Question

Step 1: Read the following questions, and use what you have learned about how the economy...

Step 1: Read the following questions, and use what you have learned about how the economy might impact your business industry, and to summarize your responses in 5 full pages. Consider the concepts and questions below when assessing the economy and the impact it may pose on your business: Describe your ideal capitalist economy. Will these conditions maximize your sustainability and profitability? What indicators would you use to measure goods and services? What happens when the quantity demand is impacted? Describe your socialist economy. Will this type of economy bring maximum sustainability and profitability to your business? Explain whom goods and services will be produced for. Who do you expect to sell most to and what aspect of the economy may impact your business activities the most? What happens when price flooring is in effect, and how does it impact your labor market? Your sales, your manufacturing?

Homework Answers

Answer #1

First of all we have to understand the meaning of economy very clearly then its types and features and then how they effect the whole system of the country and its impact on diffrerent sectors and class.

Economy is a system or a framework under which certain economic activities are performed. Basically there are three types of economic system prevails.

First capitalist economy where all the economic activities and decisions are done by individuals that is a producer or a firm. There is no role of government in the market activities and prices are determined through market forces that is through demand and supply. Profit is the main motive under this and there will class struggle between haves and have not.Economic decision like what goods to be produced in the economy and in what quantity they should be produced are taken by individuals. As there is no interference of goveernment there may be production of harmful goods too.

Second economic system is socialist system where all the economic decisions are taken by the one athority that is government. It is mainly for the welfare purpose. All the goods are produced by the government and production decisions are atken by the goverenment only.Prices are determined by the government only. Country llike cuba is having such framework. There are definitly certain pros and cons of such system.

Third type of system is mixed ecconomic system where both the individuals and goverment performs economic activities. Major important activities like food, shelter are run by the government for the welfare purpose and other non essential items are given to the individual that is private sectors where profit is generated.Public sector is worked for the welfare and private sector provides infrastructure and other facilities and earn profits.

Now what are the impacts on such system on businesses.If there is a capitalist system business of individuals will definitly flourish but will harm the welfare which a government can not ignore.

If there is socialist economy then definitly there will be no scope for individuals to flourish. On the conterary country like cuba where all the activities are under government control it is not possible to provide all things there will be long ques for essential commodities. Auto driver earms more than the manager of a company.

Susutainibilty and profitability will be more in case of capitalist economy for individuals. They can flourish as economic decisions are taken by them only.

To measures goods and services available in the economy certain indicators are considered . Like the numer of firms working to produce some goods. or may the income generated by different sectors in the economy which is reflected through GDP..Their contribution in GDP etc.

When QD is more than QS like in case of cuba it results in long ques. There will be shartages of essentials goods like food itmes.There may be more supply of non essential goods in case of capitalsit economy. There will be rise in consumarism.

Socialist economy can not bring sustainibility and profitabilty in business as social welfare is the main objective of the government.

The basic economic problem of an economy that is for whom to be produced goods and services will depends on again the type of economic system a country follows. If there is socialist economy than goods will be prodcued for the poor section of the society as welfare is the main objective wehre as in case of cappitalist economy goods will be produced by the individuals on the basis of consuers choice.It also depends on which class goods should be produced depending on the distribution of national income. If income is equally distrubuted in the economy than any type of good can be produced if it not equally distributed than goods to be produced for the majority that is more poor people means more necessities more rich people means more luxuries.

Who will sell more again depends on the type and liberty given by the athority. In case of socialist economy individuals are not allowed therefore sell will mainly depend on one athority. In case of capitalist economy depends on individuals decsions and market structure like perfect competition or monopoly or oligopoly etc.

The mainly the structure of the economy affects the business ata large. For example in case of India before 1991 there was monopolistic restrictive practices act under which private sector was allowed to invest up to a given limit only. In this way private sector could not flourish.More libertyu to private sector means more chance of growth.

If price floor is running by the economy that is fixing the minimum price by the government it will lead to increase supply of labour as minimum wage legislation is there which is alyways above the market price of labour. There will be excess supply of labour.

If floor price is implied on agriculture productes and you are individual seller in the market it would lead to bnlack marketing because market price is lower than the floor pprice.Your manufacturing may affect negatively.

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