...the proper use of resources. Income or output increased by the proper use of resources. So the differences between nation’s resources are the main source of trade. By Richardian model we can know that comparative advantage only can happen because of international differences in labor productivity. But in real world we can see that international differences between resources are the main source of trade. This is explained by Swedish economist Eli Heckscher and Bertil ohlin.This model shows that by the interaction between nation resources (the relative abundance of factors of production) and the technology production (which influences the relative intensity with which different factor of production are used in the production of different goods). This theory is often reffered to as the heckscher-ohlin model.It is also reffered as the factor-proportion theory. The original H–O model assumed that the only difference between countries was the...
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...FARM MANAGEMENT Farm management is defined as a decision-making process whereby a decision maker who may be a farmer or a manager allocates his/her limited resources among a number of competing production alternatives to meet the farmer’s goals or objectives. The second part of this definition is similar to a definition of economics, which is often defined as ‘’the allocation of scarce resources’’. Characteristics of management Problem –solving Farm management problems fall into one of three types of production problems, each of which can be put into a form of a question: 1. What to produce? This problem involves selecting the combination of crops and livestock to be produced. Should the business produce only crops, only livestock or some combination? Which crops or crop rotation? Which livestock? The manager must then select from among the many alternatives that combination which will maximize profit or best meet some other goal. 2. How much to produce? Production is determined primarily by the number of inputs used and input level. A manager is faced with the problems of how much fertilizer and irrigation water to use, seeding rates, feeding levels, labour and machinery use, and determining the rates and levels for other inputs. Therefore the level of production and profit will be determined by the input levels selected. 3. How to produce? Many agricultural products can be produced in a number of ways. For example, beef can be produced with a high-grain ration...
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...cost of goods and prices. The economic environment would affect jaguar land rover as the goods and prices will have been affected. By this happening it would result in the prices of the cars costing more due to the resources used costing more for the manufacturer. Business Cycle Increases and falls in the production are shown through the business cycle as well as income and the expenditure of the country over a period of time. During a boom the demand of products get so high that manufacturers cannot supply these products and as an alternative they have to put the prices higher. With the prices going higher the result of this is rising inflation. As there are so many costs increasing the price of products becomes so high that the demands of these products start to fall as people are unable to pay for them. If this occurs this then leads to productivity falling as businesses do not need to make as many products or services being used so they start to cut costs. At this point businesses start to reduce the number of staff that they have or reduce prices to try and increase the demand of products. Profits also start to fall. After this an economy could fall into a recession. Once an economy has reached recession getting out of it could be difficult for it to get out because of the cycle of recession. For an economy to get out of recession is by some form of external stimulus either from the government or another investor. Once jaguar Land rover increases their prices, the demand...
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...For Sale of Goods Act, 1957 to apply, it must be a goods. Under Section 2 Sale of Goods Act, 1957, goods is defined as every kind of movable property other than auctionable claims and money, and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. Land is excluded from Sale of Goods Act, 1957. For Sale of Goods Act, 1957 to apply, it must be a contract of sale for a price. Contract of Sale is defined in Section 4(1) Sale of goods Act, 1957 as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. (a) When Ahmad agrees to exchange his pen for Thomas’s watch, is there a goods? Here, Section 2 Sale of Goods Act, 1957 is satisfied because both pen and watch are movable properties. Is there any price? Here, there is no price because it is a barter agreement. Therefore, Section 4(1) Sale of goods Act, 1957 is not satisfied. Hence, Sale of Goods Act, 1957 cannot apply in this transaction. (b) When Jenny agrees to sell her house to George for Rm200000, is there a goods? Here, Section 2 Sale of Goods Act, 1957 is not satisfied because house is not a movable property. Therefore, Sale of Goods Act, 1957 cannot apply in this transaction. (c) When Frank agrees to buy shares in ABC Sdn Bhd from Sam for RM10000, is there a goods? Here...
