Question 1

In economics, demand is the ability and absolute willingness by an individual to buy a product for a given price at a given point in time. Derived demand is the need of a product and services that arises as a result of the demand for another different but related intermediate or final product or service. This can easily come about if the former is a requirement for production of the later. This concept helps determine the demand of labor as labor is a product of derived demand. If there is high demand of a good, there will be a need for higher production rates which will demand more labor (Josh, 2007).

Question 2

Monetary and non-monetary are the main determining factors of the labor supply and other minor factors like wages, availability of substitute occupations, barriers to entry for instance minimum qualification requirements, occupation mobility, job security, production costs, and market for products, technology and natural environment. In the last twenty years, the main factors that have changed the labor supply in the market have been the production cost of goods where companies prefer to outsource labor from other countries where it is cheaper, and technology where by automation of production reduces the amount of labor required for production (Josh, 2007).

Question 3

A firm determines its prices and the quantity of labor required by examining the market. When establishing the demand, the firm will try to satisfy the demand to the production rate. The number of units will then dictate the amount of labor which is also dependent on the time frame for the goods to be on the market. After all these production requirements are analyzed, then the firm can set its price, so that not to incur losses and the consumers do not suffer from over pricing.

Question 4

Income inequality is the unequal distribution of the total household and or individual income across the participants of an economy. The presentation is in the percentage of income to a percentage of population in the country. From 1980, income inequalities have only increased further as just one percent of the population has more than enough financial muscle to control about sixty percent of the economy. This is a crucial indicator of income inequality.

Question 5

The role of the US government is to streamline income inequalities and distribute resources equitably to every citizen. This will ensure that one’s living standards is not in control by someone else with more resources. Most of the poor people are for the idea claiming that it will stabilize the economy and change it from its capitalist nature, but most citizens in the one percent richest people are not for the idea. They have the capitalist mindset, and they argue that government intervention in the status of the economy will do more harm than good.

Question 6

Nations trade because they all possess different capital, natural and human resources and they all have unique ways of combining these resources to be most productive. Comparative Advantage is the ability a country to produce a product or service of international standards at a lower opportunity, and marginal cost. A country would not be better off economical if it practiced the isolation policy. This would make it struggle to produce goods which are not economically viable to be produced in the country. There will be too much opportunity cost (Murphy, 1999).

Question 7

The importing rate of the United States is higher than its exporting rate. This Imbalance of trade decreases labor and kill local industries thus destabilizing the economy. The trade deficit can be corrected using measures such as import certificates, reducing production costs and loosening tax on production.

Question 8

Exchange rates are the values within which trade of different currencies takes place. They are determined by the foreign exchange market based on the economies of the nations. Currency devaluation shows that the economy of the involved country has dropped. To other countries it means that they would have more power to import.

Order now

Related essays