in production, efficiency in the production of goods among the people, which it is also called efficiency of consumption, and allocative economic efficiency that’s in the direction of production efficiency.
Microeconomics has an impact on local businesses, that are part of the small economy of a city or a town. The politics of Microeconomics, is what makes our country tick. Small businesses
So we looked at being different and the importance of working through the why we do things the way we do with items and services. If not, we learned, who we are and why we buy, more than what we are and where we buy – something most like to perceive economics to be.
a. If we do not have scarce resources, will we have a law of demand? Will we observe price rationing for goods?
Microeconomics is the study of an individual economy, or of the different segments within the larger economy, while macroeconomics is the study of aggregate economic behavior, or the economy as a whole(Madura 103). The main goal of macroeconomics is to determine the impact of consumer spending on total output, employment, and prices.