Decision-Making in Businesses (Book Report Sample)
For the final part of your coursework you are required to write a report on the following topics related to microeconomics;
- A clear explanation of the difference between a free market economy and a mixed economy (10 marks)
- A clear explanation of a change in quantity supplied and a change in supply (10 marks)
- A clear explanation of the cross price elasticity of demand and how it helps in business decision (10 marks)
- A clear explanation of the difference between income effect and substitution effect (10 marks)
- A clear explanation of the difference between perfect competition and monopoly. (10 marks)
(You must always use examples and diagrams to clearly explain and illustrate your answer and points)
The number of words requirement of the report is 1200 – 1500
Clear sections and paragraphs must be used in each topic. Information used from other sources need to be clearly referenced in your report to the original sources. You must provide a list of reference or a bibliography in the report as evidence of your research.
Important: Additional 10 marks will be awarded for the introduction, structure, organisation and content of the report.
When appropriate you must include appropriate examples, diagrams and illustrations to support and explain your points.
For this written report you are expected to complete some research using a good range of sources.
You must keep a record of all of your sources and you must create a bibliography. If you use any paraphrasing or direct quotations in your essay, these must be fully referenced within the body of the report.
Remember that it is always a good idea to use different sources when conducting your research, not just the internet. You should also be looking at books, journals, periodicals etc.
Understanding different markets and how they function is crucial for effective business management. The knowledge on markets helps in decision-making in businesses, facilitating proper management. Some of the most important information about markets, is the information about the type of market, the type of market structure and the microeconomics understanding of how markets operates in terms of demand and supply (Grant & Vidler, 2000, 7).
The Difference between a Free Market Economy and a Mixed Economy
A free market economy, also known as a free enterprise economy is a market dominated by privatization where individuals and private firms own means of production (Grant & Vidler, 2000, 19). In this regard, the players in the market make their own choices about how to run their own business and this pertains to decision-making about what to produce, how to produce and for whom such goods or services will be produce for. In a fee market, the government also plays some roles in the market. Some of the government’s roles include passing laws that protects the key players in the market, issuing of money, preventing monopolies domination and providing certain supporting services such as security. A free market is characterized by stiff competition, innovation, greater efficiency, and the forces of demand and supply are responsible for setting prices in the market. Some of the disadvantages of the market are that it is characterized by inequality of incomes and encourages the consumption of harmful products such as drugs (Grant & Vidler, 2000, 19).
On the other hand, a mixed economy describes the type of markets present in the western world countries, for example, the British market system, which is characterized by the balance between free market and government planning (Grant & Vidler, 2000, 19). In this regard, the government plays a crucial role of controlling the business activities of both the public and private sectors. An economy would have both state-owned and private owned-enterprises. Such a market system would be characterized by the elements of a socialism and capitalism systems. The government takes the responsibility to allocate some of the resources while leaving others to be allocated by the market system. Apart from government’s role of controlling and regulating the market, it has the obligation to provide certain essential public services such as healthcare, security and education. In essence, a mixed economy is characterized by fair competition in the private sector, restriction of the consumption of harmful goods, less inequality of incomes and greater efficiency (Grant & Vidler, 2000, 19).
A Change in Quantity Supplied and a Change in Supply
A Change in Supply
Price ($) S2 S0 S1
Q2 Q0 Q1
A change in supply is a phenomenon resulting from the effects of others factors other than price of the product (Arnold 2007, 78). Graphically, it entails a shift of the supply curve, representing a reduction or an increase of quantities supplied at the same price as before the change.
From the graph above, S0 represents the original quantities supplied at the Price P. S2 represents an inward shift of the supply curve from S0, meaning it is a decrease in the quantities supplied (from Q0 to Q1) at similar price P. S1 re...
- Decision-Making in BusinessesDescription: The knowledge on markets helps in decision-making in businesses, facilitating proper management...5 pages/≈1375 words| 6 Sources | Harvard | Mathematics & Economics | Book Report |