Supply Demand Curve

Supply Demand Curve

Student’s Name

Institution

Introduction

The demand and supply are affected by market variables which include quantity and price. When the quantity of a product is high in the market the price is affected and this could mean the supply is high in the market and the demand is low. These factors influenced the performance of every product in the market.

Q1: Price and Quantity Curves

Q2: Supply Curve

If there decrease in the firm of firms in the market supply quantity would be low and therefore, the price of the product would increase. However, a decrease of the current price, would attract buyers and therefore, the supply would be low since many firms would not be willing to sell their product. An increase in productivity would increase supply and therefore, the price would decrease in the market CITATION Eiv14 \l 1033 (Brækkan, 2014). However, the decrease of expected future prices of product is likely to reduce the productivity and therefore, the supply quantity would low. An increase of input prices is expected to increase the cost of production and therefore, the prices are expected to increase.

Q4. Demand Curve : Watermelon Demand Curve

An increase in income and the goods increase the demand of the goods in the market and therefore, the demand graph will turn right and sloppy. A decrease of price of the goods will increase the demand of the product. The decrease of price occurs when the supply is high in the market. A decrease in population would cause a decrease in demand of a product. An increase of the taste of food is likely to increase the demand of the food.

The situation whereby demand is high and price is lower could happen when the supply is high in the market. Watermelon is produced during summer and people consumer a lot of watermelon during summer as well. Therefore, the demand and supply of watermelon is high during summer and therefore, the demand would be high and the prices of watermelon would be lower in the market due to high supply.

References

BIBLIOGRAPHY Brækkan, E. H. (2014). Why do Prices Change? An Analysis of Supply and Demand Shifts and Price

Impacts in the Farmed Salmon Market. https://www.researchgate.net/publication/282149761_Why_do_Prices_Change_An_Analysis_of_Supply_and_Demand_Shifts_and_Price_Impacts_in_the_Farmed_Salmon_Market , 2-35.

SWOT Analyis Of Vietnam And Brazil Coffee Industry

SWOT analysis of Vietnam and Brazil coffee industry

Author name

Affiliations

Introduction

Coffee is among the most traded commodity that is produced in nearly 55 countries. World coffee production for 2018-19 was nearly 174.5 million bags ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"p41fp6R1","properties":{"formattedCitation":"(Foreign, Agricultural, & Service, 2018)","plainCitation":"(Foreign, Agricultural, & Service, 2018)","noteIndex":0},"citationItems":[{"id":2122,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/G75XSAE5"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/G75XSAE5"],"itemData":{"id":2122,"type":"report","title":"Coffee: World Markets and Trade","URL":"https://apps.fas.usda.gov/psdonline/circulars/coffee.pdf","author":[{"literal":"Foreign"},{"literal":"Agricultural"},{"literal":"Service"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Foreign, Agricultural, & Service, 2018). World coffee consumption is nearly 7 million tons of green coffee ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"UoyaOMqp","properties":{"formattedCitation":"(Pelupessy, 2007)","plainCitation":"(Pelupessy, 2007)","noteIndex":0},"citationItems":[{"id":2124,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/KZLLS4N9"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/KZLLS4N9"],"itemData":{"id":2124,"type":"article-journal","title":"The world behind the world coffee market","container-title":"Etudes rurales","page":"187-212","issue":"180","author":[{"family":"Pelupessy","given":"Wim"}],"issued":{"date-parts":[["2007"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Pelupessy, 2007). Since the 19th century, there had been significant changes in the international coffee market. The changes alsoknown as wavers are related to the types of production, the quality of products and differentiation criteria ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"KljktvlE","properties":{"formattedCitation":"(Guimar\\uc0\\u227{}es, Leme, De Rezende, Pereira, & Dos Santos, 2019)","plainCitation":"(Guimarães, Leme, De Rezende, Pereira, & Dos Santos, 2019)","noteIndex":0},"citationItems":[{"id":2129,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/DGBI4X23"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/DGBI4X23"],"itemData":{"id":2129,"type":"article-journal","title":"The brand new Brazilian specialty coffee market","container-title":"Journal of Food Products Marketing","page":"49-71","volume":"25","issue":"1","author":[{"family":"Guimarães","given":"Elisa Reis"},{"family":"Leme","given":"Paulo Henrique Montagnana Vicente"},{"family":"De Rezende","given":"Daniel Carvalho"},{"family":"Pereira","given":"Sérgio Parreiras"},{"family":"Dos Santos","given":"Antônio Carlos"}],"issued":{"date-parts":[["2019"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Guimarães, Leme, De Rezende, Pereira, & Dos Santos, 2019). Currently, in this international market, main producers of coffee are; Brazil, Vietnam and Colombia. These are meeting their domestic demands as well as exporting their products. World coffee export was increased by 31 per cent during the period of 2000-2015 ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"fIekHLnR","properties":{"formattedCitation":"(Rosiana, Nurmalina, Winandi, & Rifin, 2017)","plainCitation":"(Rosiana, Nurmalina, Winandi, & Rifin, 2017)","noteIndex":0},"citationItems":[{"id":2141,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/IZPZDU9T"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/IZPZDU9T"],"itemData":{"id":2141,"type":"article-journal","title":"The Level of Comparative Advantages of World Main Coffee Producers","container-title":"Buletin Ilmiah Litbang Perdagangan","page":"227-246","volume":"11","issue":"2","author":[{"family":"Rosiana","given":"Nia"},{"family":"Nurmalina","given":"Rita"},{"family":"Winandi","given":"Ratna"},{"family":"Rifin","given":"Amzul"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Rosiana, Nurmalina, Winandi, &Rifin, 2017).In 2010, the production of coffee in Brazil was 48.1 million 60-kilo bags and in Vietnam, it was 18.5 million bags ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"qmUEEOO4","properties":{"formattedCitation":"(Gonzalez-Perez & Gutierrez-Viana, 2012)","plainCitation":"(Gonzalez-Perez & Gutierrez-Viana, 2012)","noteIndex":0},"citationItems":[{"id":2121,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/EUZPY9CK"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/EUZPY9CK"],"itemData":{"id":2121,"type":"article-journal","title":"Cooperation in coffee markets: the case of Vietnam and Colombia","container-title":"Journal of Agribusiness in Developing and Emerging Economies","page":"57-73","volume":"2","issue":"1","author":[{"family":"Gonzalez-Perez","given":"Maria-Alejandra"},{"family":"Gutierrez-Viana","given":"Santiago"}],"issued":{"date-parts":[["2012"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Gonzalez-Perez & Gutierrez-Viana, 2012). Vietnam is the most competitive coffee producer that has a relatively low cost of production and the highest quality yields. It has a well-managed supply chain and is able to compete with locally-owned and multinational exporters ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"iKGJvmpP","properties":{"formattedCitation":"(Wood, Dibben, & Meira, 2016)","plainCitation":"(Wood, Dibben, & Meira, 2016)","noteIndex":0},"citationItems":[{"id":2170,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/Y593V7WB"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/Y593V7WB"],"itemData":{"id":2170,"type":"article-journal","title":"Knowledge transfer within strategic partnerships: the case of HRM in the Brazilian motor industry supply chain","container-title":"The International Journal of Human Resource Management","page":"2398-2414","volume":"27","issue":"20","author":[{"family":"Wood","given":"Geoffrey"},{"family":"Dibben","given":"Pauline"},{"family":"Meira","given":"Juliana"}],"issued":{"date-parts":[["2016"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Wood, Dibben, &Meira, 2016). Quality of the coffee gives it a competitive advantage in the coffee world. On the other hand, coffee in Brazil was introduced during the early eighteenth century. It was planted only for domestic use. Then its export was started and it became the major export item due tohigh prices all over the world in the late 1820s. This paper will conduct the SWOT analysis of Vietnam and Brazil coffee industry and will give some recommendations to flourish their industries.

