The Game of Economics

Define economics using the following terms: allocation, distribution, goods, resources, production, and services.

Economics is a social science that is mainly associated with the production, distribution, and consumption of goods and services and how the government and businesses make decisions on allocation of resources to satisfy their needs.

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What is scarcity, and how does it affect supply and demand in the game of economics?

Scarcity can be defined as the primary economic issue of having universal human needs in a world that has limited resources; meaning that the society's funds are insufficient in fulfilling all the requirements and wants of humans. Scarcity affects supply and demand in that if there is a high demand for goods and services and there is a low supply; then the prices will be high. If the demand for goods and services is low and h supply is high, the prices will be low.

List the main differences between a free-market system, a command economy, and a mixed economy.

A free-market system is one where the economy is based on the supremacy of supply and demand, and the government has little to no involvement. A command economy, on the other hand, is one where the government has power over the production and pricing of goods and services. A mixed economic system is one that has a little bit of the command and free-market system where the economy is partially based on the power of supply and demand and partly controlled by the government.

What type of economic system does the United States have? Explain.

The United States has a mixed economy such that it incorporates the characteristics of socialism and capitalism. This system of economics enables the governments to intervene in economic affairs to acquire social aims and to also protect private property by allowing a level of economic freedom when using capital.

Name the three factors of production and two payment types in the circular flow model. You may draw a diagram and label the necessary components if you wish.

Three factors of production include land; it is everything on the land pus the ground itself. Things traded in the market include everything that has been removed from the land inclusive of natural resources to make a product of providing services. Labor; this is the work provided by households with the aim of producing goods and services. Capital; it is the vehicles, machinery, and buildings that an organization uses to create products and services. Two payment types include rent; paid by households in exchange for land, and wages; paid to households by businesses in exchange for labor.

Describe how subjectivity and other factors affect a person's calculation of cost and benefit. Give an example of a cost-benefit analysis you have performed.

Subjectivity and other factors affect an individual's calculation of cost and benefit because the person will be viewing things will satisfy their needs instead of the cost. Consumers seek to maximize profit which triumphs costs of products and services. I have used the formal cost-benefit analysis which is a step by step process that includes a feasibility study, a preliminary survey, and a final report.

What is technology? Name the two forms that technological advancement can take.

Technology is the collection of methods, techniques, skills, and processes that are used in the production of goods and services as well as a fulfillment of objectives. Technological advancement has gone from riding tamed animals as means of transport to driving automatic cars. It has also moved from hitting two rocks to make a fire to pushing a button.

Give an example of a technology that led to greater productivity and explain how it did so.

The invention of agricultural drones has led to higher productivity in that farmers can treat their crops better. The drones can reveal issues such as distressed plants, irrigation treatments, and soil variation.

The Players

Describe the role that workers play in the game of economics.

The role of workers in the economy is to promote economic growth because they are both producers and consumers. They will be able to utilize the scarce resources available to produce goods and services as well as being a consumer of these products hence economic growth.

Explain why the worker's role is unique.

The worker's role is unique since they act as both producers and consumers. They produce the goods and services ha are introduced in the market, and for sustenance they will have to purchase these goods. They help with the cycle of production since without demand there is no need for production.

Explain why it is important for producers to conduct market research.

It is essential for producers to conduct market research since it will enable them to have more data and understand what the consumers need and their preferences. This knowledge will, in turn, enable them to produce goods and services that will be embraced in the market, therefore, making sales and increasing profit.

Give at least one example of a type of market research that producers conduct. Explain the kind of information this research provides.

One market research method that producers can conduct is the use of focus groups. This is a small number of individuals who are given products to test and give their honest feedback. If the product or service is liked, then the producers will see that they have a chance of succeeding in the market.

Describe the meaning of utility in economics and explain why it is different from one customer to another.

A utility is the degree of personal contentment that consumers acquire from the products and services purchased. A utility is different from one individual to another since it depends on the choices made during purchasing. If one chose a product they admired and liked it after using it, then the utility is high, but if the product was admired and the consumer did not like it after using it, then the utility is low.

Why do economists try to measure and understand utility?

Economists try to measure and understand utility because consumers only purchase goods and services with the aim of satisfaction. If they understand this, then they will be able to predict the market based on satisfaction of consumers.

List two characteristics of an oligopolistic industry.

One characteristic of an oligopolistic industry is that it has important barriers to entry and another is that it is an industry dominated by a small number of big organizations.

Why are so many familiar industries oligopolies?

Many industries are oligopolies because it is hard to break into many institutions. Organizations such as the airline industry cannot have many firms because they work together to weaken the output which in turn raise their profits.

Explain why circulation and ratings systems determine how much money different advertisements cost to run.

Various advertisements cost the different amount of money for it to be aired on television. The media industry has many firms and all earn most of their revenue from advertisements. If a media group is popular with many consumers, then clients will have to pay more money for their items to be advertised since it will reach a huge number of people. If a media company is less popular with fewer consumers, then the advertisement costs will be less due to the lack of guarantee for success.

Freedom and the Free Market

What significant events were occurring in England and North America at the time that The Wealth of Nations was written?

Some activities were taking place when The Wealth of Nations was being written. They include the industrial revolution which was taking place in the majority of the European countries. The issues of labor and specialization were happening during this time, increased the popularity of the free market philosophy, and increase in productivity.

What was Adam Smith's purpose in writing The Wealth of Nations?

Adam Smith's purpose in writing The Wealth of Nations was to criticize and offer an option to the capitalist economic system that he believed would suppress the productivity of the country. Smith argued that instead of having a small number of stores that sold precious metals, the wealth of the country was seen in the flow of products and services.

Why does Smith think that pursuing personal interests is a more effective way to benefit society than trying to pursue the interest of society as a whole?

When people pursue their interests, the society will improve. This is done whereby the people will want to engage in activities that will create money such as starting their own business with the aim of making the profit. By starting businesses, they will have to employ workers whose lives will be improved through being paid. As they aim for profit, they will have to buy goods from other people who will also improve the society.

Why does Smith think that the government should stay out of economic affairs?

Smith thinks that the government should stay out of the economic affairs by arguing that every individual with sense can judge for themselves better than any lawgiver can do for them. He goes on to say that the lawgiver who will try to direct people on how to handle their economic affairs will be drawing unnecessary attention to themselves unless they get a position that people will trust.

Are there any reasons why Smith's model of capitalism might not be a successful argument in favor of the free-market system? Explain.

Smith's model of capitalism might not be a successful argument because, in his book, he says that the free-market economy is ruled by the 'invisible hand' which is a result of improvement of the economy through people pursuing their interests. This argument is opposite since it is different from the free-market economy which is entirely ruled by demand and supply of goods and services.

Smith points out the possibility of producers contriving to raise prices. Are there other problems with the free-market system that he did not point out?

Other disadvantages of the free-market system include; those goods and services that do not generate profile will not be produced. Organizations may exploit their workers or pollute the atmosphere to reduce production cost and maximize profit. Certain members of the society will not be able to get jobs since they lack marketable skills and they fall into poverty.