Various economic topics and their impact in contracting and stimulating GDP

Various economic topics and their impact in contracting and stimulating GDP

Abstract.

This paper explores six published articles that report on different issues that affect Microeconomis. The topics vary in content but have an overall impact on GDP. Microeconomics js the study of human decisions and how they affect utilization and distribution of resources. Gregory (2015). This paper examines all the six articles, shows how they are economically  interrelated and how they relate to the human well being in general.

1. Conspicous Consumption In The Market For Smartphones.

The more an item costs the less it is purchased. This is defined in the law of demand and supply. If a good defies this law it is referred to as a Veblen good. According to Elaine Schwartz (2017), with the Launching of Iphone X, Apple gave the world a “Veblen Moment”. The upperclass will show their economic status by purchasing useless items or very highly valued goods. The IPhone X valued at One Thousand dollars was more preferred than IPhone 8 valued at three hundred dollars. As demand for smartphones grow exponentially, Apple Inc and Samsung create highend products that spur demand. People living in affuluent states are more likely to own an IPhone. Preference for iphone increases with increase in affluency.  Elaine Schwartz (2017).Why We Buy Our IPhones.Econlife Online Journal

According to Thorstein Veblen (1899), conspicuous consumption is buying an expensive item for display of wealth and income rather than covering the real needs of the consumer.

This article relates to the course outline by explaining Oligopoly, Apple Inc has to use product differentiation so as to acquire a higher market niche.

2. Bitcoin And Its Derivatives-How Does The Market Operate

Bitcoin was created in 2009 by an unknown person and shot in price in 2017. Bitcoins are cheap to use since they are not tied to any country and do not have any additional charges. Marketplaces allow people to buy and sell bitcoins using currency as a form of investment. They are transferred through mobile applications of computer just like digital money transfer. They are stored in virtual wallets and are not insured. Owing to their anonymity and inability to be tracked back to the owner, bitcoins have been misused for money laundering and illicit trade. The success or failure of the bitcoin is yet to be ascertained.  Tal Yellin, Dominic Aratari, Jose Pagliery (2013) CNN Money.

The Commodities and Futures Trading Commission (CFTC) allowed the Chicago Mercantile Exchange (CME) and the Chicago Board Options Futures Exchange (CBOE) , the world’s largest exchanges for derivatives products to offer contracts for futures of bitcoin.

Bitcoins serve as an answer to scarcity of a global currency. Scarcity is the condition that exists when there are not enough resources to satisfy needs in a society. This makes it easy for interaction between suppliers and consumers, otherwise liberizing trade. This voluntary trading in turn increases gains from trade.

3. President Trump And Fake News-Effects On Political Economy.

Fake news is propaganda spread by either print media or social media. “The term became popular in 2016 during the US election campaigns when media and websites published falsified and biased information in a bid to maximize of social media advertising revenues” Victoria University, 2017.  Fake news has dominated both media and politics influencing consumer behavior and votes. Donald Trump has discredited few media stations including BBC news. Media is an element of rise and fall of market values. Not only can fake news lead to bad political decisions, they can also lead to uncertainty in business affecting consumer confidence.

Fake news dates back to the 1800s when Britain was contemplating declaring war on France, a letter supposedly from the Mayor of London to Lord Hawksbury claiming that the issue had been settled. This led to stocks rising with five percent. Before treasury issued a statement declaring the letter as a hoak, stocks had traded. Similar events are affecting the bitcoin, January 2018 has seen the fall of bit coin due to misleading content from fraudsters. With the rise of fake news, People are cautioned to be extra careful on tracing the origin of an article before making large investment decisions.  Lyric Jain (2018). Is Fake News Bad For The Economy. Finance Monthly

Fake news affect consumer behavior as well as demand.

