Demand And Supply Analysis Of Price Changes Economics Essay

Demand depends on the prices of related commodities, and buyers’ incomes and tastes. Supply depends not only on the price obtainable for the commodity but also on the prices of similar products, the techniques of production, and the availability and costs of prodution. The function of the market is to equalize demand and supply through the price mechanism. If buyers want to purchase more of a commodity than is available on the market, they will tend to make the price increase.

This graphic shows the relationship between supply and demand.

Supply and demand is a fundamental factor in shaping the character of the marketplace, for it is understood as the principal determinant in establishing the cost of goods and services. The availability, or “supply,” of goods or services is a key factor in determining the price at which those goods or services can be obtained. For example, a plumber with little competition that operates in an area of high demand for such services will in all likelihood be able to command a higher price than will a business operating in a highly competitive environment.

The demand for products and services is determined by a number of factors. The most important of these are the tastes, customs, and preferences of the target market, the consumer’s income level, the quality of the goods or services being offered, and the availability of competitors’ goods or services.

The supply of goods and services to the marketplace is determined by several factors as well, including production capacity, production costs, and the number of other businesses engaged in providing the goods or services in question.

2. On 6 May 2010 the New York Stock Exchange index fell 600 points. Explain how high frequency trading works and assess whether this is a danger to the economy?

High-frequency trading or business environment where you have to make decisions quickly with no margin of error, the market share prices raise and fall depending largely on market forces. Share prices tend to rise or remain stable when companies and the economy in general show signs of stability and growth

Example is an economic recession, financial crisis or natural catastrophe, which could eventually lead to a stock market to fell. Therefore the movement of share prices and in general of the stock indexes can be an indicator of the general trend in the economy.

3. Show using demand and supply diagrams what happens to the price of Airbus shares when;

Boeing develops new engines with much better fuel efficiency?

Price

D S

D’

Quantity Equilibrium

This graphic shows us if Boeing develops a new engines, the price of airbus share is going decrease and they going to increase the quantity, this means, demand is going fell down, move to left.

Airbus announces it profit forecasts have raisin?

Price D D’

Equilibrium

Quantity

This graphic show us if the profit of forecaster rise, airbus shares is going to increase and people can have more opportunity for buy a share and this means demand is going move to right, increase.

Real incomes across Europe start to growth with economic recovery?

The recession forces business to extend the use of video conferencing?

Price

D S

D’

Equilibrium

Quantity

The graphic shows us business to extend the use of video conferencing is bad for airbus shares because they needs to reduce the price to get more costumers and get more profit, but in another hand, the graphic represent the demand decrease, this means less price and more quantity.

4. Make a case using data from the last few years that Ireland “Celtic tiger” economy can be describe as a capitalist economy.

Describe the recent financial crisis in Ireland and estimate the dangers which face the country.

Ireland has a capitalism economy like the countries from the E.U, America, and Brazil. They have the same type of economy because they work with means of production that are privately owned and operated for a private profit. Decisions regarding supply, demand, price, distribution, and investments are made by private operators in the market rather than by central planning by the government. Profits are distributed to owners who invest in businesses, and wages are paid to workers employed by businesses and companies.

The economy of Ireland has changed in recent years from an agricultural based economy to a modern knowledge based economy, focusing on services and high-tech industries and dependent on trade, industry and investment. A serious problem, unacknowledged by management of Irish banks, the financial regulator and the Irish government, is solvency. Irish financial institutions had made substantial loans to property developers. These property developers suffered from substantial over-supply of housing. Much is still unsold, for which demand has evaporated. The employment growth of the past that attracted many migrants from Eastern Europe and propped up demand for property has been replaced by rapidly rising unemployment. Irish property developers speculated billions of Euros in overvalued land parcels such as urban brown field and green field sites. Ireland has been in recession since second quarter of 2008 and some analysts have claimed it is in a depression.

Maeve Heffernan, Senior Manager, PricewaterhouseCoopers HR Services, said:

“Overall, employers are expecting salary increases in 2006 to be slightly less than increases actually awarded last year – 4.8% compared to 5.5%. Yet again, we expect to see the Financial Services Sector awarding the highest salary increases in 2006 (5.8% forecast). By contrast, the ICT sector is planning the lowest level of increase (4.0%).

Having said that, the actual average increase for 2006 could well end up being higher as the trend in recent years has been to award larger actual increases than those predicted at the beginning of the year. At the end of 2004, participants in the PwC Survey predicted that average increases for 2005 would be in the region of 4.6% but the actual increases turned out to be 5.5%.

The winners in 2005 were Executive and Middle Management employees who were awarded on average an actual increase of 5.5% of base salary. The lowest percentage increase reported was awarded to ‘Manual/ Line Workers’ (4.5%)”.

The world or global economy generally refers to the economy, which is based on economies of all of the world’s countries, national economies. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one. It can be evaluated in various kinds of ways.

Global output involve many countries like: led by China (9%, equal to 21% of global growth), the US (1.1%, or 12% of growth), the European union (0.9%, for a 10.5% share of growth) and India (7.3%, equal to 5.6% of the total rise). The 12 largest economies (the US, China, Japan, Germany, France, the United Kingdom, Italy, Russia, Spain, Brazil, Canada and India) contributed just over half of all economic growth

By this is a file from the Wikimedia Commons, December 2007

Just shows as how much Ireland growth in this years.