SWOT analysis of Vietnam coffee industry

Vietnam being an agricultural country is the producer of rice, coffee, tea and pepper. Coffee has become the main economic production in Vietnam. Coffee in Vietnam has been known since 1857 and was firstly implanted in places of worship in different localities. Most of the coffee trees are Robusta and Arabica coffee that is grown in the southern part and northern part respectively ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"731LwXOe","properties":{"formattedCitation":"(Malaquias, Celestino, & Xavier, 2018)","plainCitation":"(Malaquias, Celestino, & Xavier, 2018)","noteIndex":0},"citationItems":[{"id":2157,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/IAIS4UCH"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/IAIS4UCH"],"itemData":{"id":2157,"type":"article-journal","title":"Optimization of the roasting conditions of arabica coffee cultivated in the cerrado area of Brazil","container-title":"Brazilian Journal of Food Technology","volume":"21","author":[{"family":"Malaquias","given":"Juaci Vitória"},{"family":"Celestino","given":"Sonia Maria Costa"},{"family":"Xavier","given":"Manaira Ferreira Franco"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Malaquias, Celestino, & Xavier, 2018). Then towards the start of the twentieth century, coffee production started expanding. Vietnam in 1975 was producing nearly 5000 to 7000 tons of green coffee by utilizing an area of 13,000 ha ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"RiFuDhcy","properties":{"formattedCitation":"(T. H. N. Nguyen, 2016)","plainCitation":"(T. H. N. Nguyen, 2016)","noteIndex":0},"citationItems":[{"id":2126,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/M4SVY82R"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/M4SVY82R"],"itemData":{"id":2126,"type":"article-journal","title":"THE COMPETITIVENESS OF VIETNAMESE COFFE INTO THE EU MARKET","author":[{"family":"Nguyen","given":"Thi Hoang Nhien"}],"issued":{"date-parts":[["2016"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (T. H. N. Nguyen, 2016). This can be attributed to support that the Soviet Union, Hungary as well as Poland provided to Vietnam government. In the 1990s, coffee production in the country grew by 20 to 30 per cent every year, witnessing the transformation of the economy of Vietnam. Production will further increase by 1.1 million bags due to weather effects ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"wfc8tdfP","properties":{"formattedCitation":"(Foreign et al., 2018)","plainCitation":"(Foreign et al., 2018)","noteIndex":0},"citationItems":[{"id":2122,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/G75XSAE5"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/G75XSAE5"],"itemData":{"id":2122,"type":"report","title":"Coffee: World Markets and Trade","URL":"https://apps.fas.usda.gov/psdonline/circulars/coffee.pdf","author":[{"literal":"Foreign"},{"literal":"Agricultural"},{"literal":"Service"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Foreign et al., 2018).

Coffee has now become the major agricultural export of Vietnam ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"sMdPmuWX","properties":{"formattedCitation":"(Doutriaux, Geisler, & Shively, 2008)","plainCitation":"(Doutriaux, Geisler, & Shively, 2008)","noteIndex":0},"citationItems":[{"id":2146,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/J8U79XRT"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/J8U79XRT"],"itemData":{"id":2146,"type":"article-journal","title":"Competing for coffee space: development‐induced displacement in the Central Highlands of Vietnam","container-title":"Rural Sociology","page":"528-554","volume":"73","issue":"4","author":[{"family":"Doutriaux","given":"Sylvie"},{"family":"Geisler","given":"Charles"},{"family":"Shively","given":"Gerald"}],"issued":{"date-parts":[["2008"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Doutriaux, Geisler, & Shively, 2008). Moreover, the country is also considered as a world leader in the production of Robusta coffee after Brazil since 2000 ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"2pnRls0O","properties":{"formattedCitation":"(Tucker, 2017)","plainCitation":"(Tucker, 2017)","noteIndex":0},"citationItems":[{"id":2159,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/XX5HD8EI"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/XX5HD8EI"],"itemData":{"id":2159,"type":"book","title":"Coffee culture: Local experiences, global connections","publisher":"Routledge","ISBN":"1-317-39225-6","author":[{"family":"Tucker","given":"Catherine M."}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Tucker, 2017). However, to sustain its position it has to overcome numerous challenges. The competitiveness of Vietnamese coffee is in danger now as global market requirements are increasing ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"uyVuvgYG","properties":{"formattedCitation":"(G. N. Nguyen & Sarker, 2018)","plainCitation":"(G. N. Nguyen & Sarker, 2018)","noteIndex":0},"citationItems":[{"id":2123,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/KRA5TH6Y"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/KRA5TH6Y"],"itemData":{"id":2123,"type":"article-journal","title":"Sustainable coffee supply chain management: a case study in Buon Me Thuot City, Daklak, Vietnam","container-title":"International Journal of Corporate Social Responsibility","page":"1","volume":"3","issue":"1","author":[{"family":"Nguyen","given":"Giang NT"},{"family":"Sarker","given":"Tapan"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (G. N. Nguyen &Sarker, 2018).

