Unit III Journal Identify A Good You Commonly Use Or Would L

Unit Iii Journalidentify A Good You Commonly Use Or Would Like To Use

Identify a good you commonly use or would like to use. Explain at least three factors that would result in a shift in the demand curve for that good and three factors that would result in a shift in the supply curve for that good. Describe the effect on equilibrium price and quantity of each factor and how those changes would affect your life. Finally, explain how the shifts in demand and supply are different from movements along the demand curve or movements along the supply curve and why the distinction is important. Your journal entry must be at least 200 words in length.

Paper For Above instruction

In this discussion, I will examine a particular good that I frequently use—smartphones—and analyze the economic factors that could cause shifts in their demand and supply curves. Understanding these shifts helps explain how market dynamics influence prices and availability, ultimately affecting my access to such technology. Additionally, I will explore the distinctions between shifts and movements along the demand or supply curves, clarifying why these differences are crucial for economic analysis.

Demand for smartphones is influenced by various factors. First, advances in technology often increase consumer interest, enlarging the demand. When new features such as enhanced cameras or 5G connectivity are introduced, consumers are more eager to purchase these products, shifting the demand curve outward (Mankiw, 2020). Second, income levels significantly affect demand; a rise in consumer income typically leads to increased purchasing power, shifting the demand curve to the right (Varian, 2019). Third, pricing of substitutes, such as tablets or laptops, can also affect smartphone demand. When the price of substitutes increases, consumers might prefer smartphones, increasing demand. Conversely, if these substitutes become cheaper, demand for smartphones may decrease.

On the supply side, technological improvements in manufacturing reduce production costs, which can shift the supply curve outward (Krugman & Wells, 2018). Additionally, government policies like subsidies for electronics manufacturing can incentivize increased production, shifting the supply curve rightward. Conversely, increased costs of raw materials—such as rare earth metals used in smartphones—can cause a decrease in supply, shifting the supply curve inward. Lastly, changes in regulations, such as stricter environmental standards, might limit production capacity, shifting supply inward.

These shifts impact equilibrium price and quantity. For example, an increase in demand with constant supply typically raises prices and increases the quantity sold. Conversely, an increase in supply with steady demand tends to lower prices but increase quantity, benefiting consumers like myself by reducing costs and enhancing availability. Conversely, decreased supply raises prices, potentially making smartphones less affordable.

Understanding the difference between shifts and movements along the curves is vital. Shifts in demand or supply reflect changes in market conditions—factors external to the specific price—leading to the entire curve moving left or right (Mankiw, 2020). Movements along the demand or supply curve occur when the price changes but the underlying factors remain constant, causing only a change in quantity demanded or supplied. Recognizing these distinctions helps policymakers, businesses, and consumers understand whether price changes are due to external factors or merely a response to price fluctuations, allowing for more effective decision-making.

Overall, analyzing these factors provides valuable insight into how market forces affect the availability and price of goods such as smartphones and underscores the importance of understanding economic dynamics in our daily lives.

Paper For Above instruction

In this essay, I will incorporate game theory concepts to analyze international trade and tariffs through the construction of two payoff matrices. These matrices will illustrate different outcomes—one harmful to both countries and one beneficial to the United States—to evaluate which scenario most benefits domestic consumers, considering current actions by each nation.

Game theory provides a powerful framework for understanding strategic interactions between countries, especially when it comes to trade policies and tariffs. Each country aims to maximize its own benefits, often at the expense of the other, creating complex strategic dilemmas. A payoff matrix visually represents these choices and their corresponding outcomes, allowing us to analyze potential consequences.

The first payoff matrix will depict a scenario where both countries impose tariffs, leading to mutual harm. For instance, the United States and China might both impose tariffs on each other’s goods to protect domestic industries. This often results in reduced trade volumes, higher consumer prices, and inefficiencies due to retaliatory actions (Brander & Spencer, 1985). The payoffs in this matrix show that both countries face losses, such as decreased consumer surplus and increased production costs, ultimately harming consumers in both nations—including American consumers who pay higher prices and face fewer product choices.

The second payoff matrix, however, illustrates a scenario where the United States pursues strategies that are beneficial to its consumers, perhaps through strategic reductions in tariffs or engaging in trade agreements. For example, if the U.S. reduces tariffs unilaterally while other countries maintain or increase tariffs, the U.S. can experience increased imports, lower prices, and a broader range of products, leading to a consumer advantage (Krugman, 2019). The payoffs in this matrix favor the United States, significantly enhancing consumer welfare, access, and choice.

From my perspective as a consumer, the second payoff matrix—centered on policies that benefit domestic consumers—is more appealing. Actions such as reducing tariffs tend to lower prices and expand choices, directly benefiting consumers by making goods more affordable and accessible. In contrast, tariffs and retaliations typically lead to higher prices and reduced variety, negatively impacting consumers.

Evaluating these matrices reveals that current international actions—such as the ongoing trade tensions and tariff disputes—likely lean towards mutual harm, as both sides seek protectionist advantages at the expense of consumer welfare. However, policies favoring freer trade and strategic cooperation produce more beneficial outcomes for consumers, supporting lower prices and greater variety.

In conclusion, applying game theory to international trade highlights the importance of strategic decision-making and its effects on consumer welfare. While mutual tariffs may seem protective in the short term, they ultimately harm consumers in both countries through higher prices and reduced choices. Conversely, policies that foster open trade and reduce barriers tend to be more advantageous for domestic consumers, encouraging economic efficiency and consumer satisfaction (Fudenberg & Tirole, 1991).

References

Brander, J. A., & Spencer, B. J. (1985). Export subsidies and international market share rivalry. Journal of International Economics, 18(1-2), 83-100.

Fudenberg, D., & Tirole, J. (1991). Game Theory. MIT Press.

Krugman, P. R. (2019). International Economics: Theory and Policy (11th ed.). Pearson.

Krugman, P., & Wells, R. (2018). Economics (5th ed.). Worth Publishers.

Mankiw, N. G. (2020). Principles of Economics (9th ed.). Cengage Learning.

Varian, H. R. (2019). Intermediate Microeconomics: A Modern Approach (10th ed.). W. W. Norton & Company.