Micro and macro economic on us trade Essay Example | Topics and Well Written Essays - 1000 words

Micro and macro economic on us trade - see ExampleMicroeconomics pertains to the economic decision and choices that ar made by individual consumers, unswervings and industries and the impact it has on the parcelling of resources, demand and supply in economies of the marketplace. As demand and supply determines the prices of goods and services available in the market, microeconomics likewise defines how prices feature in various economic decisions and vice versa. Micro economists are principally apprehensive somewhat studying numerous reasons of market failure and signifying means to correct or stop them, mostly with the attend to of public policy or by involving the presidential term. (Bernanke, 2003) Monopoly is one of these failures that the market faces. Monopoly mainly crops up when a byplay produces a good at too cheap a price that its competitors are forced to render the market. In the US, true Monopoly is rare these days, still IBM, Microsoft and Wal-Mart are borde ring to it. Whereas, Oligopoly strikes when, in a specific industry, some of the dogmatic businesses collate and set the prices as per their choice for the entire industry to either fallow or set forth the market. Oligopolistic industries in the US include accounting and audit services, aircraft, military equipment, music recording industries and film. (Dwivedi, 2002) Businesses that are well-built whitethorn consider monopolizing the market by either controlling all possible ways of production or purchasing industrial resources, therefore forcing the competitors to shut down and leave. Not all businesses are granted the rights to control an industry as some governments do intervene and stop such acts. Monopolies and other failures of the market are deemed undesirable and inefficient means of allocation of resources, by the micro economists, and that is the reason why they are not acceptable in all industry. It is suggested by these economist that Perfect Competition shall be ut ilized to counterpoise the demand and supply ratios. It is the only mean whereby no single firm or individual rules the market price of the goods or services. The price of the product is determined by its total cost and the dough depend on the demand the product has. Perfect Competition maximizes both consumer utility and the profits of a firm while utilizing the resources in an efficient manner. Sadly, these suggestions are seldom infallible as economics consists of numerous interactions amongst various market forces that are complex in nature. It is almost impossible to foresee the outcome of any economic policy. The job of micro economists is to suggest resolution of market failures that has the finest effect no matter what the unintended costs are. (Gwartney, 2009) Microeconomics also determine the most suitable policies keeping in mind the reaction that result be derived from the incentives and disincentives given to the public in such policies. For instance, in the US in dustries are allowed in urban areas the smoke and particles of chemicals will damage the water and air in the locality. This will not only make believe people fall sick, resulting in increase of healthcare facilities and medication and but also hurt the ecological lifecycle of that area. Furthermore, due to the lost beauty of nature, tourism will also be affected. To prevent such hazards, the government controls the areas where such industries are allowed to function, on the advice of the micro economists. If the company does not find this condition conducive to their profits they whitethorn choose to relocate elsewhere this would increase unemployment in that area therefore the government may opt to give them some incentive to stay back. This may include a tax hoo-hah for sometime till they make enough profits to accommodate this policy