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The fall in demand for goods in Asia is likely to have repercussions for goods markets in Europe. Using the concepts of supply, demand, and elasticity examine what effects the slow-down in Asia may have on British consu - Essay Example

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The reduction in the demand for goods and services in foreign countries that provide market for goods and services produced in Britain and other European countries has very significant effects on the demand for exports. The net exports of the country contribute greatly to the…
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The fall in demand for goods in Asia is likely to have repercussions for goods markets in Europe. Using the concepts of supply, demand, and elasticity examine what effects the slow-down in Asia may have on British consu
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The fall in demand for goods in Asia is likely to have repercussions for goods markets in Europe. Using the concepts of supply, demand, and elasticity examine what effects the slow-down in Asia may have on British consu

Download file to see previous pages... This paper aims at examining the effects of the reduction in demand for goods in Asia, on consumers and producers of consumer goods in Britain.
According to the law of demand and supply, a reduction in the demand for goods will result to a reduction in the prices of goods (Gale 1955). In turn, a reduction in the prices of goods will result to low profits to the suppliers. To the consumers, it is going to be an advantage since they are going to be capable of buying more goods from the same income. However, to the suppliers, it is very disadvantageous since they will lose revenue. For the case of Asia, a reduction in the demand for consumer goods means that they are going to buy fewer goods imported from Britain. This means that the demand for the goods produced in Britain is going to reduce hence a decline in production. Declining production activities means that producers have to reduce the number of workers in their firms resulting to reduced employment opportunities. On the other hand, unemployment will result to a low income for consumers in the country. This in turn will result to reduced purchasing power (Zhou 1997). Consumers will not be capable of buying the goods and services they need. Consequently, the standards of living in the country will decline.
In this equation, C is the consumption of goods and services by the consumers in the country and I, is the investments while G refers to government expenditure. The term (Ex - Im) refers to the value of exports minus the value of imports. The term (Ex - Im) may be either positive or negative. If the term is positive, as explained by Blanchard & Quah (1990) it means that the value of exports is higher than that of imports. On the other hand, if the term is negative, it means that the value of imports is higher than that of exports. In other words, the favourable condition for the country’s GDP is an increase in the value of the term and ...Download file to see next pagesRead More
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