Strengths

Vietnam has a promising coffee industry that also provides a livelihood to approximately 2.6 million people  ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"rpitGNJj","properties":{"formattedCitation":"(T. V. Nguyen, Nguyen, & Bosch, 2017)","plainCitation":"(T. V. Nguyen, Nguyen, & Bosch, 2017)","noteIndex":0},"citationItems":[{"id":2125,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/8BUT83DI"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/8BUT83DI"],"itemData":{"id":2125,"type":"article-journal","title":"Enhancing the competitive advantages of Vietnamese coffee through the exploration of causal loop modelling in the supply chain","container-title":"International Journal of Logistics Systems and Management","page":"17-33","volume":"26","issue":"1","author":[{"family":"Nguyen","given":"Thich V."},{"family":"Nguyen","given":"Nam C."},{"family":"Bosch","given":"Ockie JH"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (T. V. Nguyen, Nguyen, & Bosch, 2017). The country is a leader in world coffee production. It is the second largest exporter of coffee and is supplying its coffee in EU and US markets. In 2014, the export value of coffee was nearly 3% of national GDP  ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"wIKSJgKR","properties":{"formattedCitation":"(G. N. Nguyen & Sarker, 2018)","plainCitation":"(G. N. Nguyen & Sarker, 2018)","noteIndex":0},"citationItems":[{"id":2123,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/KRA5TH6Y"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/KRA5TH6Y"],"itemData":{"id":2123,"type":"article-journal","title":"Sustainable coffee supply chain management: a case study in Buon Me Thuot City, Daklak, Vietnam","container-title":"International Journal of Corporate Social Responsibility","page":"1","volume":"3","issue":"1","author":[{"family":"Nguyen","given":"Giang NT"},{"family":"Sarker","given":"Tapan"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (G. N. Nguyen &Sarker, 2018).

The plantation area has increased from 134,000 ha to 513,000 ha during the period of 1975 -2010.

Coffee is produced for the domestic market as well as for export purpose.

There is great awareness among coffee cultivators about capacity and quality of the coffee.

Farmers are able to easily understand new techniques in production as well as they are experienced ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"SdS5me6M","properties":{"formattedCitation":"(Luna, Klein, & Summerhill, 2016)","plainCitation":"(Luna, Klein, & Summerhill, 2016)","noteIndex":0},"citationItems":[{"id":2160,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/IGJ47U8Z"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/IGJ47U8Z"],"itemData":{"id":2160,"type":"article-journal","title":"The characteristics of coffee production and agriculture in the state of São Paulo in 1905","container-title":"Agricultural History","page":"22-50","volume":"90","issue":"1","author":[{"family":"Luna","given":"Francisco Vidal"},{"family":"Klein","given":"Herbert S."},{"family":"Summerhill","given":"William"}],"issued":{"date-parts":[["2016"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Luna, Klein, &Summerhill, 2016).

Main producers are; Dunkin Donuts, Starbucks, Gloria Jeans, McCafe, Coffee Bean, My Life Coffee, the Coffee House and Trung Nguyen.

The main product of the coffee industry is Coffee Robusta. Vietnam provides 95 per cent of this coffee to the world ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"xhjFmIY2","properties":{"formattedCitation":"(T. H. N. Nguyen, 2016)","plainCitation":"(T. H. N. Nguyen, 2016)","noteIndex":0},"citationItems":[{"id":2126,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/M4SVY82R"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/M4SVY82R"],"itemData":{"id":2126,"type":"article-journal","title":"THE COMPETITIVENESS OF VIETNAMESE COFFE INTO THE EU MARKET","author":[{"family":"Nguyen","given":"Thi Hoang Nhien"}],"issued":{"date-parts":[["2016"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (T. H. N. Nguyen, 2016).

Vietnamese coffee has the highest quality and the industry set competitive prices while operating internationally.

Vietnamese coffee has a specific style that is due to the preparation process and blending of beans in a specific way ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"vWwpEc66","properties":{"formattedCitation":"(Alves, Rodrigues, Nunes, Vinha, & Oliveira, 2017)","plainCitation":"(Alves, Rodrigues, Nunes, Vinha, & Oliveira, 2017)","noteIndex":0},"citationItems":[{"id":2161,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/JKFNJ9VU"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/JKFNJ9VU"],"itemData":{"id":2161,"type":"chapter","title":"State of the art in coffee processing by-products","container-title":"Handbook of Coffee Processing By-Products","publisher":"Elsevier","page":"1-26","author":[{"family":"Alves","given":"Rita C."},{"family":"Rodrigues","given":"Francisca"},{"family":"Nunes","given":"Maria Antónia"},{"family":"Vinha","given":"Ana F."},{"family":"Oliveira","given":"M. Beatriz PP"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Alves, Rodrigues, Nunes, Vinha, & Oliveira, 2017).

Traditional coffee is a small and highly concentrated having strong and bitter taste ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"jgwV6KDy","properties":{"formattedCitation":"(Carvalho & Spence, 2018)","plainCitation":"(Carvalho & Spence, 2018)","noteIndex":0},"citationItems":[{"id":2162,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/W8MPVWQ9"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/W8MPVWQ9"],"itemData":{"id":2162,"type":"article-journal","title":"The shape of the cup influences aroma, taste, and hedonic judgements of specialty coffee","container-title":"Food Quality and Preference","page":"315-321","volume":"68","author":[{"family":"Carvalho","given":"Fabiana M."},{"family":"Spence","given":"Charles"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Carvalho& Spence, 2018).

Vietnamese coffee has a remarkably unique flavour as it is grown in the tropical belt of the Northern Hemisphere ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"mjXm7LBN","properties":{"formattedCitation":"(Toledo, Pezza, Pezza, & Toci, 2016)","plainCitation":"(Toledo, Pezza, Pezza, & Toci, 2016)","noteIndex":0},"citationItems":[{"id":2163,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/YRAI4HFH"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/YRAI4HFH"],"itemData":{"id":2163,"type":"article-journal","title":"Relationship between the different aspects related to coffee quality and their volatile compounds","container-title":"Comprehensive Reviews in Food Science and Food Safety","page":"705-719","volume":"15","issue":"4","author":[{"family":"Toledo","given":"Paulo RAB"},{"family":"Pezza","given":"Leonardo"},{"family":"Pezza","given":"Helena R."},{"family":"Toci","given":"Aline T."}],"issued":{"date-parts":[["2016"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Toledo, Pezza, Pezza, &Toci, 2016). The climate of this area is suitable for coffee growth specifically for Arabica growth.

