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Because the price has increased, it is reasonable to expect that the quantity demanded will decrease. This is because the market demand will adjust to the increased prices by not purchasing the same amount of DVDs as before. However, if demand is high enough, then quantity will remain relatively the same. This is because a competitor, Netflix, raised its prices by even more—60%. Even though consumers may not like the price hike, they may have no other option but to continue using Redbox’s services.
I think that Redbox is doing the right thing by raising their prices because they need to make a profit. Because operating costs have risen, it is only natural to pass on that increase to customers. Redbox needs to be aware that its customer base may fall due to this announcement. If so, Redbox needs to decrease its prices marginally so that market equilibrium can be
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Running Head: Macro Economics Macro Economics Writer’s Name Macro Economics Question 1 The determination of the level of GDP (Gross Domestic Product) in the short run is determined by the model developed by John Maynard Keynes. This model works on the basic premise that the level of production in the economy depends upon the level of aggregate demand.
Similar, thoughts are presented in the article written by Rober Pear in The New York Times, with the title “Recession Officially Over, U.S. Incomes Kept Falling” (Online Version). In this commentary, an attempt has been made to explore and analyze the information presented in this article in context to different economic theories and concepts.
Business cycle is the rise and decline of economic activity. There is no specific span of time that determines a business cycle and the same may range for years.
The mandate of a country to influence economic activity is the purpose of fiscal policy. Macroeconomic theories are utilized in the formulation of the scope and limitations of fiscal policy
This means that, after every fifty years the central bank of England anticipates the value of the economic assets to double. The growth in value of resources is in relation to the value of money in distribution. Availability of funds for use in the economy influences spending and saving patterns by the individuals and organizations (Joyce, et.al.
In the article namely “China Falters in Effort to Boost Consumption” by Tom Orlik and Bob Davis, published in’ The Wall Street Journal’, various macroeconomic issues relating to China have been discussed. These macroeconomic issues include: INCOME OF HOUSEHOLD According to the article, growth relating to the disposable income of the urban households has declined to 6.5 % in the first half of 2013 as compared to the first half of 2012 growth rate i.e.
Firms receive revenues from sale of goods and services and use it to pay for factors of production. The government receives revenue from taxes and uses it to pay for government purchases. Any excess tax revenue over government spending is called public saving, which can either be a budget surplus or a budget deficit (Mankiw, 2008).
Historically speaking, high oil prices are nothing new and the oil production market is beset by erratic behaviour and wide fluctuations. Why, and with what effects, were there sharp increases in oil prices in 1973-74 and 1979-81? How have