Economics of Social Issues Study Set 2

Answer:

At an equilibrium phase, the consumers' demand for hot dog products (the buns and wieners mainly) is balanced with the supply that will generate a profitable margin for the sellers. However, changes in the price of one or more of these products can affect the market leading to a surplus or shortage of supplies.
If the price of hot dog buns increases, for instance, the demand for hot dogs as a whole will decrease. Many people simply have no need to purchase hot dog wieners without buns and they would be unwilling to purchase buns at prices that they deem as unreasonably high. This would result in a surplus of hot dog products and send the message that the money used to produce those products could be put to use elsewhere. This will lead sellers to slow or halt production of hot dog goods. They will also competitively lower the price on their remaining products in order to sell them.
The effect is ultimately the same as would occur if prices were increased for a singular product (like soft drinks or pizzas). Consequently, the supply-demand graphs for both products would be similar to each other; both would reflect a decreasing demand for the products in an inverse relationship with the supply.

Answer:

Man nations, the USSR (now Russia) and the United States included, have seen the benefits of moving toward the pure market end of the economic spectrum. China stands out as a shining example of how this shift can ultimately improve economy. One should not take this fact to assume that the shift alone will equal prosperity and economic stability.
A country in wartime or a nation experience civil unrest is highly unlike to reap the benefits of a pure market economy; its resources and finances are likely being tapped to the limit trying to stabilize its infrastructure. The reason this shift worked so well for China and a few other countries like Vietnam is because it just so happened to occur during times of relative stability within these nations.
In China's case, Mao Tse Dong's rule ended with his passing and while there were many who were loyal to him, no one felt the need to spark a revolution or civil unrest in either direction. Thus his successors were able to slowly but surely implement economic change and as they saw their situation improving for themselves and their people, they confidently continued to move toward a more pure market economy.

Answer:

The spending habits of consumers and the effect that this has on the market for certain goods are directly linked to consumer incomes. If consumers' buying power is inhibited by a decreased income, then the consumers may stop buying certain products or services and look for cheaper alternatives. A good that consumer typically buys when their income is at an optimal level is known as a normal good. The demand for normal goods increases with rising consumer income and decreases when consumer income falls. The alterative goods that consumers buy more of when their income decreases are known as inferior goods. Generic products or substitutes are inferior goods to name brand products, which are considered normal goods.