Coffee as a product is safe and has no health risks. Studies have shown the benefits of consuming coffee in different diseases such as cancer and high blood pressure.

The product is also eco-friendly as there is a use of the highest quality beans ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"6rhG3KmL","properties":{"formattedCitation":"(Kerr, 2015)","plainCitation":"(Kerr, 2015)","noteIndex":0},"citationItems":[{"id":2164,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/NGBBWZPN"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/NGBBWZPN"],"itemData":{"id":2164,"type":"article-journal","title":"Competitiveness of the Brazilian Pulp Industry: A Real Options Analysis of a Forestry Investment","container-title":"Práticas em Contabilidade e Gestão","volume":"2","issue":"1","author":[{"family":"Kerr","given":"Roberto Borges"}],"issued":{"date-parts":[["2015"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Kerr, 2015).

Use of technology is not only decreasing the production costs but also enhancing the quality ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"rAxAxQLQ","properties":{"formattedCitation":"(Oliveira & Franca, 2015)","plainCitation":"(Oliveira & Franca, 2015)","noteIndex":0},"citationItems":[{"id":2165,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/B2RN5I9Q"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/B2RN5I9Q"],"itemData":{"id":2165,"type":"chapter","title":"An overview of the potential uses for coffee husks","container-title":"Coffee in health and disease prevention","publisher":"Elsevier","page":"283-291","author":[{"family":"Oliveira","given":"Leandro S."},{"family":"Franca","given":"Adriana S."}],"issued":{"date-parts":[["2015"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Oliveira & Franca, 2015).

Weaknesses

The production and consumption are linked with the economy. During the time of downturn, consumers spend less on coffee.

Purchasecontracts are not always followed.

Coffee business has short-term investment plans.

Farmers are not well and have small and fragmented farms.

Farmers cannot get the economy of scale and specialization.

Farmers do not get high prices for their coffee beans.

There is less growth in the domestic market due to the competition. International brands are entering Vietnam such as Starbucks and Coffee bean. They offer to severe competition to the domestic market.

There is also less production during the economic downturn due to the rising prices of coffee and dairy products.

Farmers lack strategic visions for product branding.

There are not many brands in the coffee industry due to the limited marketing budget.

Low-quality products affect the entire industry.

There is little investment in technological innovation.

The industry has to bear the cost of exporting.

There are only a few suppliers that supply the highest quality Arabica beans.

Opportunities

The coffee industry has a potential of growth all over the world and Vietnam coffee demand is increasing day by day.

Vietnam’s coffee is considered as sustainably certified coffee.

Local and central both governments support coffee production.

European people demand diverse categories of coffee.

Profit margins can be increased with the use of technology.

There is an increasing trend of drive-thru, kiosks as well as carts that are also increasing the demand for coffee.

Café chains are increasing by major coffee deals such as the Coffee Bean and tea Leaf, Starbuck.

Domestic consumption of Vietnamese is increasing as a result of cafe culture and retail coffee shops.

Promotional efforts can increase the demand for coffee.

Digital technology is offering the industry different ways of marketing ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"8WOLol78","properties":{"formattedCitation":"(Souto et al., 2015)","plainCitation":"(Souto et al., 2015)","noteIndex":0},"citationItems":[{"id":2153,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/3NUJX5ZZ"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/3NUJX5ZZ"],"itemData":{"id":2153,"type":"article-journal","title":"Screening for coffee adulteration using digital images and SPA-LDA","container-title":"Food Analytical Methods","page":"1515-1521","volume":"8","issue":"6","author":[{"family":"Souto","given":"Urijatan Teixeira de Carvalho Polari"},{"family":"Barbosa","given":"Mayara Ferreira"},{"family":"Dantas","given":"Hebertty Vieira"},{"family":"Pontes","given":"Aline Santos","non-dropping-particle":"de"},{"family":"Silva Lyra","given":"Wellington","non-dropping-particle":"da"},{"family":"Diniz","given":"Paulo Henrique Gonçalves Dias"},{"family":"Araújo","given":"Mário César Ugulino","non-dropping-particle":"de"},{"family":"Silva","given":"Edvan Cirino","non-dropping-particle":"da"}],"issued":{"date-parts":[["2015"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Souto et al., 2015). It will offer low-cost marketing that will also make connections with the customers strong.

Managing the supply chain effectively in the context of global operational strategy can make the industry more competitive ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"uoZgducb","properties":{"formattedCitation":"(T. V. Nguyen, Nguyen, & Bosch, 2017)","plainCitation":"(T. V. Nguyen, Nguyen, & Bosch, 2017)","noteIndex":0},"citationItems":[{"id":2125,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/8BUT83DI"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/8BUT83DI"],"itemData":{"id":2125,"type":"article-journal","title":"Enhancing the competitive advantages of Vietnamese coffee through the exploration of causal loop modelling in the supply chain","container-title":"International Journal of Logistics Systems and Management","page":"17-33","volume":"26","issue":"1","author":[{"family":"Nguyen","given":"Thich V."},{"family":"Nguyen","given":"Nam C."},{"family":"Bosch","given":"Ockie JH"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (T. V. Nguyen, Nguyen, & Bosch, 2017).

Opportunities to use modern technology such as biotechnology, manufacturing technology and automation.

Coffee-based agroforestry systems (AFS) systems can be used for environmental resources conservation. These can also be used for requiring fewer inputs ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"qHD2rkWO","properties":{"formattedCitation":"(Millard, 2017)","plainCitation":"(Millard, 2017)","noteIndex":0},"citationItems":[{"id":2155,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/ZP7RYXWZ"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/ZP7RYXWZ"],"itemData":{"id":2155,"type":"article-journal","title":"Still brewing: Fostering sustainable coffee production","container-title":"World Development Perspectives","page":"32-42","volume":"7","author":[{"family":"Millard","given":"Edward"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Millard, 2017).

