...Planned economy to ensure Long Term Stability of Canada Economists have often debated the strengths and weaknesses of different economic theories or plans. Two economists that proposed two entirely different economic theories to be integrated into society were, Adam Smith and Karl Marx. Adam Smith born in Kirkcaldy, Scotland, on 1723 was an economist from Scotland who believed that an economy can grow without the interference of government role by individuals driven to expand their wealth by the incentive of financial power and reward. However, Karl Marx, a social economist born on May 1818, in Germany had a differing theory. He believed in equality and that with capitalism came a separation of classes within a society, in which the lower class of a society were exploited by higher class workers. Thus, the lower class were unable to acquire financial needs or requirements for their own survival in life. For this reason, he suggested that government should be the main dominance in a country, to dictate how much wealth individuals can acquire, in a way which every individual could equally be financially stable to provide for their own needs and survival. Both economists suggest theories that a society should or could implement, but with both economic theories comes their own set of advantages that a society could benefit from and disadvantages that could lead to society to collapse. In my opinion, I feel that for Canada to economically stable, they should follow the planned economic...
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...attention in the press and from politicians. But when you look at countries who actually have a socialist economic structure, you can see some similarities to the United States – but there are some really stark differences. Below, you will see some of the most socialistic nations in the world today: China Denmark Finland Netherlands Canada Sweden Norway Ireland New Zealand Belgium Despite popular myths, there is very little connection between economic performance and welfare expenditure. Many of the countries on this list are proof of that, such as Denmark and Finland. Even though both countries are more socialistic than America, the workforce remains stronger. China In China the government manages and controls the economy. Many of the domestic companies are owned and run by the government. Recently, the Chinese economy has become more geared towards capitalism, but is still officially socialist. Life in China remains relatively less stressful and more relaxed than life in capitalist countries like America. Denmark Denmark has a wide range of welfare benefits that they offer their citizens. As a result, they also have the highest taxes in the world. Equality is considered the most important value in Denmark. Small businesses thrive, with over 70 percent of companies having 50 employees or less Finland Finland has one of the world’s best education systems, with no tuition fees and also giving free meals to their students. The literacy rate in Finland is...
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...QUESTION: Market economy is the one in which decisions about the allocation and use of resources by producers and consumers are primarily through a system of markets and prices (Hodgetts, R and Smart, T.L.). According to O’Connor (1988) a market economy is an economic system where resources are largely owned by private individuals and firms who seek to make profits. In a market economy there is operation of free markets of demand and supply to determine the market equilibrium. Also there is very little or no government intervention in the economy. It is also called the Laissez faire. McConnell, Brue and Flynn define a command economy as the one in which government owns most property resources and economic decisions occurs through the central economic plan. In a command economy there is no private participation in economic activities meaning that the government solves the basic economic problems of scarcity. The basic economic questions are; how to produce, what to produce, in what quantities and for whom to produce. In a market economy, these questions are answered by certain individuals who own the factors of production that is land, labour and capital in the private sector. The question of what to produce is answered by demand in this economy (market economy) since the individuals have the objective of profit maximisation, hence they will produce the commodity that consumers are willing and able to buy. After deciding on what to produce, there is need for knowing the quantities...
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...How People Make Economic Decisions ECO/212 October 21, 2013 How People Make Economic Decisions The principles of individual decision-making are a set of concepts that broken in to four parts. These principles help us to understand some of the motivational factors which will help us understand the way consumers interact with other consumers in the market and to make strategic business decisions. The four principles are: "people face trade-offs," "the cost of something is what you give up to get it," "rational people think at the margin" and "people respond to incentives." In my line of work, I have to make decisions based on what is best for the customer and me because the more products I sell, the more money I make. I had a choice to place a 250 case display but I had to decide which specific size to put, either 24/12 or 24/10. I would make more money on the 24/12, but the store sells more 24/10. Instead of being greedy for the one time buy in, I decided that volume would be more important for me and the customer so I would continue to resell the display with the 24/10. The benefit with these decisions is that sometime the customer would run out of the product just with regular back stock, and now they can handle more volume and will less likely run out of inventory with the display in hopes to sell more products. The incentives that could have made me make a different decision is that if I could have sold more 24/12 I would put those on display simply because I would...
