Economics: Relationship Between Supply And Demand

This means as employees’ nominal wages increase with inflation their real wage (purchasing power of nominal wages) may remain constant. Since inflation reduces the incentive for households to save, it causes a shortage of savings for firms to borrow. Firms finance investment (the purchase of new capital goods) by borrowing money. Therefore, if there is not saving funds for investment will

Along these lines, unemployment may decrease, as this has different favorable circumstances, for example, lower government using on profits and less social issues. However, this phenomenon includes a number of different expenses. Firstly, if economic growth is unsustainable and is higher than the long run pattern rate, inflations are liable to be seen. An increase in economic growth could prompt an equalization of issued installments. In case the expanded customer expenditure causes further development, there will be an increase in the import sector.

Per classical and neo-classical economic theories, from this meeting of supply and demand, in situations of perfect competition between suppliers, the price should settle at a level of equilibrium, i.e. at a point where the price being paid equates with efficient production and fairness. Where supply exceeds demand, then the price will fall back to a level where it becomes unprofitable for producers. These will then withdraw from production until shortages cause the price to increase to profitable levels again. Of course, in modern urban areas people largely have no choice but to enter the housing market to secure accommodation, thereby creating or increasing demand.

As before, as the population increases with immigration, the labor supply would also increase, but the increased population would also lead to increased consumer spending and demand (i.e. money flowing into the US economy). When this new shift is taken into consideration, the labor demand would need to also increase to accommodate the new consumer demand. Thus, the change to wage rates would be subject how much labor supply and labor demand shift; a larger shift in supply over demand leading to decreased wage rates and vice-versa. Consequently, the resulting outcomes from immigration could be positive, negative, or neutral towards economic factors.

The challenge that is normally encountered is increasing population growth, this means that there should be an increase of infrastructure to accommodate people. Most of the cities are expanding outwards while other are slightly considering an upward expansion. The new population which is mainly the working class immigrants have occupied places that are developed in the long ago and the people who use to stay in those places have migrated to urban areas. When people in the inner city are migrating to other areas, the buildings which they previously occupied are then neglected. The South African cities should grow upwards because the land value is rapidly increasing.

The factors presented under this model change over time, and they determine the success of the company. The changes are likely to present new opportunities and threats to a company, thus, there is a need for continued evaluation of the industry to ensure that a company exploits the opportunities and protects itself from threats. Political factors The political factors in the retail market are associated with the government policies and the political interest groups. In this case, the retail industry operates under high political stability due to democratic elections systems. There is also increased political support for globalization and political pressure for higher wages as the minimum wage requirements are raised (Yüksel, 2012).

Since the company weakens supply while demand stays the same, the price will increase. The producer believes that the price will rise in the future and makes a rational decision to slow production, and this decision partially affects what happens in the future. By relying on the rational expectations theory, companies can inadvertently effect future inflation in an economy.

This evidence can be used to characterize the positive and negative impacts of immigration on the economy. In the short run, immigrants lower the wage rate in certain jobs, but raise the returns to capital because companies spend less to hire workers. This leads to an increase in profitability of firms which will eventually “attract capital flows into the marketplace, as old firms expand and new firms open up shop to take advantage of the lower rate” (Borjas 164). As a result, the demand for labor increases, and the extent of the curve shift depends on technology. In the long-run, the increase in supply of labor leads to an increase in the firms’ demand function because capital expands as firms take advantage of the cheaper work force.

Triest suggest that as labor becomes scarce and costly relative to capital, producers will try to shift the labor productivity schedule outward through capital deepening or innovation. Accordingly, economists would expect to find a negative relationship between the growth of the labor force and the growth in labor productivity. Cutler et al. (1990) also argue that incentives to innovate are strongest when labor is scarce. Conversely, Gordon states that productivity growth has been flat in recent years.

This gives you less flexibility so whatever life changing decides a have to be made in areas close to your home. • When it comes to the market prices fluctuate the appreciation and depreciation of the property depends on the time the home was bought. T may not have enough value to sell if the home owner decides to sell. Advantages to renting a home • Renting cost less money, and there are limited financial obligations. The money used to pay a mortgage, pay taxes can be deposited on an account and gain higher returns.