This sample will let you know about:
- Discuss about the Impact of technological change on employment.
- What is Economics ?
Economics is the branch of social study which mainly concerned with production, consumption as well as transfer of wealth (Gregory Mankiw, 2019). It helps in studying the current affairs by critically analysing market condition, including ways to improve economic performance. Reflecting on this subject, a critical evaluation is done on some essential concepts and theories in micro and macroeconomics, under present report. It includes demand and supply theory that apply while making market related decisions, with impact of different market structures on pricing products and services.
Economics is study to understand how to utilise the limited resources efficiently, for the purpose of earning maximum possible satisfaction. Through market survey, it can be analysed what types of products and services are produced for satisfying the needs of consumers. For this purpose, main factors of production are concerned with factors like land, labour, capital as well as entrepreneurship (Bhattacharyya, 2019). To understand influence of such factors on economic performance, two main concepts are being studied most. It includes micro and macroeconomics which appear to be different but interdependent on theories of each other. Microeconomics is that branch of economy that concerned only with specific units and focused on utility, profitability and area where a firm operates individually (Tang and et. al., 2018). While macroeconomics focused on households, industries, government and more, to study economy as a whole.
Therefore, it is used for identifying the broad issues like growth of country in terms of GDP (Gross Domestic Product), unemployment, trade balance and inflation. Instead of studying the aspects of profitability of companies at individual level, macroeconomics analyses whole industries, for ascertaining rate of inflation and process to stimulate the economic growth. It helps in evaluating how GDP or economic growth can be affected by unemployment rate and trade policies (Mankiw, 2020). To identify and measures such ratio, macroeconomic policies like monetary and fiscal are studied. The term monetary policy involves those policies which affect interest rates, bank lending, financial capital markets and more. While another term i.e. fiscal policy involves the government taxes and spending.
Considering the concept of microeconomics, it helps in examining the way a company maximise its production and business capacity to offer products on lower prices, as well as give better competition to other rivalries in same industry (Bhattacharyya, 2019). Therefore, to examine the same, several key principles are undertaken while studying microeconomics. It includes demand, supply and equilibrium; production theory; costs of production; and labour economics.
Here, prices of any commodity in a particular marketplace is determined by theory of supply and demand, under which economic equilibrium is created when suppliers offer the product on same price that demanded by consumers. While production theory states procedures that shows how goods and services are manufactured, so that consumers can develop their minds whether to purchase the same or not (Mankiw, 2020). The next principle i.e. production costs helps in determining prices of products by determining costs of resources that are used while producing. Another principle in microeconomics include labour economics which concerns on employment, pattern of wages and income etc. to decide price of products.
Demand and supply create a market i.e. a mechanism which coordinates the intention of producers and consumers, by sorting out conflicting perspectives of them. The point where both curves i.e. demand and price intersect each other, is called equilibrium (Rodrik, 2018). It states the conditions where supply of a demanded good is equal to demanded quantity at price on which customers are willing to purchase. Order assignment help from our experts!
Figure 1 Demand and supply curve
In this regard, considering the law of demand, it has been evaluated that quantity of good which is demanded in a certain marketplace is inversely proportional to price by taking other things constant. But when price of a particular demanded products is increased then consumers search for its substitutes which are relatively available on less price (Charles, Hurst and Notowidigdo, 2019). Other factors which affect demand of a good includes income, taste and preferences, where fall in pricing of a commodity results in increasing real income of consumers, that leads to increase the demanded quantity as well. On the other hand, moving on concept of supply, it shows relations between price and supplied quantity (Glenk and Martin-Ortega, 2018). Law of supply states that quantity of supply is mostly related to price of products, where increase in price reflects that producers are willing more for suppling a particular good. To understand, concept of both law of supply and demand, take an example of labour market, to ascertain factors that contributes to unemployment. ÂÂ
Figure 2: Impact of technological change on employment
By applying the law of demand on labour market, it has been evaluated that a higher salary expectation in labour markets results in decreasing the quantity of workers demanded by employers (Hummel, Pfaff and Rost, 2018). This would increase ratio on unemployment, especially teenagers who are willing to work as per their capabilities on high prices, while lower in wages increase quantity of same. Similarly, by applying the law of supply, higher price in wages increases quantity of labour supplied and vice versa (Dosi and Roventini, 2019). Considering the above mentioned figure, it has been evaluated that wave of new technologies affect low-skill and high-skill workers also, especially in develop countries like Australia.
