Instituion
According to the findings from the activity given in class, figure 1 shows a curve representing the relationship between price and demand of goods/services. Onces the slider is moved towards the upper side, the price of the the goods/services tend to raise, while the values of the demand tend to go down. On the other hand, once the slider is moved towards the lower ,end, the price of the good/servuces tend to go down, while the values of the demand tends to go upwards.
In the world of economics, this is referred to as the demand curve. It depicts the relationship between the prices of a certain good/service with the number of goods/services purchasers are willing to buy within a given price. In this case it reflects that as the prices of the goods rises, fewer purchasers are willing to go for the goods/services or the purchasers go for fewer goods as compared to when the prices are lower (Sloman, 2003).
Figure 1
There are several factors which may influence the consumers into being reluctant to purchase a certain good/service at a higher price. These include the consumer’s income; as the consumers income continue going up, they tend to go for more goods/services. On the other hand, when their income goes down, they tend to go for fewer quantities of the same goods/services. Or rather, they may choose to go for another good of similar nature but less expensive, hence the demand of the previous good/services tends to go down (Mansfield, 2004).
Another factor that may influence the consumer into being reluctant to purchase a certain good/service at a higher price is the price of other related goods and services within the same market. When two goods can substitute each other, then purchasers may prefer to go for the cheaper alternative. For instance, since coke and Pepsi are almost similar, and serve the same purpose, incase on of the product goes up, then that gives an advantage to the other product as the consumers tend to find it more attractive and hence its demand goes up. In the economic world, it is said that when two goods are substitutes of each have a positive relationshipbetween the price of one good and demand of the other good(Mansfield, 2004).
Another factor that may influence a consumer into being reluctant to purchase a certain good/service at a higher price is the change of taste/preference amongst the consumers. This may be influenced by several factors, for instance, in case the consumers hear that a research was conducted and it reflected that the good/services were not meeting the expected outcomes, and then the consumer demand may go down. On the other hand, if they are given information that the product/goods have certain health benefits, which were discovered later, even with the increase in price, the demand of the good/services will still rise(Sloman, 2003.).
Another factor that may influence a consumer into being reluctant to purchase a certain good/service at a higher price is the number of consumers within the market. In case a product has very few consumers within the market, then people will be less willing to buy it at a higher price. This is because the supply of the goods/services is higher than its demand. On the other hand, if the good has many consumers, then its demand goes high, irrespective of the price (Mcconnell & Brue, 2006).
In figure 1b, 2 and 3, there was some slight difference in the quantity demand levels at the same price. For instance, when the price in all the goods/services was at 3 , it was discovered that in the first curve(figure 1), the demand was at 49 while in the second curve(figure 2) the demand was at 50 and in the third curve(figure 3) the demand was at 93. When higher prices of 4 were used, it was discovered that in the first curve (figure 1), the demand was at 39 while in the second curve (figure 2) the demand was at 46 and in the third curve (figure 3) the demand was at 73.
The results above reflected that when the demand of good/service in figure 3 is higher than that of figure 1 and 2. As the price goes up, the demand reduces, but the reduction of demand is highest in goods/services in figure 1 then 2 and finally 3. This could be implying that the goods/services in figure 3 are more of basic commodities, and hence a large number of people have to purchase them whether the prices go up or not, because people cannot do without them. On the other hand, commodities in figure 2 are necessary commodities. They are important in purchasers; lives, but still, the purchaser can live without them and still survive in life. Finally, the commodities/services in the first curve are more of luxury commodities, when sold at a cheaper price more people will go for them, however, as the prices rise, people tend to shy from buying them as they can live very comfortably without them(Sloman, 2003.).
Figure 1
Figure 2
Figure 3
3. The business of choice is selling plants as gifts.
This business is likely to rise and be at its peak during annual occasions such valentines, chrismas, and thanks giving. This is because it is during these seasons that people love giving gifts. The demand is also likely to increase in case of a bad weather, which may affect the growth of plants and damage plants within the area or in case of a plant disease outbreak. This is so because it would cause the number of plant gift commodities within the market to go down, and hence the demand will be high, since people have to continue giving gifts to their loved ones during occasions such as birthday parties, graduations, baby showers to name but a few(Mansfield, 2004).
Other factors that may cause the demand of plant commodities to increase include the reduction in price. According to the law of economics, price is inversely promotional to the demand of goods/services. A lower price would attract more customers. Advertising the products would also lead to a higher demand of the commodities. This is because it would capture the attention of many people and hence attract them into wanting to buy the commodities. It would be even better to advertise them with individuals who are well recognized in the society. Good packaging of the products would also attract more customers and hence increase the demand of the goods (Mcconnell & Brue, 2006).
