PRINCIPLES OF MACROECONOMICS
Introduction
In this study, the discussion will be made on the four different topics which are based on four individual case studies. In the first section, the discussion will be focused on the explanation of the concept of scarcity and opportunity cost. Scarcity is considered as one of the economic problems as well as the significant gap between the limited source in a country and theoretically the needs of the sources in the country. The opportunity cost is considered as the profit or benefits of anything to get the achievement on something. In the second section, the discussion will be made on the identification of the change in demand and supply in the significant market. Through the demand and supply, any company or any government sector can make the equilibrium situation of the market through which the people can get good products in a justified price. In the third section, market equilibrium will be discussed and at the end, there will be discussed a lot of economic-related things such as the revenues, costs or profits to price-output decisions in any country.
1. Explanation of the concept of scarcity and opportunity cost
Many years ago, the economists Samuelson stated that ‘Pure Theory of Public Expenditure’ through which the person made the classification of the products. On the other hand, another economist Bain stated the book named as “Economies of Scale, Concentration and the Condition of Entry in Twenty Manufacturing Industries” through which the person explained the particular structure or the performance of the opportunity cost as well as the scarcity paradigm. For making sustainable development, the companies or the management of the companies should have to maintain the opportunity cost and the scarcity in the nation (Mance, 2015). Scarcity is that situation where the economy is struggling and the government of that nation is facing the economic problem due to the less production of the products which are needed in daily purpose for the people.
It is not good for that country as well as for the government because of the collection of the revenue on the lower side. Through the scarcity of the products or services, the price of those goods is increasing on a regular basis to make up the profit margin. That is why it will be difficult for people to maintain the price of the products. The income of the people is not increased on a regular basis and that is why the increasing price will create the problems. On the other hand, through the opportunity cost, the companies can make the benefits or profits. In this case study, it has been given that the opportunity cost has helped the companies to induce specialisation, convexity or subadditive through which the companies can make sustainable development and increase the standard in the country (Mance, 2015).
2. Identification and predict a significant change in market outcomes given a change in demand or supply
The demand and supply in the market are quite identical and both the terms are connected with each other. The market demand is mainly considered as the total number of products or the services through which the people are willing to manage for purchasing the products or the goods at a particular price from the market. In other words, the demand is represented how much amount of the products can be bought from the suppliers of the products at a significant price level (Duignan, 2016). On the other note, supply is considered as one of the major fundamental economic concepts through which the people can understand the availability of the products in the market. The supply of the products is mainly depending on the demand for the products in the market.
If the demand for the products will be on the higher side, then the producers are tried to price up the products with the increase in the supply of the products. However, if the products will not satisfy the people then, the demand will fall and the producers will try to decrease the price of the products through which the producers can empty the stock of the products (Duignan, 2016). In this case study, the discussion has been made on the supply and demand of the crops in the US as per the provided data by USDA. Here, the demand and supply have no significant changes in the present year related to the previous year. That means the demand and the supply of the crops are increasing in the same way and that is why the prices of soybeans, corn and the other foods are not increasing in the country however in the global context, the price is increased.
3. The explanation of the concept of market equilibrium
The concept of market equilibrium is crucial for any market to identify the actual demand and actual supply in the market. The integration of the demand and supply on the market will be creating the equilibrium point in the market in which the actual demand will be meeting the actual supply in the market. However, it may be stated that the article has presented an equilibrium vacancy rate and offered new approach of market equilibrium. On the other hand, it may be stated that market equilibrium is defined as the point when the demand is equal to the supply in the market and the term market equilibrium is self evident in nature (Parli, 2017). However, it may be critically mentioned that vacant space is associated with the market equilibrium and the concept of market friction vacancy and new demand vacancy. It may be stated that vacancy rates have influenced the rental rates in the market irrespective of the market conditions.
On the contrary, it may be specified that market rates of rent have also significantly affected the vacancy rates in the market. It is evident from the market equilibrium concept that vacancy rate is reliable indicator of the market equilibrium while major aspects of the market equilibrium are related to the market demand and supply. On the other hand, it may be critically mentioned that stable rents are influencing the concept of market equilibrium in nature. The concept of market equilibrium is critically explained with the benefits of intersection of demand and supply in the market. It is evident from the above scenario that inflationary and deflationary movements on the market have affected the wide movement of the market equilibrium across the market of a particular product (Parli, 2017). However, it has been critically argue that market equilibrium has been explained with the help of rents and vacancy rates in the market which has been widely for occupancy metrics. It is crucial for the process of the market equilibrium that the demand and supply both move away from their existing equilibrium point while if one moves then the other will be at the existing pointy of equilibrium.
4. Apply the concepts of revenue, cost and profit to price-output decisions
According to the article it may be stated that the price output decisions are critically influenced by the aspects of the cost and revenue in the market in order to recognise profits from the operations of the business. In the context of microeconomics, it may be critically mentioned that production, pricing and transportation are considered to be relating to the multiproduct and multi market as a system which may be referred to as PTPMM (Xu, 2016). On the other hand, it may be stated that pricing strategies concerned with the critical achievement of the targeted profit in the market which will be controlling the profits of the business as well as the firm. On the contrary, it may be stated that pricing has the ability to control the demand and cost in the market while making significant profit. It is evident from the article that revenue and cost are critically affecting the amount of profit a firm will be making under certain market conditions. There are a large number of production pricing problems in the market which will be expected to affect the linear scalarisation function.
It may be essentially stated that pricing depends up on the sub market in the main market which will be majorly governing the pricing and cost of the market. The revenue and cost has the regulation that they both are interrelated in nature. It may be critically mentioned that revenue and cost has the potential to impact the profit and the output decision of a firm or the transportation sector in which the firm will be operating as per the profit output decisions. The profit network graph is used to identify the major aspects of the market pricing and revenue model of significant business houses. It is to be stated that Wardrop equilibrium is associated with the market pricing and market revenue of the associated firms in the market which will be impacting the profit output decisions in the market potentially (Xu, 2016). However, it may be argued that the decision makers need to switch between various profit making decisions before analysing the profit making decisions.
Conclusion
According to the above discussion, it may be critically mentioned that equilibrium is achieved with the integration of the market supply and demand while the scarcity and opportunity cost are related to each other. It may be stated that change in market outcomes critically changes demand and supply.
