Another factor which influences costs of operating in different locations is the presence or absence of agglomeration economies. Agglomeration economies are a form of economies of scale. If a group of firms are in the same industry or involved in similar types of activity are located near to each other they may be able to secure cost saving which is available to all firms but cannot be exploited by one single firm. These savings can arise from many sources one ... ... middle of paper ... ...rences, a Nash equilibrium is unlikely to occur in this situation. Location can give firms a competitive advantage but not on entirely on its own, a location can initially give a firm an advantage but in the long run other firms are likely to follow.
Governments Today Should governments today play a greater role in the operation of their economies? In a perfect world everyone would have a job, and would have all which they need to live, however, this is not always the case. Poorer countries may not have the necessary productivity to sustain their economies, working conditions may be awful, or sometimes people may not even have the right to own and operate their own business. This situation is probably caused from too much government intervention. On the other hand, if there is too little government intervention the workers rights could be exploited in order for the industry owners to make more profit.
Even though specialization will give comparative advantage, which is the ability of a firm or individual to produce goods or services at a lower opportunity cost than other firms or individuals, economic interdependence will scare some countries to specialize in something and dependently import something else from the other countries. In conclusion, interdependence will contribute imperfect specialization in international trade. These factors are clearly represented the factors that cause incomplete specialization. There are so many researches supporting these factors as this essay has discussed. Furthermore, the example can be found recently between countries.
Many people feel that efficiency lies in the free-market economy where one can easily answer the questions what should be produced, how it should be produced, and for whom. However, the problem with this ‘capitalist’ economy is that poverty and boom and bust cycles reduce progress (Economic Systems: How Societies adapt to Problems, 2003). “If you care about economic efficiency, you should like free markets…But they would also believe the second one should be qualified, in addition to its stabilisation and distribution functions, governments will be needed to correct market imperfections…” (Rhoads, 1999, p.66) Rhoads (1999) mentions how a market economy leans towards more efficiency but needs the government sporadically, a combination which makes the so-called mixed economy. A mixed economy which leans towards laissez-faire, as in the case with the U.S or the United Kingdom, is rather successful. On the contrary, countries, such as Burma or North Korea, which slant towards a planned economy, lack progress.
Although communicating price can be difficult at times, given that many people perceive prices differently, careful analysis suggests that by using the four key aspects of proportional price evaluations, reference prices, perceived fairness, and gain-loss framing can help make the pricing strategy process easier and more effective for companies no matter what the economy is doing. Proportional Price Evaluations Rather than evaluating price differences in absolute terms, buyers typically evaluate proportionally, which is also known as the Weber-Fechner effect. The Weber-Fechner effect indicates that consumers tend to evaluate price differences relative to the level of the base price. In other words, consumer’s perceptions of price changes depend on a percentage not an absolute difference (Nagle, Hogan & Zale, p. 88). In this scenario consumers typically see thresholds above and below the products price and then either do not notice or ignore the rest.
If the prices of some goods go down, this means that there is more money in a budget to be spent on other goods. However, if prices of goods rise there is less to spend on other goods. It is by this reasoning that the prices of other unrelated goods will have an effect upon the demand for any product. *Income In general terms, when the public’s income rises this influences consumer’s demand. People, who have low incomes, often buy products which they consider to be inferior to other products, which they would prefer, but cannot afford.
These questions will be discussed in this essay. Innovation with few precedent values One observable disadvantage of seeking similarities from antecedents is that, sometimes this process can be heavily twisted and biased if there are few precedent examples to follow. There are two side effects of this process: firstly, the relative advant... ... middle of paper ... ...he balance which is not negligible. Today, many innovative firms and entrepreneurs put extensive attention on how to make the innovation comply with the marketing mechanism instead of thinking how to make the products more advantage and sophisticated. If innovators could focus more on issues like products development (effectiveness) and cost control (efficiency), they are likely to have a better competitive edge than the competitors.
Generally, when the price of a product goes up, people do not demand as much as this product as they did before. The magnitude of how much the demand rises or drops due to price change is the elasticity. As for cost and benefits, it is understood that in economics, a company is to begin and proceed with their production as long as the costs do not outweigh the benefits. An analysis of the cost effectiveness of different alternatives in order to see whether the benefits outweigh the costs is an integral part of every company, and this concept can also be app... ... middle of paper ... ...Getting married can get them publicity, and after they get it and realize they don't want to be in the marriage anymore, they get divorced. This is like Keynesian economics.
The merit of mixed economy is both government and private enterprises it has the advantage of taking the benefit of capitalist nature of private companies and socialist nature of government. There is less inequality of income because intend of government is to have a balanced economic growth of an economic. The demerits of mixed economic is since welfare of society is important in a mixed economy it leads to lower than optimum use of the resource because government mobilize the resources towards the production of those goods and services which are beneficial for the society as a whole rather than producing those goods and services which in economic terms are more beneficial for an economy. Under mixed economy private enterprises have to face lot of difficulty because of various government loopholes like favoritism and bureaucratic nature which is prevalent in mixed economy. As one can see that mixed economy like socialist and capitalist economies has both
Individuals have more property rights than traditional and command economies, but have less rights than market economies since the government is allowed to dictate the prices of certain places to live. Very similar to market economies, mixed economies promote competition since it allows the economy to thrive. Much like a command economy but unlike a market economy, the government can put restraints on businesses if the business seems to be a threat to the public or is making way too much money and is driving away/eliminating competition. In short, this economy type allows for many economic freedoms but in order to protect businesses and consumers alike, the government is allowed to have some intervention. Like with anything, too much of something can be a bad thing so a mixed economy strives for balance which makes it unique among the different