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This article published in New York Times on October 13, 2011 is titled as “Auto Bailout Done, Obama Looks for Payback” and has been written by Jeff Zelney.1 Though this article discusses mostly the political side of the Obama Administration and its plans to win the next election however, it critically links as to this has important economic implications too.
After 2007’s recession, two industries were badly affected i.e. the financial services sector as well as the auto industry. US government offered bail out plan to some of the largest automakers in the country in order to make the industry survive the current wave of economic depression. Most notable beneficiaries of the Federal funding included General Motors as well as Chrysler. By allowing these organizations to have equity support, government actually attempted to correct the demand and supply balance within the auto industry.
After receiving support from the government, auto sector responded through downsizing, cutting costs as well as improving their processes. It has been mentioned that the auto industry specially the bigger players in the market are responding to the situation and are slowly coming out of the recessionary conditions. This article therefore clearly mentions that with the help of the government intervention, industry survived one of the most difficult periods in its history.
This article therefore clearly establishes the conditions in two different periods and how the government intervention can actually help organizations to correct the supply and demand mechanics within a free market economy.
In order to reduce the market anomalies as well as lessen the impact of externalities, it is important that the government must intervene in the market. The timely intervention of the government in the market affairs therefore can gradually help the markets to
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The present situation is APE< GDP = ASF. There would a response from the producers by decreasing unemployment, reduction in prices and output. This will make the ASF line to move rightwards and the GDP and APE line to move leftwards. The economy attains a position which is shown in the figure.
The demand curve plots the combination of both the quantity and the price of a commodity. A slight shift in the price, results in a shift along the demand curve price. A slight change in the price would certainly result to a shift of the demand curve. Technically speaking, a shift along the demand curve can be termed as a shift in the quantity demanded.
Since to sell more units of its product the firm has to lower its prices, the firm faces a downward sloping demand curve (Ison & Stuart, 2006). Since each additional unit sells only at a lower price, the marginal revenue curve lies below the average revenue curve or the demand curve.
One of the significant areas of economics especially is macroeconomics which is a branch of economics that deals with the problems of a particular country or economic region comprised of several economic agents acting with their individual economic behaviors and the evaluation of the policies taken by the government of these countries in order to tackle those problems (Adams, 2002, p.
There are abundant signs which are pointing towards positive glimpses because there has been a little growth in the overall income of UK and the statistics are revealing that double dip depression is now being diminished from the UK’s economy(Alderman & Shelburne, 2011).
Therefore the author has termed Google as being operating as a monopoly in the search market. The author refers that Google has been dominantly playing its role in the search market and is this dominance is favored by governments as they are not placing any restrictions on the practices adopted by Google.
Short run equilibrium of a firm can be derived based on the total revenue and total cost and marginal revenue and marginal cost and marginal revenue and marginal cost. As firms are price-takers, each firm in an industry tries to maximize its profit by adjusting the output to a level where Marginal Cost (MC) =Marginal Revenue (MR).
The economic approach to consumer behavior delves into consumer demand analysis. The Theory of consumer demand is the analysis of demand with regard to consumer behavior and rationale when changes occur in variable factors such as price, income and
without making anybody else worse off.” From this rationale economists have deduced the conceptions of Pareto improvement and Pareto optimality which is otherwise know as Pareto efficiency. A condition is believed Pareto-optimal if it is not possible to make additional
Another way of response can be through the use of pollution permits. Thus, the buyer of the permit will get the right to pollute to a certain extent. Even control measures can be taken for the negative externalities. All these options are good but the
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