From the employer perspective, to run business effectively, it is essential for them to bring new technologies at workplace, where to work on same, they demand more skilled workers. Along with this, implementation of new machines or latest technologies also reduced demand of low-skilled workers like clerks at workplace whose main work is to maintain and keep business related documents separately (Gregory Mankiw, 2019). So, replacement of low-workers by new technologies and increasing demand of talented ones, highly affect labour market.
This market is also considered as prominent example of price floors, where government of every nation impose laws for employers to pay proper wages to employees by setting a minimum wage rate. The main purpose behind this is to stimulate market growth by reducing unemployment rate and helps in maintaining a standard of living (van Dalen and Henkens, 2018). But on contrast, as per economists, a 10% rise in wage income will also reduce demand of employment especially of low-skilled workers, because to pay higher salaries, organisations seeks to provide jobs to most eligible ones only.
This would lead to increase unemployment ratio as well. Another main factor which argues that setting the minimum wage rate cannot stimulate unemployment ratio, is working hours. Companies when force to pay minimum wages as per working hours, then mostly they prefer to give part-time jobs, which again results in increasing unemployment ratio for full-time labours (Bhattacharyya, 2019). Therefore, instead of raising minimum wages, it is essential for government to develop better public policy options that help both low-skill and high-skill workers to get job in desired manner.Need Assignment Samples?Talk to our Experts!
Another main concept to predict concept of demand and supply, is market structure which helps in determining relationship between buyers and sellers, etc. The main characteristics of market structure include number of firms available in a same marketplace, number of producers and buyers, difficulty or easy mode for new entrance to enter or exit etc. A perfect competition in an area is founded when there are many buyers and sellers present, with undifferentiated products (Mankiw, 2020). Along with this, in such market there is no barrier for entry or exit like in agriculture market which is considered as perfect example of perfect competition, because products are mostly same but way of offering is different. Other than this, another two types of market structure include oligopoly and monopoly (Earle, 2018).
Oligopoly type of market structure holds characteristics like presence of few sellers, high barriers to entry or exit of new ventures, limited power of firms to control prices and other. Factors that makes an industry oligopoly, include economical, legal and technological ones. Industries that mostly run in such type of market structure include steel manufacturing, construction companies, grocery chain stores etc., where entrance of new ventures are difficult, with slow innovation as well. But profit margins of these types of organisations that operate in oligopoly market structure, earn high profitability (Charles, Hurst and Notowidigdo, 2019).
While monopoly market structure characterised by single seller, who are selling unique product in a particular marketplace, therefore, firms operating in such an area, faces no competition as well as have no close substitutes also. Furthermore, in such market structure, government licence, copyright, ownership of resources and other factors, make an organisation a single user, which restricts entrance of new ventures (Kreps, 2019). Microsoft and Google Corporations are considered as perfect example of monopoly market structure. don't worry get marketing assignment help from UK's leading assignment helpers.
Under monopolistic competitive market, organisations have power to set prices for their products, because every company offers same kind of products or services (Mason, 2019). Therefore, they adopt pricing strategies to attract consumers and increase demand of their goods to earn profitability. But, these prices are mostly dependent on quantity they are desired to produce (Gregory Mankiw, 2019). However, due to presence of many producers in such structure, market as a whole do not highly affect. A company to differentiate its business from others who are offering same products, use branding, advertising, as well as packaging strategies.
This states that companies under monopoly market relatively have control over own prices. While under oligopolistic competitive marketplace, prices of products are mostly determined by competitors. Therefore, firms under such market structure are mostly dependent on other entities for setting prices (Dosi and Roventini, 2019). Moreover, due to few sellers in such an oligopoly, firms can affect market prices but not as whole. In this regard, competition under oligopolistic market is based on differentiation on the basis of products and services, instead of price wars.
Therefore, it has been evaluated that pricing decisions of companies are mostly depended on the type of market structure where they deal business. It would be summarised that in monopolistic competition, organisations have possessed a certain degree of power to take initiatives for setting prices (Tang and et. al., 2018). Here, price of products depends on factors like cost of production, government regulations and objectives for producing. From above figures, it has been evaluated that in short run, an organisation may or may not earn profits because barriers to entry is usually low. While in long run, entities are in state of earning high profitability because prices of products remain same to the long run average costs.
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