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ECONIMICS 405: Assignment1: Article Analysis - Assignment Example

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Article Analysis Name of the of the University Date Contents Contents 2 Overview of the Issue 3 Model and Economic Theory 3 Analysis 9 Conclusion 11 References 13 Overview of the Issue It was stated true by the famous economist Alfred Marshall that human wants are unlimited…
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ECONIMICS 405: Assignment1: Article Analysis
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Download file to see previous pages Thus, allocating resources efficiently is the major task of all the producers in the modern world. If the income level of an economy is not equal, then the resource allocation becomes inefficient. In this situation, the economy gets bifurcated into two groups: the ‘haves’ and the ‘have not’s. An increase in the strength of the latter is the underlying factor generating poverty in the economy. Poverty over the time has created and tends to create various problems like health hazards, low income, corruption and poor infrastructure in an economy. Referring to the article, the assignment will analyze the incidence of poverty and would also formulate ways to overcome such issues in the economy (Arnold, 2008). Model and Economic Theory It can be stated that it is the duty of an economy to achieve maximum returns from the given resources of production. Firstly, the resources should be allocated in production of those goods and services that help in boosting the economic standards of the individuals. It is also true that a nation should always try to improve its state of technology. If the technological expertise of a country improves, then the nation is able to generate a greater amount of goods and services with the given resources of production. ...
The curve is based on the hypothetical analysis of an economy which engages in the production of two products A and B with the help of a given amount of resources and given state of technology. A Production Possibility Curve B (Source: Authors Creation) The above graph explains a production possibility curve. It shows the various combinations of two goods that can be produced (A and B) with the help of a given state of technology and a given amount of resources for the purpose of production. Since the amount of resources available in an economy is limited, it can be stated that for the production of extra units of product B, the country needs to sacrifice portions from the production of A. There is another way in which the economic well-being of a nation can be assessed. The gross domestic production (GDP) of a nation signifies the value of the final goods and services produced within the domestic territory of the country in a year. This also implies that a lower level of poverty in a country signifies a higher amount of GDP. The level of GDP in a nation helps to analyze the living standards in the country. Application of the Economic Theories in the Article The impending poverty level of a country takes form of a vicious circle. Low Education => Low Skills => Poor Paid Jobs => Low Income Level => Poor Standard of Living => Poverty => Low education (next generation). Figure 1: Production Possibility between Education and Food (Source: PPT) The above diagram shows the Production Possibility Curve for the choice of food production and education. It is always true that for the low income economies, the country has to concentrate more on allocating resources for food production than ...Download file to see next pagesRead More
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