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...Exclusive Hyun Kim Jung Hoon Hong Daiki Kim Meejoo Song Wooseung Sohn 1 I. INTRODUCTION In our presentation, there are four main subjects that we will be explaining today. Those subjects are: 1. Private goods and the Free Market System. 2.The Price Mechanism and the Invisible Hand 3. Public goods and the market failure 4. Public hand and the government failure. Before we go into the details, let me briefly give you the overview. First we have to approach these questions by asking ourselves… What do we mean by Exclusive? Of course, the word exclusive can be heard on a regular basis. For example, an exclusive interview with Professor Kim. Then what does the word exclusive mean? According to the dictionary, the word “exclusive” is defined as “not divided or shared with others” So how is this relevant to what we are studying? How is it connected to the rights? You might ask… There were discussions as to what “exclusiveness” meant. In my perspective, there are spiritual and material interests that are protected by the laws. Since, these interests are protected, as the characteristic of the rights, the interest become exclusive when it becomes a right. In having an exclusive right would mean that a person could enjoy the right at his or her wish. Therefore, we felt that there was a close link to the free market system and the right. Well, let’s go back to the last week’s lecture. If you can remember, Sun-young gave us a splendid presentation on the bourgeoisie last week. Then...
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...convergence of factor prices in the Heckscher-Ohlin Model. Does empirical evidence validate the propositions of this theory? Word Count: 2,909 words Essay 1 : Discuss how trade leads to the convergence of factor prices in the Heckscher-Ohlin Model. Does empirical evidence validate the propositions of this theory? Abstract The Heckscher-Ohlin model (H-O model) states that a country possesses comparative advantage for those goods whose factors of production are in relatively abundant supply in the country’s endowment. Input combinations depend on the relative factor prices and these in effect, influence the goods prices. Factor prices and the goods prices have a one-to-one relationship. Countries tend to export goods, whose production makes intensive use of the resources. There are four components to the H-O model, and these are: The Heckscher-Ohlin Theorem, The Stopler-Samuelson Theorem, The Rybczynski Theorem and The Factor-Price Equalisation Theorem. The Heckscher-Ohlin model (H-O model) was developed by Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics [Krugman and Obstfeld, 2003]. This model states that a country possesses comparative advantage for those goods whose factors of production are in relatively abundant supply in the country’s endowment. Countries, in this model, are differentiated by the factor intensity of the good they produce. A land-intensive good will have a high land-labour ratio. Whereas, a labour-intensive good will have a lower...
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...Homemade Pies and using the economic concepts of supply and demand, explain * Discuss what you think will happen to the supply, demand and price of the product in the short-term; * Discuss what you think will happen to the supply, demand and price of the product in the long-term. * Explain why you think supply, demand or equilibrium price will be different, if at all¸ in the short-term and long-term. I want to begin sharing my findings with the definition of supply and demand. Supply is defined as the number of products, goods and services that businesses are willing to sell at different prices at a specific time (McGraw-Hill p. 13). Demand is the number of goods and services that consumers are willing to buy at different prices at a specific time (McGraw-Hill p.13). Mrs. Acres Homemade Pies started out successful which caused an increase in demand for the product. In the short-term, the supply of the product can be increased to meet the demand. Shelly had already taken the necessary steps to meet the rising demand of her product, by expanding operations and borrowing money in order to increase her staff. In order to meet the increasing demand in the short-term, Shelly could consider another expansion and find the financial means to increase her staff so she will be able to keep up the supply of the product. I think the price of Shelly’s pies will increase in the short-term, causing the demand for her product to either decrease or remain the same. The supply...