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...Which economic system is best suited for handling a crisis of epic proportions (hurricane, flood, blizzard, forest fire, etc.)? Why? When dealing with a crisis as serious as a hurricane, flood, blizzard etc. I believe that a free market is best suited for handling these issues. Free market is an economic system in which decisions about what to produce and the amount are decided by the markets buyers and sellers (Courtland, 2005). When something this devastating occurs, many businesses and resources are taken and destroyed. Private sectors are those who own and operate businesses which would eliminate some of the government’s role on repairing communities. The government could focus on aiding and assisting the economy for the better, for example, lending private sectors money to help regain their establishment. The planned system, which the government has large control over resources and limited freedom of choice may not be best suited in this situation because I believe the public would be in fear of what might happen. Planned systems are solely based on what the government recommends, which might not be the best solution during a disaster because people have no choice but to wait on the government to take action. With a free market system we are able to have non-profit organization such as Red Cross or churches help aid and rebuild the communities. Free market system is more open to help where they can manage disasters with help from others rather than a planned market where...
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...Economy Systems Handling A Crisis When disaster strikes, it leaves many citizens in disarray. Man-made disasters can sometimes be prevented beforehand, but natural disasters happen and it is out of our control. The most important thing we can do in the event of a disaster is to be prepared to respond. It definitely helps to have an economic system that is able to be the most effective when the effects of a disaster becomes a problem. These effects such as unsanitary resources, homelessness, job loss, crime, and the change in supply and demand for many essential needs become impactful but the right economy system can get things going sometimes even better than how they were before. The best system for handling a crisis such as a natural disaster is that of a mixed-economy. This allows for proper government intervention to help the affected people, and the economic freedom of businesses to keep the economy moving in a positive direction. There are three major economic systems in today’s world. The difference between each lies in the relationship of the amount of control the government has and how much freedom the individuals have on the factors of production. Free-market (or capitalist) economy allows private ownership and individuals choice over what and what not to produce and sell with little Government intervention. A planned (or command) economy in the opposite, in which the government controls most factors of production, make production plans beforehand and...
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...Supply, Demand, and Price Elasticity Team C-Carefree Challengers Kimberly Badgley, Randall Coakley, Stacy Engram, Misty Landwehr, Geneva Krager, and Gregory Minor ECO/212 September 13, 2010 Dr. Lyn Bush Supply, Demand, and Price Elasticity Introduction. (Misty) Changes in Supply and Demand (Kimberly) According to Hubbard and O’Brien (2010), the demand side of the curve influences by not what a customer wants to buy but what a buyer is willing to purchase. The demand curve shows the association between the price of a product and the amount of the product demanded. When the value of merchandise falls, the demand increases. Further, income, prices of a related product, tastes, population and demographics, and estimated future prices cause the change in demand (Hubbard & O’Brien, 2010). Income is relevant when a person cannot afford a product because of a lack of income. The prices of a related product or substitution will motivate a person to buy the cheaper of the two products. Tastes are what a person is willing to buy by his or her preference. Population is significant because if a product is popular, then more people will want to buy that product. If a person suspects prices will increase, then he or she will buy now, but if a person suspects prices will decrease, he or she will wait until the prices come down. Supply is the quantity of a good or service that a company is willing and able to supply at a given amount (Hubbard & O’Brien, 2010). The...
