Production possibilities

This graph shows the scope in the production possibilities curve for a maker of laptops and desktops. As shown here, there is an reverse relationship between the figure of laptops and desktops being produced by a conjectural computing machine house ; while production of desktops decline, there was an addition in the figure of laptops being produced. This pupil explains that the curve expands for laptops, while it decreases for desktops because of altering penchants of clients, handiness of new engineering, and affordability of fabricating techniques in bring forthing the two sorts of computing machines. The house increases end product for laptops because many clients prefer buying it due to its portability, bigger memory size and other user-friendly characteristics. In the interim, it has to diminish end products for desktops since demand for it by consumers have declined. This pupil thinks that efficiency is lost when a house produces more for one good at the disbursal of the other since it tends to concentrate more of its resources, labour and money in bring forthing one peculiar good. But the current selling mentality dictates the house should be able to utilize its resources to bring forth more sorts of goods. This research worker has observed that a company is more efficient if it is able to bring forth a assortment of goods since it can offer a broad assortment of merchandises to a wider consumer scope.

Competition for diamonds in E-bay

After a hunt at the E-bay online selling site, this pupil found out that nine major sorts of diamonds were up for sale in the site as of August 27, 2009. The diamonds offered for sale: emerald, bosom, marchioness, ellipse, pear, radiant, unsmooth diamonds, unit of ammunition brilliant, square princess, and “ others. ” The site showed that as of that day of the month 26,020 consequences offering different merchandises for each sort of natural diamond. This pupil observes the sheer graduated table of the diamond sale concern with the fact that purchasers put up commands on assorted sorts of diamonds holding diverse forms, qualities and colourss: unit of ammunition, pear, ellipse, octagon, “ scintillating luster xanthous ” , chocolate-brown orange, princess cut etc. Monetary values for these diamonds were merely as varied: in merely one page, this pupil had seen diamonds sold for every bit low as $ 5 so to a monetary value every bit high as $ 670,000.

One can see that from this assortment of monetary values and diamond qualities, competition occurs both among Sellerss and purchasers. On the portion of the Sellerss, they strive to offer the best sorts of diamond at the lowest monetary value possible ( although non that low so that they can gain grosss ) . They do this by sharply advancing the qualities of the diamonds, such as their colourss, lustre and forms. On the other manus, competition besides occurs among purchasers because they have to offer out the best monetary value for the diamonds. They have to do certain that the monetary value they propose would fit or even exceed the monetary value proposed by the marketer. As a consequence, purchasers have to besides analyze the diamonds for sale and how they can profit if they purchase those diamonds. Monetary values of diamonds are influenced by competition among purchasers in that they may go lower so that purchasers can besides buy them. But the Sellerss must guarantee that their diamonds possess “ salable ” qualities.

With this sort of competitory market, the pupil thinks that an foreigner intercession into the command procedure at E-bay would ensue in detrimental effects on both the supply and demand sides of the diamond trade. For one, the finding factor in the procedure would be the bureau ‘s criterions, non the ongoing market environment. If this bureau will put a monetary value ceiling on the monetary value where diamonds can be sold, a deficit of diamond supply may happen. In add-on, authorities intercession into a command procedure will turn off many Sellerss and purchasers since they may comprehend that even the trade is now capable to government/outsider intercession.

“ Last Word ” – After reading the article on the “ market for human variety meats ” ( McConnell,, 2009 ) this research worker cites the marihuana trade as an illustration where free markets do non work at an unfastened degree. Since statutory ordinances still prohibit unfastened usage of the substance, trade of marihuana is still either regulated by some provinces or is wholly done “ belowground. ” Hence the pricing agreements of the substance by and large depend on the supply available among traders and the degree of demand of purchasers for the substance. Some traders may freakishly raise monetary values, mentioning hazards apparently associated with selling the drug while some purchasers will pay any sum merely to acquire their supply. The high monetary value and great demand may ensue in supply deficits and hence may do stiff competition among parties which may do offense to be committed.

If free market characteristics are included in the marihuana trade such as greater freedom in the sale and purchase of the substance, so this could exercise some influence on the manner marihuana is priced and sold. If the authorities allows retail merchants to openly sell marihuana, albeit within the standard pharmaceutical criterions, monetary values for the sale of marihuana would so act harmonizing to the dictates of the market: marihuana will be priced higher if there is greater demand and decreasing supply, and it will be sold inexpensive of demand lessenings and supply additions. It is besides hoped that this move will cut down offenses committed by purchasers and Sellerss when carry oning the marihuana trade.