4. Perfect Competition For Information: Why Newspapers Are Dying Off

Previous announcement the New York Daily News that it had just laid off its staff is an ominous indication that newspaper industry is dying. In the 1940s, New York Daily’s newspaper had over two million daily circulation, seventy-five years later, the circulation stands at two hundred thousand. This is despite of the rise in population of New York City and its environs. Other print media that has since “died” is Rocky Mountain News, Denver, Post-Intelligencer, Seattle and the Tucson Citizen. In other states like Detroit, print media is not on daily basis but printed on certain days of the week.

The reason for this decline is attributed to the upsurge of Television in the seventies and internet in the nineties. Other people associate the print media with objective reporting and fake news. People are not willing to pay for something they can get through the phone or internet. Aside from newspapers, other print media including magazines have also ceased publication. John F. McManus (2018). Newspapers Are Dying. The New American.

Perfect completion is referred to as a condition where many firms produce identical products, there are many buyers and many sellers, both have relevant information to make rational decisions about a product, free entry and exit to the market and minimal government intervention. Seventy five years ago, New York Daily News enjoyed monopoly in the New York markets. As years went on,  there was emergence of Television and internet. These came with many media stations, websites and online journals.

Economic principle applied is trade can make everyone better off. When one side gains , in this case electronic media, the other side losses, in this case, the print media.

5. Demand Vs Supply For Clean Energy: Why The World Still Runs On Fossil Fuels.

Duncan Clark (2013) says that we have more coal, oil and gas than we can safely burn. In addition, oil is  highly economically valuable, very important and useful. Tackling global warming and skewing towards clean energy means that we have to leave fossil fuels in the ground. It has not been proven that giving up obsecure and unconventional fossil fuel will reduce the rate of global warming. Cutting carbon uses in one place has lead to an increase in another place, case study, drastic reduction in use of Fosil fuels in America and Australia has seen a decline in carbon emission in the areas but an increase in the China republic.

The government has been subsidizing green energy , clean power sources, efficient cars and buildings but has been ripping as much oil and coal gas as they can. This shows that clean energy has no demand. Although America boasts of clean energy replacing dirtier coal, it is extracting carbon faster than ever before and exporting it to China. Fossil fuels remain a finite resource that get more expensive than renewables and nuclear. Given its many uses not just in fossil fuel extraction, it is less likely that its extraction will end any time soon. With so much money and Economic power, it will take harder politics and bigger thinking to cub oil extraction. Voluntary carbon cuts will be a great start. Duncan Clark, (2013). Why cant we quit fossil fuels. The Guardian.

According to the article, the government offers incentives such as price subsidies and tax cuts for clean energy to create demand. Principe of economics applied is “people respond to incentives”. The market for oil is relatively inelastic and very much controlled by the government. The production cost of fossil fuel is relatively lower than that of clean energy. According to Alyssa Danigelis (2017) Energy Manager today , US renewable energy supply is not enough for major manufacturers’ demand. David Gardiner and Associates (2017) noted that after General Motors announced its interest in purchasing Two Hundred Mega Watts from Ohio and Illinois, it was met with legal and policy barriers from the government.

6. Theory Of Consumer Behavior- Impact Of Social Media On Economic Growth.

Social media has provided a new ecosystem for businesses to thrive. Before social media, businesses had to pay for advertisements and to get information from the public. Social media is linked to a chain of platforms that control distribution. The success of a business is not based on how much money it can pay but how well it can capture audience through Digital marketing. These platforms have since become world’s biggest companies by market capitalization. Smaller businesses can therefore gain foothold in the market much easier. Quora (2017),Forbes.

Social media influences consumer behavior through: direct communication with the consumer increases a consumer confidence and loyalty, consumer research from social media platforms aid the consumer in knowing what other people think of the product influencing a purchase, aggressive social media marketing also increases a company’s sales.  The power of social media on consumer behavior can be illustrated by a case study in 2014 when Lupita Nyongo dropped a lipstick tube as a donation to Ellen. The lipstick brand Clarins Hydra Quench Moisture Replenishing lip balm sold out overnight such that the company has to ask for additional stock from France.