End users prefer safe products, providing an opportunity to the industry.

Thus, the industry can increase product lines to remain competitive ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"XcNr4dGL","properties":{"formattedCitation":"(de Almeida & Zylbersztajn, 2017)","plainCitation":"(de Almeida & Zylbersztajn, 2017)","noteIndex":0},"citationItems":[{"id":2133,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/24EGINDA"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/24EGINDA"],"itemData":{"id":2133,"type":"article-journal","title":"Key Success Factors in the Brazilian Coffee Agrichain: Present and Future Challenges","container-title":"International Journal on Food System Dynamics","page":"45-53","volume":"8","issue":"1","author":[{"family":"Almeida","given":"Luciana Florêncio","non-dropping-particle":"de"},{"family":"Zylbersztajn","given":"Decio"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (de Almeida &Zylbersztajn, 2017).

Support of Japanese partners.

Vietnam is following a Social-Economic Development Strategy (2011- 2020) that will make it industrialized economy.

Vietnam is an established player in the world coffee market and can take advantage of acquisitions and partnership strategies.

Threats

Farming methods such as monocultures and poor fertility management are resulting in deforestation and soil degradation. This is a potential threat to decrease coffee production ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"OtOwiZP5","properties":{"formattedCitation":"(G. N. Nguyen & Sarker, 2018)","plainCitation":"(G. N. Nguyen & Sarker, 2018)","noteIndex":0},"citationItems":[{"id":2123,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/KRA5TH6Y"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/KRA5TH6Y"],"itemData":{"id":2123,"type":"article-journal","title":"Sustainable coffee supply chain management: a case study in Buon Me Thuot City, Daklak, Vietnam","container-title":"International Journal of Corporate Social Responsibility","page":"1","volume":"3","issue":"1","author":[{"family":"Nguyen","given":"Giang NT"},{"family":"Sarker","given":"Tapan"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (G. N. Nguyen &Sarker, 2018).

Private sector owns most of the farms.

Local companies run discriminating competition against each other.

Environmentalists have warned about the shortage of land available for coffee cultivation.

The production of coffee and its specific taste is linked with growing conditions such as weather. Any change in weather can disturb the coffee production in the long run.

An economic recession is a common threat in this industry.

Foodservice chain is a threat to the coffee industry.

There are fake brands in the market that affect the quality of products.

Strong competitors.

Coffee prices volatility

Increasing cost due to international trade.

Companies are facing regulatory pressures while operating internationally. There are strict rules to comply with local and international laws.

SWOT analysis of Brazil coffee industry

Coffee has been an indispensableproduct in Brazilian history. Its cultivation in Brazil started in the north then spread all over the country.French settlers first time brought the plant from Ethiopia and implanted it in the state of Pará. At that time sugar cane plantations were common and people had no taste of the coffee. During the 19th century, it was among the most exported product. In the 1960s, the government tried to reduce high costs by implementing the Brazilian soluble coffee industry. The other aim of this measure was also to meet external demand. However, in the early 1990s, Brazil reduced its input in the world market of soluble coffee, ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"KpzEn1Lj","properties":{"formattedCitation":"(Nishijima & Saes, 2010)","plainCitation":"(Nishijima & Saes, 2010)","noteIndex":0},"citationItems":[{"id":2130,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/4M55FFRG"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/4M55FFRG"],"itemData":{"id":2130,"type":"article-journal","title":"Tariff discrimination on Brazil's soluble coffee: an economic analysis","container-title":"Brazilian Journal of Political Economy","page":"293-309","volume":"30","issue":"2","author":[{"family":"Nishijima","given":"Marislei"},{"family":"Saes","given":"Maria Sylvia Macchione"}],"issued":{"date-parts":[["2010"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Nishijima&Saes, 2010). Brazil has 43.2 million 60-kg bags of green coffee produced in 2015; 32 million of Arabica coffee and 11.2 million of a Conilon species ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"TlDwIFoV","properties":{"formattedCitation":"(de Almeida & Zylbersztajn, 2017)","plainCitation":"(de Almeida & Zylbersztajn, 2017)","noteIndex":0},"citationItems":[{"id":2133,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/24EGINDA"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/24EGINDA"],"itemData":{"id":2133,"type":"article-journal","title":"Key Success Factors in the Brazilian Coffee Agrichain: Present and Future Challenges","container-title":"International Journal on Food System Dynamics","page":"45-53","volume":"8","issue":"1","author":[{"family":"Almeida","given":"Luciana Florêncio","non-dropping-particle":"de"},{"family":"Zylbersztajn","given":"Decio"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (de Almeida &Zylbersztajn, 2017). In 2016, the quality of coffee that was being traded in Brazil surpassed 1.7 billion and in 2017, the production of coffee in Brazil was more than 8.4 million bags ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"quVKwUtn","properties":{"formattedCitation":"(Foreign et al., 2018)","plainCitation":"(Foreign et al., 2018)","noteIndex":0},"citationItems":[{"id":2122,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/G75XSAE5"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/G75XSAE5"],"itemData":{"id":2122,"type":"report","title":"Coffee: World Markets and Trade","URL":"https://apps.fas.usda.gov/psdonline/circulars/coffee.pdf","author":[{"literal":"Foreign"},{"literal":"Agricultural"},{"literal":"Service"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Foreign et al., 2018). Brazil is implantingcoffee over 2,223,464.1 ha ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"O5b754Sh","properties":{"formattedCitation":"(Paseto, de Alcantara, Paseto, & Patino, 2018)","plainCitation":"(Paseto, de Alcantara, Paseto, & Patino, 2018)","noteIndex":0},"citationItems":[{"id":2132,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/LPXTFQ32"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/LPXTFQ32"],"itemData":{"id":2132,"type":"article-journal","title":"Coffee Production: An Analysis of Opportunities for Competitiveness","container-title":"International Journal of Advanced Engineering Research and Science","volume":"5","issue":"8","author":[{"family":"Paseto","given":"Luísa"},{"family":"Alcantara","given":"Milla Reis","non-dropping-particle":"de"},{"family":"Paseto","given":"Luís Américo"},{"family":"Patino","given":"Marco Túlio Ospina"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Paseto, de Alcantara, Paseto, &Patino, 2018).

