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There is an overall increase in the price and quantity.
‘if the price of a complementary good increases then the demand for the good will fall. This will result in a leftward shift in the demand curve of any complementary good’(Biz/ed team 2010, Spotlight on the theory: Demand Curve, Movements)
Obligation to follow fair trade policies has resulted in increased cost of production, thereby causing a decrease in supply as producers shift to other activities. This translates into a higher quantity at a lower price.
The elasticity of demand price is becoming more inelastic for tea. This can be explained by the fact that rising tea prices have not deterred tea demand and have been accompanied by increased tea demand. Tea is a stable drink in the diets of many and is catching on in many countries like China and it has relatively few alternatives (only real one being coffee) which makes the demand inelastic. Another reason for the inelastic demand is that tea consumes a low percentage of the consumer’s income making them less sensitive to its price changes.(Price of Tea, Economics Help). This seems unlikely but an exception might exist for consumers who treat teas as a luxury, their demand would be price-elastic.
The elasticity of supply price would tend to be inelastic. This is because although an increase in price should create more incentive for suppliers statistics show that this has not happened at least in the short run. At the moment for example supply is being outstripped by demand. Also irrigation, weather conditions and land shortages make it hard to increase tea production.( Rahman Lutfur Mohammad ‘Imapct of price and other factors on tea in Bangladesh: Sources of variation and Disparity over Vision) In the long run however supply is likely to respond to the tea pressure. It has been estimated by the FAO that supply will
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For instance, Adam Smith’s theory of the invisible hand argues that when people engage in business and selling they are governed by the invisible hand of the market that helps regulate prices and ensures that businesses and people act in certain ways. Indeed, the nature of economics is like psychology in that it presents theories of human behavior.
As such, economic analysis relates to the study of economic systems in an industry to ascertain the effectiveness of the operations of a given industry with reference to its profitability1. With this, we are able to establish the optimum use of the limited resources to achieve a given economic objective.
Some countries grow rich and some others remain poor and this has been a central topic of debates for several decades. Economists use real income per capita in order to measure the well being of the people in a country. When it come to the economic growth, not only peoples’ income but also many other factors like political freedom, education, health and environment are of greater significance.
Founded on theoretical perspectives of the wide-ranging operating components of various forms of economic institutions, comparative evaluations can be initiated, and logically analyzed, on the comparative level to which other economic structures can be supposed to permit individuals, businesses, and the larger society to pursue their choices, independently and jointly.
From this viewpoint, the possibility to make profit comes from the process of exchange where the seller assigns a product a specific value that is likely to give returns of his desire, which could be higher than the cost of obtaining it though production or buying from another one.
The essay emphasizes in the role undertaken by government and monetary authorities in the economy to maximize social welfare. It also throws light on the recent strategic tools of business adopted by the entrepreneurs in the market. Part I Keynesian Theory John Maynard Keynes was a British economist, his theories and ideas have fundamentally influenced modern macroeconomics.
Complexities in international trade in the recent years have increased complexities in businesses due to globalization drive pursued by the countries. The market structure in various economic systems has undergone significant change due to the impact of the convergence of technology.
resources and maximizes his/her utility by selling it, since the economic problem of scarcity prevails; allocation decisions are made necessary by the market forces. Hence the point of interaction of the consumer’s demand curve and the producer’s supply curve is known as
Advancement in technology, such as that of GPRS has enabled the use of roads to be easy to man, hence easy to charge for road-space (Frankena, 2003). Congestion of roads results into travelers paying high costs for travelling, increase in business cost and some road users for
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