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...com/47740996/economics-chapter-1-flash-cards/ 1 What enables society to produce more goods with current resources? Technology 2 A nation's production possibilities curve can shift outward: As a result of specialization and trade. With an increase in the quality and quantity of resources. Through the use of improved production techniques. 3 Factories storage, transportation and distribution facilities, as well as tools and machinery are all examples of physical ________ goods. Capital 4 To economists, land includes all ______, or gifts of nature, used in the production process. Natural Resources 5 The pleasure, satisfaction, or happiness obtained from consuming a good or service is known as (One Word) Utility 6 The need to make choices because economic wants exceed economic means, most likely describes The Economizing Problem 7 _________ is the discipline of economics concerned with individual units such as households, firms and government Macroeconomics 8 The four general categories of economic resources are: Land, Capital, Labor, and Entrepreneurial Ability. 9 A ____ ____ ____ list the different combinations of two products that can be produced with a specific set of resources, assuming full employment Production Possibilities Table. 10 Due to scarce resources, every individual, whether rich or poor, is faced with an _______ cost when choosing to produce or consume more of one good over another Opportunity. 11 A production possibilities...
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...An Essay on Economic Theory An English translation of Richard Cantillon’s Essai sur la Nature du Commerce en Général An Essay on Economic Theory An English translation of Richard Cantillon’s Essai sur la Nature du Commerce en Général Translated by Chantal Saucier Edited by Mark Thornton 4 An Essay on Economic Theory © 2010 by the Ludwig von Mises Institute and published under the Creative Commons Attribution License 3.0. http://creativecommons.org/licenses/by/3.0/ Ludwig von Mises Institute 518 West Magnolia Avenue Auburn, Alabama 36832 mises.org ISBN: 978-1-61016-001-8 Foreword Robert F. Hébert Following a century of neglect, William Stanley Jevons, in the first blush of discovery, proclaimed Cantillon’s Essai, “the cradle of political economy.” Subsequent growth and development of economic thought has not really alerted us to the subtleties of this succinct appraisal. A cradle holds new life; and there can be little doubt that the Essai added new life to the organizing principles of economics. But “political economy” does not accurately describe the subject Cantillon addressed. Indeed, he scrupulously avoided political issues in order to concentrate on the mechanics of eighteenth-century economic life. When confronted by “extraneous” factors, such as politics, Cantillon insisted that such considerations be put aside, “so as not to complicate our subject,” he said, thus invoking a kind of ceteris paribus assumption before...
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...1. The willingness to pay is the value that the consumer puts on the good. Every person puts a different value on everything from material things to natural resources. Having money and being able to pay for goods plays a big part in a person willingness to pay. Willingness to pay relates to demand in the way that there is a market curve for the goods that an individual is willing to pay for the goods. First you start with a high price on the good and see how many buyers will be willing to pay for that good at that price. Then you lower the price and see what happens with the consumers. Doing this you can follow the trends and see what price a good is at when a consumer’s willingness to pay is at its peak. Every consumer has a different demand curve and it depends on their wealth and what they can afford to see their willingness to pay. (Field and Field 2009) 2. There are many things to consider when it comes to the cost of manufacturing a product. To determine to cost of manufacturing you need to know the costs required for the business, in production, the cost of selling a product to determine the price and when the product is sold, was there a profit or loss. The cost of manufacturing a good include the costs of materials, equipment, labor, materials for packaging, electricity and water, transportation, promotion and advertising, management and coordination and depreciation of fixed assets. (FAO) Things to consider when producing a plastic product would be what the plastic...
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...INDIVIDUAL ASSIGNMENT Q1. What is meant by the term resources? What are the four factors of production and explain the factors incomes associated with each factor of production (20 marks) a) Resources means being able to produce something that can be a good or service. For e.g. the sun, trees, natural gas, materials, staff. b) The four factors of production are land, labor, capital and entrepreneurship. (i) Land- is considered the natural resources or raw materials we find on the earths surface to produce a good or service. Such as forest, coal, copper, oil. The reward earned b land resources is rent. (ii) Labor- is the time and effort contributed by employees to the production of goods and services. For e.g. the waitress who brings your food...