In addition, the country has favourable climate conditions that are making the future of the coffee market pricy. The trend is continued to grow as quantity is attributed to the biennial production cycle. Brazil mainly produces two types of coffee; arabica and robusta. Both these types differ in taste, growing conditions, as well as in price. Moreover, robusta production is expected to increase more due to favourable weather condition ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"ZRRgaE0W","properties":{"formattedCitation":"(Guimar\\uc0\\u227{}es et al., 2019)","plainCitation":"(Guimarães et al., 2019)","noteIndex":0},"citationItems":[{"id":2129,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/DGBI4X23"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/DGBI4X23"],"itemData":{"id":2129,"type":"article-journal","title":"The brand new Brazilian specialty coffee market","container-title":"Journal of Food Products Marketing","page":"49-71","volume":"25","issue":"1","author":[{"family":"Guimarães","given":"Elisa Reis"},{"family":"Leme","given":"Paulo Henrique Montagnana Vicente"},{"family":"De Rezende","given":"Daniel Carvalho"},{"family":"Pereira","given":"Sérgio Parreiras"},{"family":"Dos Santos","given":"Antônio Carlos"}],"issued":{"date-parts":[["2019"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Guimarães et al., 2019). Currently, Brazil is mainly exporting its coffee to the United States and Germany. United States has the North American coffee market, thus, it is the world's largest single buyer of coffee ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"19kEGLSx","properties":{"formattedCitation":"(McCook, 2017)","plainCitation":"(McCook, 2017)","noteIndex":0},"citationItems":[{"id":2148,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/8WYCCSH2"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/8WYCCSH2"],"itemData":{"id":2148,"type":"chapter","title":"Environmental History of Coffee in Latin America","container-title":"Oxford Research Encyclopedia of Latin American History","author":[{"family":"McCook","given":"Stuart"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (McCook, 2017). However, the quality of Brazilian coffee is not much good ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"EYSKJQFY","properties":{"formattedCitation":"(Reichman, 2018)","plainCitation":"(Reichman, 2018)","noteIndex":0},"citationItems":[{"id":2137,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/LGXZAQMY"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/LGXZAQMY"],"itemData":{"id":2137,"type":"article-journal","title":"Big Coffee in Brazil: Historical Origins and Implications for Anthropological Political Economy","container-title":"The Journal of Latin American and Caribbean Anthropology","page":"241-261","volume":"23","issue":"2","author":[{"family":"Reichman","given":"Daniel R."}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Reichman, 2018).

Strengths

Brazil culture has a prominent position for coffee ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"X07nVskI","properties":{"formattedCitation":"(Acchar & Dultra, 2015)","plainCitation":"(Acchar & Dultra, 2015)","noteIndex":0},"citationItems":[{"id":2149,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/YVM2DYNL"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/YVM2DYNL"],"itemData":{"id":2149,"type":"chapter","title":"Coffee industry in Brazil","container-title":"Ceramic Materials from Coffee Bagasse Ash Waste","publisher":"Springer","page":"23-30","author":[{"family":"Acchar","given":"Wilson"},{"family":"Dultra","given":"Eduardo JV"}],"issued":{"date-parts":[["2015"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Acchar&Dultra, 2015).

Brazil people consider it as a vehicle for antioxidants, lawful drugs as well as sweeteners in the diet ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"0xuTyLrA","properties":{"formattedCitation":"(Sousa & da Costa, 2015)","plainCitation":"(Sousa & da Costa, 2015)","noteIndex":0},"citationItems":[{"id":2140,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/9PZHA8ND"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/9PZHA8ND"],"itemData":{"id":2140,"type":"article-journal","title":"Usual coffee intake in Brazil: Results from the national dietary survey 2008–9","container-title":"British Journal of Nutrition","page":"1615-1620","volume":"113","issue":"10","author":[{"family":"Sousa","given":"Alessandra Gaspar"},{"family":"Costa","given":"Teresa Helena Macedo","non-dropping-particle":"da"}],"issued":{"date-parts":[["2015"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Sousa & da Costa, 2015).

Brazilian coffee is famous worldwide for its aroma and flavour. Customers like this and this has helped in increasing the customer base ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"ZNxWJd2u","properties":{"formattedCitation":"(Guimar\\uc0\\u227{}es et al., 2019)","plainCitation":"(Guimarães et al., 2019)","noteIndex":0},"citationItems":[{"id":2129,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/DGBI4X23"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/DGBI4X23"],"itemData":{"id":2129,"type":"article-journal","title":"The brand new Brazilian specialty coffee market","container-title":"Journal of Food Products Marketing","page":"49-71","volume":"25","issue":"1","author":[{"family":"Guimarães","given":"Elisa Reis"},{"family":"Leme","given":"Paulo Henrique Montagnana Vicente"},{"family":"De Rezende","given":"Daniel Carvalho"},{"family":"Pereira","given":"Sérgio Parreiras"},{"family":"Dos Santos","given":"Antônio Carlos"}],"issued":{"date-parts":[["2019"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Guimarães et al., 2019).

Natural methods of coffee processing give the coffee a special flavour.

Brazil is the largest exporter of coffee in the world ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"HmgPiUgY","properties":{"formattedCitation":"(Samper & Qui\\uc0\\u241{}ones-Ruiz, 2017)","plainCitation":"(Samper & Quiñones-Ruiz, 2017)","noteIndex":0},"citationItems":[{"id":2152,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/B2IZX3G4"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/B2IZX3G4"],"itemData":{"id":2152,"type":"article-journal","title":"Towards a balanced sustainability vision for the coffee industry","container-title":"Resources","page":"17","volume":"6","issue":"2","author":[{"family":"Samper","given":"Luis"},{"family":"Quiñones-Ruiz","given":"Xiomara"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Samper &Quiñones-Ruiz, 2017).

It is harvesting 30% of the world’s coffee; 130 million bags ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"S3E0WD1m","properties":{"formattedCitation":"(Arzabe, Macieira, Menezes, Baliza, & Mour\\uc0\\u227{}o, 2018)","plainCitation":"(Arzabe, Macieira, Menezes, Baliza, & Mourão, 2018)","noteIndex":0},"citationItems":[{"id":2139,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/66HU5M9V"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/66HU5M9V"],"itemData":{"id":2139,"type":"article-journal","title":"Women in coffee in Brazil.","container-title":"Embrapa Café-Livro científico (ALICE)","author":[{"family":"Arzabe","given":"Cristina"},{"family":"Macieira","given":"Josiane Cotrim"},{"family":"Menezes","given":"Raquel Santos Soares"},{"family":"Baliza","given":"Danielle Pereira"},{"family":"Mourão","given":"Tânia Fontenele"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Arzabe, Macieira, Menezes, Baliza, &Mourão, 2018).

