Discussion Board reply - Assignment Example

4. What are advantages and disadvantages of estimating demand by virtual shopping? The primary advantage of estimating demand by virtual shopping is the ease of collecting data. Compared to physical data collection that involves a host of activities, data collection through virtual shopping statistics is relatively simple. Moreover, the participants in physical data collection may or may not provide responses. However, demand estimation through virtual shopping allows a reliable tabulation of individual preferences as well as actual consumption behavior.

On the downside, demand estimation through virtual shopping tends to limit the market being studied since it concerns only online buyers and not brick and mortar shoppers. If demand for products is left to virtual shopping estimates only, it would provide biased outcomes that may not reflect actual market behavior and equilibrium.5. How important is saving for a household and the economy? How much should be saved?Saving is important for both households and the economy as a whole. A household benefits from savings as it allows a cushion in case of an economic recession.

Furthermore, savings allow households to invest in various parts of the economy which aids in increasing the total assets available to a household. On the other hand, the economy stands to benefit from household savings since it allows the government and banks greater liquidity to initiate larger economic projects and hence spur economic growth. In addition, the increased liquidity helps governments to provide better social security nets for the population at large (Gwartney, Stroup, Sobel, & Macpherson, 2011, p. 246). There is no rule of thumb for the proportion a household should save.

However, it could be generalized that a household should save enough of its disposable income to allow investment opportunities and to cushion economic shocks whilst not saving too much so as to cause a loss of liquidity in the economy.BibliographyGwartney, J. D., Stroup, R. L., Sobel, R. S., & Macpherson, D. A. (2011). Economics: Private and Public Choice. New York: Cengage Learning.