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Principles of Economics Paper

Words: 740, Paragraphs: 10, Pages: 3

Paper type: Essay , Subject: Economics

In the readings of this week we looked at some market structures and how they affect the certain areas of economic structures within the economy. In this paper we will also be exploring information given on equilibrium in relationship to the labor market, as well as an observation of the package deliver leader “UPS” We will first start with comparing and contrasting services and goods used n the different market structures.

In Economics, market goods in four different categories grouped by characteristics of being excludable or rival in consumption. Excludable basically means one person can prevent the use by another person. A rival in consumption means the use of a good by one person eliminates the opportunity for another person to use that same good. The four different groups of goods are private goods, public goods, common resources, and natural monopolies. Private goods are goods that private firms produce for profit available to people but not available to all people.

Examples of private good are food, clothing, toys, furniture, and cars. According to Mankiw (2007), private goods are excludable and rival in consumption because someone can prevent some from obtaining a good and the use of a good prevents others from obtaining the same exact good. Natural monopolies are goods which are excludable but can be used without limitations. For example, a cable company can exclude people from accessing cable by charging for cable, but there is no limit on the consumption.

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Public goods are the exact opposite of private goods. Public goods are free, available to everyone, and there is no decrease in the availability by use of others; therefore public goods are neither excludable or rivals in consumption (Mankiw, 2007). Air is an example of a public good. In general, the intake of air by one individual does not decrease the supply of air to other individuals. Another category of goods are common resources.

Common resources are the goods that are available to everyone, but the use of the good itself reduces the availability of the good to others. Commonly used examples of common resources are fish in the ocean and congested non-toll roads. The final category of goods is natural monopolies. Because of the free availability of public goods and common resources, there are both positive and negative externalities. The positive and negative externalities require government intervention and regulations to protect resources and future allocation of resources.

When the quantity of demanded equals the quantity supplied at the current market price, it is refers to the labor market equilibrium. Equilibrium is to keep thing balanced. There has to be a balance in the labor marketplace to keep thing equal. A change in labor market equilibrium can occur when there is limited amount of job opening and qualified people to fill those positions. When there is a decrease in labor supply occurs there are not enough qualified people to fill the position that are open.

Hiring more labor causes the marginal product of the worker to fall. In the new equilibrium both the wage and the value of the marginal product of labor are lower than they were before the increase in labor supply. This causes the labor market equilibrium to become unbalanced. Labor demands shift decrease because of a lack of jobs opening in area causing qualified employees to relocate to find a job. When demand for labor increases an increase wages and employment will increase.

With a higher output price the added productivity from more employees is more valuable, which makes hiring more workers becomes profitable (Mankiw, 2004). Mankiw (2004) stated, “Any event that changes the supply or demand for labor must change the equilibrium wage and value or the marginal product by same amount, because these must always be equal. ” Equilibrium happens when supply equals demand, generating the employment, and competitive wage. In closing what has been included in this paper are the main points of what we believe these chapters have summarized.

The four major market structures have been broken down to understand who and what are represented by each in an example as well as characters of each. The effectiveness of these organizations as well as factors that affect supply and demand have highlighted along with compare and contrast resources within market structure.

References: ankiw, N. G. (2004). Principles of Economics (4th ed. ). Mason, Ohio: South-Wesrern. UPS Investors Relations , 1999-2010 United Parcel Service of America, Inc Retrieved from www. investors. ups. com

Principles of Economics

About the author

This sample is done by Scarlett with a major in Economics at Northwestern University. All the content of this paper reflects her knowledge and her perspective on Principles of Economics and should not be considered as the only possible point of view or way of presenting the arguments.

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Principles of Economics. (2019, Jun 20). Retrieved from https://paperap.com/paper-on-essay-principles-of-economics-2/

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