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BUSINESS ECONOMICS
Paul A. Zevgolis
Abstract
There are several focus points in this paper; the first focus is on the types of market structures there are in doing business. In relation to the market structure a look at the kind of structure Levis incorporates into practice is present. As one goes further into the paper, the topic shifts and focuses on the benefits of International Trade, and analysis are of the theory of Comparative Advantage. Furthermore the different kinds of unemployment are explained with relevant theory, and finally Greeces inflation is explained from the period of 2002 to 2011, which is approximately in a ten year span.
Paul A. Zevgolis
have to be careful when it comes to choosing its own price and production rate of output, which may be affected by the decisions of their competition. For instance a car producer may switch to a cheaper seller if one firm raises their prices, based on the fact that steal is the same compound product for cars or bearings made from steal (E. Rodopoulos 2011) (McConnell B. 2005). In these markets marginal-revenue and marginal cost play a big role, same can be said for price, profit, supply and demand. Also an important aspect in these markets is elasticity of demand factors.
Paul A. Zevgolis
belief, irrespective if it was either their choice or the marketing teams tactics, is an approach that strengthens the relationship between customers and the company brands which is one of the most important entities in monopolistic competition industries (McConnell B. 2005).
Levis is a monopolistic competition market, and compete amongst many other firms, they have differentiated products, and they have some control over prices, but within rather narrow limits. On the other hand entry to this market structure is relatively easy although considerable amounts of equity is spent in marketing which is purchased on means of advertising, brand names, and trademarks (TM). Levis clothing ranges from shoes, jeans, shirts, dresses and usually are sold through retail trade (McConnell B. 2005).
produce(McConnell B. 2005). One example is that if Greece tried to produce the famous coco bean, it would cost the nation much more to harvest and maintain the production of it. Firstly labor would
be too expensive and secondly taxes on imported produces are usually classified as revenue tariffs or protective tariffs, and have decreased since 1940, from 37% to a mere 5% in most nations making it much cheaper to import (McConnell B. 2005). Furthermore it would cost less to obtain coco beans from Western African (which would be considered revenue tariffs) countries such as Cte d'Ivoire and Ghana where they are naturally grown and harvested with cheap labor making them more productive in comparative advantage terms (The Hershey Company 2012). Although imports benefit a countrys well-being in that sense it also benefits the nation that exports the goods as well, by increasing their GDP through all the output they are able to sell, though most profits are see by undeveloped countries rather than developed countries, being that undeveloped countries changes in GDP are substantially noticeable than developed countries. Improvements in distance trading has cut costs in international trade, airplanes for example transport low weight items such as diamonds, pipelines that natural gas flow through are exported and imported faster and cheaper. Also, international trade
contributes to a global market, meaning that products are able to be sold all over the globe, thus increasing the possibility of sales, and therefore contributing to nations overall increase in production and GDP (McConnell B. 2005). Importantly international trade helps countries stabilize their market; by means of stabilizing a particular resource, an extreme example is that if a country lacks labor recourses, it can then offer people an opportunity to enter the working market of that particular country, depending on the specialties one may have, this may be seen as a form of importing, thus labor is exchange by wages stabilizing the economy from scarcity of employment, the same can be true for corn, wheat, beans, milk, and any exchangeable recourse (McConnell B. 2005).
Communication in technology are constantly improving international trade as well, information travels much faster now a days, and most communication means are linked directly to traders in a internationally accepted relationship, which is contributing to a clearer and faster means in trade (McConnell B. 2005).
Paul A. Zevgolis
Comparative Advantage
A country has a comparative advantage when it can produce a product at a lower domestic opportunity cost than a potential trading partner can (McConnell B. 2005 pg 101). The explanation about Greece and the coco bean is a good example of comparative advantage. Another example is if Greece produced cars such as Mercedes Benzs it would cost them more to produce 1 unit/cars per day at high labor costs, whereas Germany can produces the cars a lot faster with less workers and less equipment giving a lower domestic opportunity cost to Germany, either by trade to Greece and around the world. On the other hand Greece has a comparative advantage over Germany in olive production and trading due to costs of producing olives are cheaper in Greece than in Germany, therefore Greece can balance Germanys lack of olives via trade (McConnell B. 2005).
Paul A. Zevgolis
are forced to lay-off workers, which unemployment cycles in an economy. Usefully when a country gains more money flow and new opportunities spin the economy that is experiencing cyclical unemployment, workers are hired again, and the economy becomes productive as before (McConnell B. 2005).
Inflation
3.1
Inflation
1.3
10 Years
Depicted above is the inflation rate of the past 10 years in Greece. As read in the beginning of the graph of 2002 when the euro was introduced into the Greek economy slowly settled to its new low in 2004 when the Olympic games took place in Athens. Greece had taken longs prior to the Olympics and after the games. The inflation rate from 2004 to 2007 (3 years stable growth) shows a stable percentage rate each year of about (3.2%) as depicted above. In the year of 2008 a sudden rise significantly noticeable on the graph appeared, due to a global recession in that year. The cause of
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2011
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2003
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2005
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2010
the recession made the economy of Greece stop spending (Larry Elliott 2012). Thus inflation had dropped immensely to (1.3%). Greeces politicians took out an even bigger loan in 2009-2010 due to accusations that the party elected in parliament had emptied the reserves (Amie Ferris-Rotman 2011). Spending increased due to the new loan and the rate of inflation did the same rocketing from 1.3% in 2009 to an extreme of 4.7% in one year alone. Finally in 2011 the economy experienced cyclical unemployment, many businesses struggled to maintain themselves or even break even, due to a lack of spending in the nation, and thus inflation took a downward turn to 3.1%. The total increase in inflation from 2002 to 2011 is 33.4 percent.
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Paul A. Zevgolis
References
Amie Ferris-Rotman, 2011, Greek Loan [Online] Available at: http://www.reuters.com/article/2011/11/23/us-greece-loansharksidUSTRE7AM0EM20111123, Accessed on: June 1, 2012 Chaelee Duhigg, 2009, Trading replaced with computers [Online] Available at: http://www.nytimes.com/2009/07/24/business/24trading.html, Accessed on: June 1, 2012 Crown, 2012, Trading restrictions [Online] Available at: http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1077793273&type=RES OURCES, Accessed on: June 1, 2012 Larry Elliott, 2012. Global recession [Online] Available at: http://www.guardian.co.uk/business/2012/jan/17/world-bank-warns-global-recession, Accessed on June 1, 2012 McConnell B. 2005, Economics Principles, Problems, and Policies, 16th edition .McGraw-Hill Companies, Inc. pages 97-104 Cited on May 29-June 3 The Hershey Company, 2012. Coco Bean [Online] Available at: http://www.allchocolate.com/understanding/where_chocolate_comes_from/, Accessed on: May 31, 2012
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