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HEA8302 Globalization and Law of Demand Assignment
In today’s world various economy and countries are making their consistent efforts in order to prove them self on the international level. Various developing countries and leading company has entered into general agreement in order to eliminate the concept of tariff and traits in the process of import and export of goods services from one’s countries. There are various other benefits that have been seen on the international level due to the countries inclination toward the development and globalization. Globalization is the concept that allows economy of one country to make transaction with other countries for transferring, consuming goods provided on the international portals.
(a) Do you support the idea of globalizing the Australian economy? Why. Why not? In writing your answer, wherever possible, back up your arguments with the theory, research articles or statistical evidence?
Yes I do support the idea of globalizing the Australian economy because it helps economy in the following ways.
- Process of globalization of economy has proved to be very much help in enhancing the country image on international level.
- It results into incorporation of good amount of amicable relation between other counties
- Globalization is the process of eliminating all the tariff and traits at the world level and opens it economy to other countries for the betterment of the future.
- Availability of the international goods and services, increment of the standard of living of the Australian people and availability of quality of goods and services for the local resident in the home countries.
- Increment of the business and production of the goods and services in Australian economic (Flew, 2012).
In order to support my answer I would like to quote the oldest example that we have seen throughout the time being in force. India now has become one of the leading economies in the context of import and export of goods since the time it open its economy for the rest of the world. In the year of 1992 or before that time Indian economy was not in good condition then at that time prime minister of that country named Mr. Manmohan Singh allowed Indian economy to cover itself in the shell of the globalization worldwide. Due to the increasing effects of the globalization on the Australian economy has resulted into increasing use of outsourcing business, tough competition to the local market player with the international players, increment of the standard of living of the Australian local people and further more.
(b) Also, discuss who gains and losses from globalization?
Globalization is the process of eliminating all the barriers related to import, export, FDI and ODI on the international level. This is being found that there are various losses and gains that could be seen for the time being in force in the Australia.
- Grasps of High level of foreign direct investment in the Australian countries.
- Establishment of big Multinational companies has increased the product quality and high level of services to the local resident.
- Increment of jobs to the local resident and standard of living has significantly changed of the local Australian people.
- Elimination of traits and barriers to the international players has showed a very much help in the incorporation of amicable relation on the international level with other countries.
- Introduction of international treaties and agreement with other countries.
- Increment of the rating on the members list prepared by the world trade organization.
- Availability of good amount of foreign exchange reserve to the country and it will result into the valuation of the Australian money on the international level.
- Development of good understanding of the international policies and rules for the betterment of the Australia
- Local resident will gradually increase the product and services quality offered in the market.
- Better infrastructure and more employment will results into betterment of the Australian economy in various context such as education level, business enhancement, understanding of the global working style and further more
- Creating of brand image of the counties on the international level that will increase countries tourism business.
- Australian local residents have to face tough competition with the international players
- Liberalization in the security concern and low level of tariff and trades result into the malfunctioning of the countries process system that is comprised of terrorist activities, increment of bribe and other pitfalls in the government functioning.
- Availability of the foreign stocks and goods undermine the local goods and services uses in the Australian countries
- Local businessman has to face recession in their business as they will be not in the position to pose a good threat to the international players.
- High government expenditure and investment in the development of infrastructure may result into the increment of balance of trade.
- Loss of the Culture, heritage and people values and belief as foreign resident will be unable to understand the key value of all this segments in the countries.
- Interruption in trade and business policies developed by the local government by the WTO and other legal bodies.
Now with the given level of benefits and pitfalls we would say that globalization of Australian economy May results in drastic changes. But due to this a country can never close its economy for the long-term at the some point of time each and every country has to open its economy for the world. Globalization is not choice but an essential requirement that should be adopted by each and every country in order to phase with other economies on the international level.
(a) Explain why the law of demand applies to food just as it does to all other goods and services?
Law of demand is the essential factor to determine the future demand of the products and services offered in the market. It states that all the other factors remain the same if price of the goods and services offered is kept high then demand of the same goods will be decreased. Law of demand showcases the negative relation between price of the goods and demand of the same in the relevant market. In the given time schedule it is depicted that higher the price of the goods will result into gradual decrease in the demand of the same product due to the increasing level of opportunity cost to acquire goods therefore they end up with doing more trade off with the available resources (Hilletofth, 2011).
There are two reason why the law of demand applies to food as just like on other goods and services
- The law of demand is one of the best fundamental concept of economy that apply to all the goods and services price effects on demand in the given market segment. It works with the demand of supply it makes an understandable fact how market economics and its various factors allocate resources and determine the price of the goods.
- The most appropriate reason of application of law of demand on the foods is that it depicts the consumer behavior and their changes in the choice of action due to the price changes in the given market.