Brazil has segmented its market for the coffee based on ingredient type, sales channels as well as geography. Among the distribution networks, convenience stores and supermarkets have major shares.

The burgeoning market is the specialty coffee in Brazil ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"4WPq34sD","properties":{"formattedCitation":"(Guimar\\uc0\\u227{}es et al., 2019)","plainCitation":"(Guimarães et al., 2019)","noteIndex":0},"citationItems":[{"id":2129,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/DGBI4X23"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/DGBI4X23"],"itemData":{"id":2129,"type":"article-journal","title":"The brand new Brazilian specialty coffee market","container-title":"Journal of Food Products Marketing","page":"49-71","volume":"25","issue":"1","author":[{"family":"Guimarães","given":"Elisa Reis"},{"family":"Leme","given":"Paulo Henrique Montagnana Vicente"},{"family":"De Rezende","given":"Daniel Carvalho"},{"family":"Pereira","given":"Sérgio Parreiras"},{"family":"Dos Santos","given":"Antônio Carlos"}],"issued":{"date-parts":[["2019"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Guimarães et al., 2019).

Bourbon Santos is Brazil's best coffee bean that is used in the production of coffee for export ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"nyz3Umzu","properties":{"formattedCitation":"(Guimar\\uc0\\u227{}es et al., 2019)","plainCitation":"(Guimarães et al., 2019)","noteIndex":0},"citationItems":[{"id":2129,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/DGBI4X23"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/DGBI4X23"],"itemData":{"id":2129,"type":"article-journal","title":"The brand new Brazilian specialty coffee market","container-title":"Journal of Food Products Marketing","page":"49-71","volume":"25","issue":"1","author":[{"family":"Guimarães","given":"Elisa Reis"},{"family":"Leme","given":"Paulo Henrique Montagnana Vicente"},{"family":"De Rezende","given":"Daniel Carvalho"},{"family":"Pereira","given":"Sérgio Parreiras"},{"family":"Dos Santos","given":"Antônio Carlos"}],"issued":{"date-parts":[["2019"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Guimarães et al., 2019).

Brazil exports; green coffee; soluble coffee, roasted and ground coffee, concentrated and essential extracts as well as coffee residues ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"KS9zMzkO","properties":{"formattedCitation":"(Castro et al., 2018)","plainCitation":"(Castro et al., 2018)","noteIndex":0},"citationItems":[{"id":2169,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/NNVB8KU8"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/NNVB8KU8"],"itemData":{"id":2169,"type":"article-journal","title":"Green coffee seed residue: A sustainable source of antioxidant compounds","container-title":"Food chemistry","page":"48-57","volume":"246","author":[{"family":"Castro","given":"ACCM"},{"family":"Oda","given":"F. B."},{"family":"Almeida-Cincotto","given":"M. G. J."},{"family":"Davanço","given":"M. G."},{"family":"Chiari-Andréo","given":"B. G."},{"family":"Cicarelli","given":"R. M. B."},{"family":"Peccinini","given":"R. G."},{"family":"Zocolo","given":"G. J."},{"family":"Ribeiro","given":"P. R. V."},{"family":"Corrêa","given":"M. A."}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Castro et al., 2018).

All these are soft and have low acidity having a bittersweet chocolate taste.

The coffee production costs in Brazil are relatively low that give it comparative advantages as compared to other countries.

International buyers of coffee are; Germany, Japan, the United States in addition to Belgium.

Weaknesses

The quality of Brazilian coffee is not much good ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"zp9htofL","properties":{"formattedCitation":"(Reichman, 2018)","plainCitation":"(Reichman, 2018)","noteIndex":0},"citationItems":[{"id":2137,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/LGXZAQMY"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/LGXZAQMY"],"itemData":{"id":2137,"type":"article-journal","title":"Big Coffee in Brazil: Historical Origins and Implications for Anthropological Political Economy","container-title":"The Journal of Latin American and Caribbean Anthropology","page":"241-261","volume":"23","issue":"2","author":[{"family":"Reichman","given":"Daniel R."}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Reichman, 2018).

The industry has faced numerous economic crisis resulted in stark losses ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"3Y2SSC4p","properties":{"formattedCitation":"(Paseto, de Alcantara, Paseto, & Patino, n.d.)","plainCitation":"(Paseto, de Alcantara, Paseto, & Patino, n.d.)","noteIndex":0},"citationItems":[{"id":2131,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/XG7CS97K"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/XG7CS97K"],"itemData":{"id":2131,"type":"article-journal","title":"Coffee Production: An Analysis of Opportunities for Competitiveness","container-title":"International Journal of Advanced Engineering Research and Science","volume":"5","issue":"8","author":[{"family":"Paseto","given":"Luísa"},{"family":"Alcantara","given":"Milla Reis","non-dropping-particle":"de"},{"family":"Paseto","given":"Luís Américo"},{"family":"Patino","given":"Marco Túlio Ospina"}]}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Paseto, de Alcantara, Paseto, &Patino, n.d.) ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"mr9Xyeo0","properties":{"formattedCitation":"(Neto et al., 2016)","plainCitation":"(Neto et al., 2016)","noteIndex":0},"citationItems":[{"id":2135,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/RA3EJ3TP"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/RA3EJ3TP"],"itemData":{"id":2135,"type":"article-journal","title":"Thundersnow in Brazil: a case study of 22 July 2013","container-title":"Atmospheric Science Letters","page":"26-32","volume":"17","issue":"1","author":[{"family":"Neto","given":"Giovanni Dolif"},{"family":"Market","given":"Patrick S."},{"family":"Pezza","given":"Alexandre Bernardes"},{"family":"Rodriguez","given":"Carlos Augusto Morales"},{"family":"Calvetti","given":"Leonardo"},{"family":"Silva Dias","given":"Pedro Leite","non-dropping-particle":"da"},{"family":"Escobar","given":"Gustavo Carlos Juan"}],"issued":{"date-parts":[["2016"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Neto et al., 2016).