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...1. Summary: The Indian government has the power to acquire private land for public use (the philosophy of eminent domain). Land acquisition is a very important and absolutely necessary activity that every government must undertake, and it is absolutely imperative that the government have a clear, just and feasible policy regarding land acquisition that provides fair compensation to the parties affected by the acquisition. A land acquisition policy must be clear on the factors mentioned blow: 1. The definition of public use (or the type of projects that the policy is applicable for): In general, the definition includes strategic purposes (those relating to Defense), infrastructure projects for development of villages, etc. 2. What all kinds of land can be acquired and how much of it: In all cases, there are restrictions that the land acquisition must not impair historical or artistic monuments of importance or desecrate religious structures, graveyards, etc. Due to concerns pertaining to food safety, in India, restrictions are often imposed on the acquisition of irrigated multi crop lands. 3. Who the affected parties are (or who are to be compensated): Land owners are the most obvious affected parties (they are always considered among those to be compensated). But people depended on the land indirectly, like landless labourers working on the land and others who depend on the land for livelihood, are also affected, often adversely. 4. In what form the...
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...The coffee market case study 1. The nominal and real prices of a product are two very different things. Nominal refers to the price of the product at a given period of time. However the real price of the product is the nominal price which has been adjusted due to changes that happen in the economy such inflation. This happens because, over time the prices of products rise and the value of money falls. Therefore expressing prices over a long period of time can sometimes be misleading. The peaks and troughs show when coffee prices were very high and when they were very low. When the real price of coffee is calculated, taking the nominal price in 1970 and multiplying it by the 2010 price, it shows that the 2010 price has fallen, which means coffee has become cheaper. 2. Quantity demanded is the amount that customers actually purchased or wish to purchase. There are several key determinants of demand for green coffee; some of these include the price, income or wealth, the population of the country, taste, the environment or even various acts of government. Price Quantity demanded Price Quantity demanded The demand curve above shows the relationship between quantity demanded and price of coffee, holding all other factors, that the factors constant. Price Quantity demanded Price Quantity demanded The table above shows a shift the demand curve due to an increase of disposable income among a population 3. A. Demand for green coffee would...
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...Assignment# 1 – Economics and Ethical Issues BUS 508: The Business Enterprise July 20, 2012 1. Discuss what you think will happen to the supply, demand, and price of the product in the short-term. Since the demand for the pie is high, the price of the pie will go up. Also, since more people are willing to pay for it. The demand and supply for the pie will go up also, simply because the people want them and the price is what they can afford to pay for it. Consequently, the rise in price prompt more pies to be supplied as supply relationship shows that the higher price, the higher the quantity supplied (Ferrell, O.C., Hirt, G., & Ferrell, L. (2009). Producers supply more at a higher price and selling a higher quantity at higher price increases revenue (McConnell, C., & Bruce, S. (2008). 2. Discuss what you think will happen to supply, demand and price of the product in the long- term. In the long term, if the demand for the pie goes down, the price as well will go down. That is to say all else equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls which affect the amount purchased. For instance, If new style of pie comes out and everyone wants the new one, the demand for the old pie will drop, thereby forcing the supply to drop too (McConnell, C., & Bruce, S. (2008). Mrs. Acres will have to do something in order to meet the long term levels of demand such as. (a) Tastes: A favorable change in consumer...
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...Question 1 (5 marks, 200 words) (a) Thomas Malthus reasoned that because the amount of land is fixed, as population grows and more and more labour is applied to land, the productivity of labour in food production would decline, leading to widespread famine. Malthus’s prediction failed to materialise as advances in technology greatly increased labour productivity in food production. Do such technological advances contradict the law of diminishing marginal returns? (b) Why do you think the motorcar production exhibits strong economies of scale but not the trucking (haulage) industry? The answers are as follows: (a) Yes, the technological advances do contradict the law of diminishing marginal returns. Thomas Malthus states that as adding an increase in factor of input such as labour to a fixed factor such as land, the marginal productivity of labour in food production would progressively diminish and the law is based on the premise that the state of the technology is constant, however, advances in technology is promoting in reality. Namely, the land productivity is determined by both physical and technological capability. Simply adding more input of labour that increases physical capacity would not always increases the productivity of land. In this situation, continues development of technology enhance the productivity. (b) The industry with strong economies of scale has the capability to process production at feasible minimum average cost. Namely, when firms increase...
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