(B) Explain how the substitution effect influences food purchases. Provide some examples of substitutions that people might make when the price of food rises and other things remain the same?
Substitution of the product can be describe as a different product and services that can satisfy the same need and demand of the products and services in the market. With the given level of research it could be said that when price of the one good is increased then consumers like to switch their choice of action to other offering in the market for the satisfaction of the same need. There are following points that describe how substitution effects influence food purchase
Substitute product provides the same level of satisfaction to fulfill the demand and need of the consumers with the particular product.
Substitute product of main product has all the key intent that is possessed by the main product
Consumer could easily make changes in their choices if substitute product offers much better quality then the present one.
Main curve of demand of the substitute product and the price of the main product goes in the same direction or could be said both curve have positive relation in demand and supply.
There are given some of the example of the substitution of the product that people like to make if all the other factors remain constant
Fast moving consuming goods
If the price of the Colgate increases then consumers will prefer to switch to Mouth fresher
Auto mobile sector
Mitsubishi Lancer Evolution MR (Obizhaeva & Wang, 2013).
Subaru WRX STI Specifications
If the price of the Mitsubishi Lancer Evolution MR increases then consumers will prefer to switch to Subaru WRX STI
(C)Explain how the income effect influences food purchases and provide some examples of the income effect that might occur when the price of food rises and other things remain the same?
One of the central considerations for the consumer’s choice of action in purchasing goods and services is dependent upon the consumer’s budgetary constraints. The main things that could be used in order to demonstrate the consumer’s behavior change with the slight change in the income of the consumers. The simplest way to demonstrate the clear effects of the income on the consumer choice of action is to use the consumption curve. With the help of this curve we could easily portray the different product changes and effect due to the changes in the price of the goods
In case of normal demand of goods which are of daily use there will be liners relationship with the increase and decrease of the consumer’s income provided other constraints remain the same
In case of inferior goods demand if income of the consumers increases then inferior goods demand will be decreased as consumers would be option better quality of goods and services If there purchasing power increase for the time being in force and vice versa
In case of luxuries goods demand there is fact that if there is drastic increase in the consumers income then there will be high amount of increment in the luxurious product demand and vice versa
(a) Why is the land price raising in the metropolitan cities and what are the major drivers of rising house prices in these cities?
There are various factors that is contributing rise in the land price in the metropolitan cities
As per the law of demand if the demand of the product increase then there will also be seen increase in the price of the product. Therefore there is seen that Land in metropolitan cities are in the most demand so it results into the increment in the price of the product (Kannai & Selden, 2014).
Australian metropolitan cities, particularly in Darwin, Sydney and Melbourne are the most developing cities and the people resident in this countries are seeing consistent increment in their income level that results into the higher level of inflation and devaluation of the Australian money
Standard of living of the local residents are also increasing that showcase the big level of demand of owns houses and increasing demand results into the high level of up price.
GDP growth rate and national income has shown tremendous increase that has resulted into the increasing demand of owning houses and land.
b) Using an appropriate diagram, explain your answer in part (a) above.
(C) Is the supply of land in the metropolitan cities perfectly inelastic?
Supply of land in metropolitan cities is comparatively less in context with the demand of the local resident in the countries. There are no such factors which preferably decide the valuable factors but other ancillary factors which are used in order to justify the elasticity of the land supply.
- Tax rate in the selected area
- Government expenditure
Now I would like to say that in the selected metropolitan cities demand and supply of the land are not equal and in order to find out equilibrium point researcher has to undertake various identified and unidentified factors. Therefore this curve is inelastic in terms of supply and demand of the land in the cities.
This report has provided me a very much help in understanding of law of demand and its effects on the consumers report. It is the actual fact that Consumers choice of action is dependent upon the various factors. Now I would like to conclude my words by saying that Demand and supply are the important two aspect in determining various needs and product value in the market.
- Burkhard, B., Kroll, F., Nedkov, S. & Müller, F. 2012, "Mapping ecosystem service supply, demand and budgets",Ecological Indicators, vol. 21, pp. 17-29.
- Flew, T. 2012, "Globalisation, media policy, and regulatory design: Rethinking the Australian media classification scheme", Australian Journal of Communication, vol. 39, no. 2, pp. 1-17
- Hilletofth, P. 2011, "Demand-supply chain management: Industrial survival recipe for new decade", Industrial management + data systems, vol. 111, no. 2, pp. 184.
- Kannai, Y. & Selden, L. 2014;2013;, "Violation of the Law of Demand", Economic Theory, vol. 55, no. 1, pp. 1-28.
- Obizhaeva, A.A. & Wang, J. 2012;2013;, "Optimal trading strategy and supply/demand dynamics", Journal of Financial Markets, vol. 16, no. 1, pp. 1.