On the other hand, there are some factors which may lead to a low demand of the plant presents. This include high prices of the companies’ products as compared to other similar products In the market, sell of low quality and poorly packaged products, a high season of similar products and hence a high supply of the same within the market place. Inflation in the general economy of the country may also lead to a less demand of the products as it is more of a luxury product than a basic need within the society, and so people may choose to concentrate more on the basic needs than the luxurious commodities.
In order to ensure that the company gains maximum profits and fits in the market competitively, then the management has to be ready to advertise the products in media, which is inclusive if social media. Moreover, they have to ensure that their gifts are packaged in a more appealing manner in order to attract more customers. The company has to ensure that they come up with strategies to curb the harm caused by bad climatic conditions, in order to ensure continued production especially when the climatic condition is bad.
6. On doing activity in figure 4, it is noticed that as the price of the commodity goes up, the quantity bought and sold tends to go down. This can be explained that the cost of high amounts/high quantities of a product tend to be high as compared to the price of smaller packaged quantizes. This is because the cost of production of larger amounts of a product as compared to the cost of production of smaller amounts of products. According to the law of supply, the relationship between the price and quantity of good are directly proportional. Business firms and producers of commodities take get different resources, and combine those producing different goods and services. In order to make profit from selling their products, they have to sell the products at a cost which is higher than the cost they used to produce the products. As the product price goes higher, the producers find it more benefiting to sell more units. This is what brings about the direct relationship between the cost and quantity of products (Mcconnell & Brue, 2006).
Figure 4
Some of the reasons that might there for producers to want to offer more for sale at higher prices include: the price of input. This is because the cheapest amount a firm can sell its products is the amount that the company used in the production of the good. An increase in input lead to decrease in supply and a decrease in the price of production leads to increase in supply (Mansfield, 2004).
Another factor is the state of production technology at time of production. In case of better technological facilities, and hence better production, it is easier to supply more products, at a higher cost, due to the cost of improving the technology. Another factor is the number of producers in the market within a given time. In case there are many producers of the same product, then this calls for a decrease in the supply, but if there are less producers, then the supply increases. The final factor is the climatic factor as it affects the supply of agricultural products (Sloman, 2003).
In figure 4, 5 and 6, as the cost rises, the goods supplied and sold also rise. However the rise is more in figure 4 then followed by figure 5 and figure 6. This shows that fewer products are supplied at the same cost in figure 6 as compared to figure 5 and 4. This could be due to a higher cost of production of products in figure 6.
During the heat wave which occurred in the U.K in 2003, the demand and supply of different products were affected in different ways as a result of more tourists visiting the country. According to personal prediction the cost of ice cream is likely to have gone higher, so are the prices of beer, hotel rooms, wheat, beef burgers, barbeque charcoal and garden swings. This is because of more visitors within this country and so more demand than supply of the products and services mentioned. On the other hand, the prices of lettuce, maize and barley are likely to go down. This is due to the negative impact of the weather on such plants (Mansfield, 2004).
In the United Kingdom, monetary policy has been only been given to the Bank of England. This means that the bank of England has the mandate to set interest rates. The role of the government in this case is setting the inflation rate, whereby it has set the inflation rate at 2%. In case there is a prediction that the inflation rate will go higher than the inflation target, then the MPC increases the interest rates. A higher interest rate comes with lower demand and hence prevents the economy from abrupt expansion (Mcconnell & Brue, 2006).
In case of sluggish growth of the economy, then the interest rates are cut down in order to boost economic growth and reduce inflation. The fiscal policy is aimed at preventing recession and inflation. It influences economic activities by changing taxation and the government’s expenditure. In case of inflation, then the government heightens the taxes and cut down on its expenditure, hence reducing the aggregate demand. Incas of recession, then the government increases their spending and cut down on taxation hence increasing disposable income, and increasing the economic growth as well as reducing unemployment(Roy,et.al,2006)..
The monetary and fiscal policy is likely to impact further education in that it may most institutions of higher education rely partially on the funding from the government. For instance, the .government was supporting Exeter University. In case the government and the Bank of England are unable to implement these policies effectively, then the higher education systems are likely to be affected directly. It affects the number of employees within the higher education system and the amount of taxes these people pay. It also affects the amount of tax to be paid by institutions of higher learning as it deals with the taxation systems. In case of an increase in taxation payment, then institution have to look for a way of making more income. In case it doesn’t come up with a sufficient strategy, then this may lead to underfunding and even closure of the institution(Roy,et.al,2006)..