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...Mixed Economy A mixed economy is an economic system that incorporates aspects of more than one economic system. This usually means an economy that contains both privately-owned and state-owned enterprises or that combines elements of capitalism and socialism, or a mix of market economy and planned economy characteristics. This system overcomes the disadvantages of both the market and planned economic systems. Features * Resources are owned both by the government as well as private individuals. i.e. co-existence of both public sector and private sector. * Market forces prevail but are closely monitored by the government. Advantages * Producers and consumer have sovereignty to choose what to produce and what to consume but production and consumption of harmful goods and services may be stopped by the government. * Social cost of business activities may be reduced by carrying out cost-benefit analysis by the government. * As compared to Market economy, a mixed economy may have less income inequality due to the role played by the government. * Monopolies may be existing but under close supervision of the government. http://www.dineshbakshi.com What Are The Advantages And Disadvantages Of Mixed Economy? The mixed economy refers to such an economic system wherein two the sector exist and function for achieving national objectives. The two sectors are the public sector and private sector. Both these sectors exist and function for achieving national objectives...
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...Question Compare & contrast a market economy and a planned economy in terms of the following; provision of public goods, production and consumption of merit and demerit goods, consumer sovereignty and equity in income distribution. (30marks). A market economy is an economic system where the factors of production, are privately owned, consumers and producers are motivated by self interest, the level of competition in the markets is very high and resources are allocated through the price mechanism. The definition is supported by Lipsey (1992) who also state that decisions about resources allocation are made without any central direction but instead as a result of innumerable independent decision taken by individual producers & consumers hence in the market economy the individuals or market makes the ultimate decision in allocation of resources. Whereas the planned economy is one in which the coordination of economic activity so essential to the viability and functioning of a complex social economy is undertaken through administrative means commands, directives, targets and regulations rather than by market mechanism. The dictionary.com defined this economic system as a socialist economic system in which production and distribution of goods and services are controlled by the government and industry is mostly publicly owned. Provision of public goods These are goods that are non rivalry in consumption and non excludability as alluded by Stanlake (2000) He also added...
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...The test for scarcity is price hence only goods that are not scarce command a price.Therefore economists try to explain how this economic problem is solved by different economic systems. There are three economic systems that exist in the world today that is the free market, command and mixed economy. These economic systems have different ways in which they try to answer the fundamental economic questions of “What? How? And for whom to produce for? Samelson and Nordhaus define a market economy as an elaborate mechanism for cording people, activities and business through the a system of price and markets. Production is mainly driven by the market forces of demand and supply, which determine price hence it is termed as the price mechanism. The USA is an example of what can be simply classified as a market economy. Thus by matching sellers and buyers in each market, the three fundamental questions of what? How?, for whom?. Consumers determine what goods and services will be produced by their dollar votes, which means their daily purchasing decisions. Firms in the market economy are profit motivated therefore they abandon areas where they are losing profits and lured by high profits into production of goods in high demand. The question of “How” goods and services are produced is determined by the competition among different producers. Hence the best way for firms to remain competitive in the market economy, is to keeps costs at minimum by the adopting of the most cost efficient...
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...Everything In-Between. We have all grown up seeing that we live in a world that divides our planet into territories. These territories are bordered by imaginary lines that divide us from them. The borders in which we live play a major role in developing each of our identities, our customs or traditions, the way we conduct ourselves in business and personal endeavors. Some of us have grown up with an expectation of freedom to choose, while others depend on their government to act in their best interest. Depending on what country you call home, you either participant in a free market economy, a controlled economy, or a mixture of both. In this report we are going to look at what creates each type of economy and where we can find examples of each within the world. First we are going to analysis the characteristic of a Free Market Economy. In a free market, the government’s role is to “make sure that the market is stable enough to, properly, conduct business” (Freidman). In purity, the system hopes to “eliminate subsidies for industries, the pre determination of prices, and the amount of regulation controlling certain industry sectors”(Freidman). The implementation of a free market introduced individual property rights, which allows citizens to voluntarily exchange property/resources at a price arranged solely by the mutual consent of the buyer and seller. The seller is free to choose if the price being offered is worth their property; without threat of physical force, fraud,...
