Contemporary Issues In Economics Discussion Critical Thinking Examples

Scarcity in my life occurred when I saw my brother fail to continue with his masters because I was also going to high school. Since the resources were scarce, he was to forgo doing masters so that I could continue with my high school studies. The opportunity cost of me going to high school is my brothers’ failure to continue with master’s degree. The sacrifice was worth making since I also needed to continue with my studies to become a reasonable person in future.
When federal budget is being made, the trade off comes in because the government has the choice of reducing public debt and hence reduces spending in some sectors. The opportunity cost of reducing public debt in the national budget is that the economy is expected to slow down, unemployment will increase, and investment in the economy is expected to reduce. This is because the government wishes to reduce the interest rates that are paid on the government debt, which is currently very high.
In the current world, most nations prefer a combination of both guns and butter. Using the finite resources that are available in these countries, nations need to produce goods and services for their citizens. At the same time, they need to invest in defense since without security, production cannot occur. As a result, most countries end up producing guns and butter.
In our society, the producers dictate what to produce. The capitalists are the ones that own resources that are limited. They produce goods that are highly profitable first. This means that even though the society needs goods but the goods yield low profits, then there will be no production of such products. In this sense, producers who own the production resources decide what to produce.
In a price mechanism, the suppliers actually determine prices. This is because, consumers cannot control demand. They need the goods produced. On the other hand, suppliers can control supply by causing intentional shortages. By doing this, they can charge the price that they wish. The consumers do not determine price since producers fix the price and those not willing to buy can leave.
I do not always buy brand name product. This is because in most of the cases, the substitutes for the brand name are of equal quality. In the current world, it is possible to find a generic produce that is of higher quality than brand product. In this sense, price does not really tell about quality in the current world. This is why I am willing to substitute lower priced generic products.
United States is not a free market economy. This is because government intervention in the market is seen in various sectors through minimum wages rules, price ceilings, and intervention through subsidies. In this case, the market is interfered with hence; production is not based on demand. United States economy is therefore a mixture of free market and planned economy.
Price cutting is not a very common thing in the current society. This is because this activity involves huge costs and many companies fear incurring huge expenses whereas there is uncertainty in the future. Companies cannot be assured of complete elimination of competitors in the current market and this is why they do not practice price cutting.
The markets that I consider purely competitive are the market for agricultural products. This is because supply and demand are the determinants of prices and an individual can sell what he/she has produced at the market price. There is no benefit of lowering prices to sell more in these markets.
Monopoly can never be a good thing. This is because it will always exploit consumers through high prices and low supply. Without competition, there are no improvements in the monopoly and this leads to inefficiencies.
The government should not intervene in the market to break up Microsoft. This is because the success of the company is based on the motivation that is in the company. If there is government intervention, it means that there will be less reward to the company hence the motivation to innovate will reduce. This will affect the products that are created by the company and hence the revenues that the government gets from the company.