The competition policy in the United Kingdom is aimed at ensuring that the different premises within the country affects the competition and whether it is in line with the general interest of the public. It involves a number of legislations but has four key principal Acts, of each dealing with different aspects of the competition policy. These are the fair trading Act 1973(looks at mergers and abuse of monopoly power, within the market), the competition Act 1980(looks at anticompetitive practices within certain institutions), agreements restrictive trade practice Act 1976(deals with pacts which restrict companies or individuals from competing freely) and the resale prices Act 1976 which deals with imposing the minimum prices for reselling goods.
The competition policy and regulation has an impact on higher education systems in that most education system is also in business. They have to .make profits or charge their students some money for the purpose of their sustainability. Since they are institutions in business, then they have to comply with the competition Act. They have to ensure that they are working with the interest of the public at heart. This is the reason as to why the government intercedes in case there is need to do so. For instance, in the Exeter University, the government had to come in in order to curb the closure of the institution for the good of the general public (Mansfield, 2004).
There are three main structures of institutions of higher learning. To begin eighth, there are the monopolistic competitions, the oligopoly and the monopoly. In the United Kingdom, the kind of structure used in institutions of higher learning is the oligopoly structure. In this form of structure, the education system is not discriminative of the students to admit in their institution on monetary basis. It considers factors such as the courses available for the students to do, the qualification of the students and vacancies available, rather than on monetary qualifications of the students. Exter University is a typical example of such type of education system. The cost decisions on such type of structure are made basing on the cost of production of the products/services. In this case the cost incurred in order to deliver the services, is what determines the fee to be charged on the students (Mcconnell & Brue, 2006).
There is a rampant change in the world cultural changes, especially in higher education. This is done in order to accommodate the new culture of taking students from all over the world. The cultural changes are geared towards globalization, managerialisation, marketization, massification and diversification. Different universities have to change their culture in order to fit competitively in the economic world. Cultural changes will affect the United Kingdom system of higher education in that it will increase the demand of higher education all over the world, and so the United Kingdom’s education systems have to be ready to accommodate more students from all over the world. This should come with an increase in the amount of money paid for acquisition of higher education (Roy, et.al, 2006).
Mergers and acquisitions can be beneficial to the University of Exter especially during a period like this when it is weathering away. When undergoing financial problems in the market, the institution can go for an acquisition deal. When an institution with a strong market buys out an institution with a weak market, then there is formation of a competitive company/institution which is cost efficient. The weaker institution gains, since it is assisted to get out of the difficult situation, after being acquired by the larger company. Furthermore, the larger company has more capability of acquiring a larger market share (McDonaldet.al, 2005.
When two institutions join through mergers or acquisition, they benefit through acquisition of cost efficiency. When the two firms come together, production is done at a larger scale and once the output increases, then there are higher chances that the unit production of outputs is reduced. Another advantage of the mergers and acquisition is that it enhances surplus of power when the two companies come together. Moreover, mergers help the institution to maintaina competitive edge as well as enhancing market reaches, offering new sales opportunities as well as new areas to explore (McDonaldet.al, 2005.
The disadvantages of mergers and acquisition are that the company/institution may have conflicting objectives. It may be difficult to address the objectives of both institutions effectively. Secondly, there may be redundancy, whereby the different workers tend to duplicate the work done by another worker. Moreover, there may be some culture conflicts between the two institutions. Finally, there may be market saturation incase the two companies have a similar market target (McDonaldet.al, 2005).
List of References
ActonAid (2005) “Contradicting Commitments: How the Achievement of Education For All is B eing Undermined by the IMF,” By Akanksha A. Marphatia and David Archer, ActionAi d International.
Sloman,j. 2003.Essentials of Economics.UK: LTSN:University of Bristol.
McDonald,J., Coulhard,M., and Paul De Lange.( 2005) ‘Planning for a Successful Merger: A Lesson form an Australian Case Study.’ Journal of Global Business and Technology, Volume 1, Number 2.
Mcconnell,C. and Brue,L.2006. Economics. U.K: Nottingham Trent University.
Mansfield, E. (2004). Microeconomics, 8th ed. New York: W.W. Norton and Co\
Roy, R. Heuty, A. and Letouze, E. (2006) “Fiscal Space for Public Investment: Towards a Human Development Approach,” United Nations Development Program, Prepared for the G‐24 Technical Meeting, Singapore, 13‐14 September.