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...How People Make Economic Decisions Paper How people make economic decisions regarding their buying’s of good or services at the market are ruled by three basic principles as follows: People are rational as they make the best decision that will benefit each individual on their purchases or selling’s. The people evaluate constantly the benefits versus the cost of the goods or services. Example of this might be: An imaginary famous nail enamel branch was priced originally as .39 cents as the sale manager established. The famous branch was heading to bankrupt then did a marketing study of the market where they establish that the price the people where most likely to pay was .69 cents; this show us that the people associates price with quality. People respond to economic incentives, The basic idea behind the incentive tells that people tend to move towards a decision that they didn’t considered before if at the time they will receive any monetary incentive for it. As an example the author show us how Estonia woman start having babies after the government decide to provide incentive for each child birth to the mother for a couple of months with the goal of rise the born and death rate in this country that still critical. Finally the Optima decision is made at the margin where the benefits are maximize, where the seller obtain the maximum return possible for what the buyers are willing to pay for a good or service. The best example to show the application of the marginal benefits...
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...dictatorship. True False 4. In an individualist society, the welfare of society is best served by letting people pursue their own economic self-interest. True False 5. The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based. True False 6. There is a global trend of societies shifting from individualism toward collectivism. True False 7. It is possible to have a democratic state where collective values predominate. True False 8. It is possible to have a totalitarian state that is hostile to collectivism and where some degree of individualism is encouraged. True False 9. The most practical form of democracy is direct democracy. True False 10. Most modern democratic states practice representative democracy. True False 11. In a market economy, if demand for a product exceeds supply, prices will rise, signaling to producers to produce more. True False 12. The number of command economies has fallen dramatically since the demise of communism in the late 1980s. True False 13. Because international businesses are headquartered in different countries, a nation's legal system is usually of very little interest to international business managers. True False 14. A country's legal system can affect the...
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...Topic 4 Managing The Environment What’s Your Global Perspective? • Parochialism - viewing the world solely through your own perspectives, leading to an inability to recognize differences between people. • Ethnocentric Attitude - the parochialistic belief that the best work approaches and practices are those of the home country. Other Global Perspectives • Polycentric Attitude - the view that the managers in the host country know the best work approaches and practices for running their business. • Geocentric Attitude - a world-oriented view that focuses on using the best approaches and people from around the globe. Understanding the Global Environment – Trading Alliances • European Union (EU) - a union of 27 European nations created as a unified economic and trade entity with the Euro as a single common currency. Exhibit 4-1 European Union Map Trading Alliances (cont.) • North American Free Trade Agreement (NAFTA) - an agreement among the Mexican, Canadian, and U.S. governments in which certain barriers to trade have been eliminated. Trading Allowances (cont.) • Association of Southeast Asian Nations (ASEAN) - A trading alliance of 10 Southeast Asian nations Exhibit 4-2 ASEAN Map Global Trade Mechanisms • World Trade Organization (WTO) - a global organization of 153 countries that deals with the rules of trade among nations. • International Monetary Fund (IMF) - an organization of 185 countries that promotes international monetary cooperation...
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...Describe the three basic/core economic problems facing all economies. Economic problems emerge because our desire for goods and services to consume is greater than our ability to produce those goods and services. As humans, we have unlimited wants and limited resources. This is referred to as scarcity, which exists because there are insufficient resources to produce the goods and services to fully satisfy all wants. Another part of the problem is the fact that resources are not distributed evenly between countries and societies. As a result we are forced to choose among alternative options. For example, you might go into a shop and see two great-looking pairs of jeans but you only have enough money (resources) to buy one of them. Another example is that, a business might have received a major order for its products and wants to increase production but does not have the staff or the equipment and raw materials to meet the order in full. The above mentioned examples highlight the problem of scarce resources in relation to wants and needs. Because no economy can produce enough goods and services to satisfy all its citizens’ wants, choices must be made. The decision to have one thing over another involves a cost. Not a monetary cost, but what is known in economics as an opportunity cost, that is the next best alternative foregone. In other words, the cost of any choice that you make is the value of the best opportunity that you give up in order to make that choice. In an economy...
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