The industry is still facing the residual effects of the worst economic crises.

Coffee trees require two to four seasons to supply optimum productivity ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"KQyGMgDK","properties":{"formattedCitation":"(Reichman, 2018)","plainCitation":"(Reichman, 2018)","noteIndex":0},"citationItems":[{"id":2137,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/LGXZAQMY"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/LGXZAQMY"],"itemData":{"id":2137,"type":"article-journal","title":"Big Coffee in Brazil: Historical Origins and Implications for Anthropological Political Economy","container-title":"The Journal of Latin American and Caribbean Anthropology","page":"241-261","volume":"23","issue":"2","author":[{"family":"Reichman","given":"Daniel R."}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Reichman, 2018).

Supply coffee to only a few countries in the world and have only a few stores in each country.

Brazil has overdependence in the United States market that is limiting its scope.

The products are expensive and not available to all classes. Moreover, during the recession consumers may switch to other brands or alternatives.

International buyers are also coming to the country after considering the leading position of Brazil in the coffee world. They have joined the Brazil market with a hope to get the best business deals.

The industry has to compete internationally with low-cost coffee sellers. For instance, Starbucks competes while operating internally with many local low-cost coffee sellers. These competitors offer products at low prices and reduce the industry’s market share.

There is constant production of green Robusta beans that have inferior quality.

People are health conscious and they evade from caffeine-containing drinks.

They have less understating about the advantages of coffee adoption.

Not many products can be offered due to low quality.

Raw materials are costly and their non-availability in case of harsh weather conditions that make them more expensive.

The cultivation of coffee is also carried out at faraway places in Brazil. It requires construction and management of infrastructure for their transport such as railroads.

Farmers have to give different treatments against rust that increase production costs.

Increased production costs due to any reason make exporters to less focus on marketing. When they spend less on advertising and promotions, they do not get able to face the competition effectively.

Opportunities

In 2014, the Brazilian government granted Certified Denomination of Origin (CDO) status to the CerradoMineiro ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"Cu4FDIaV","properties":{"formattedCitation":"(Reichman, 2018)","plainCitation":"(Reichman, 2018)","noteIndex":0},"citationItems":[{"id":2137,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/LGXZAQMY"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/LGXZAQMY"],"itemData":{"id":2137,"type":"article-journal","title":"Big Coffee in Brazil: Historical Origins and Implications for Anthropological Political Economy","container-title":"The Journal of Latin American and Caribbean Anthropology","page":"241-261","volume":"23","issue":"2","author":[{"family":"Reichman","given":"Daniel R."}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Reichman, 2018).

Consumer consumption patterns are changing internationally and they are moving towards instant standard coffee. This is due to their busy lifestyles and longer working hours that are offering the coffee industry an opportunity to target more and more consumers.

Currently, there are 20 instant coffee processing plants across the country.

Companies can invest more in soluble coffee products.

Companies can also expand into emerging markets as they will not be saturated like the US market currently. This will reduce competition and offer more profits.

Partnership opportunities can also increase profits in emerging markets.

The largest emerging market can be an Asian market that can get the nation traditional coffee products such as green tea flavoured coffee drinks.

With the well-managed supply chain, different risks can be made less such as competition, higher prices and low quality.

Threats

Climate has an effect over the production of coffee and it is considering changing with time ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"1xRuK6Z0","properties":{"formattedCitation":"(Chalfoun, Angelico, & de Resende, n.d.)","plainCitation":"(Chalfoun, Angelico, & de Resende, n.d.)","noteIndex":0},"citationItems":[{"id":2128,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/L4XYMGIQ"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/L4XYMGIQ"],"itemData":{"id":2128,"type":"article-journal","title":"Brazilian Coffee Quality: Cultural, Microbiological and Bioactivity Aspects","container-title":"World Journal of Research and Review","volume":"6","issue":"1","author":[{"family":"Chalfoun","given":"Sara Maria"},{"family":"Angelico","given":"Caroline Lima"},{"family":"Resende","given":"Mário Lúcio Vilela","non-dropping-particle":"de"}]}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Chalfoun, Angelico, & de Resende, n.d.).

The climate is bringing resilient pests and plant diseases as increased temperatures bring more pests ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"uJ7puhcJ","properties":{"formattedCitation":"(de F\\uc0\\u225{}tima Souza, dos Santos, Inoue, Tin\\uc0\\u244{}co, & Ferreira, 2018)","plainCitation":"(de Fátima Souza, dos Santos, Inoue, Tinôco, & Ferreira, 2018)","noteIndex":0},"citationItems":[{"id":2166,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/G4L75F83"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/G4L75F83"],"itemData":{"id":2166,"type":"article-journal","title":"ADDITIVES TO CONTROL THE QUALITY OF COFFEE HUSK POULTRY LITTER","container-title":"Revista Engenharia na Agricultura","page":"197-206","volume":"26","issue":"3","author":[{"family":"Fátima Souza","given":"Cecília","non-dropping-particle":"de"},{"family":"Santos","given":"Cláudia Ribeiro","non-dropping-particle":"dos"},{"family":"Inoue","given":"Keles Regina Antony"},{"family":"Tinôco","given":"Ilda de Fátima Ferreira"},{"family":"Ferreira","given":"Williams Pinto Marques"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (de Fátima Souza, dos Santos, Inoue, Tinôco, & Ferreira, 2018).

Arabica coffee requires a moderate temperature for its growth as increased temperature make coffee beans to ripen too rapidly that affects the taste and quality of the beans ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"CF9v4roU","properties":{"formattedCitation":"(Clontz, 2018)","plainCitation":"(Clontz, 2018)","noteIndex":0},"citationItems":[{"id":2145,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/HUAZLB76"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/HUAZLB76"],"itemData":{"id":2145,"type":"webpage","title":"Coffee Versus the Climate: Coffee Production in Brazil","URL":"https://www.panoramas.pitt.edu/economy-and-development/coffee-versus-climate-coffee-production-brazil","author":[{"family":"Clontz","given":"Carley"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Clontz, 2018).

A competition involving low-cost coffee sellers is present at both local and international levels ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"Tbxqz1lH","properties":{"formattedCitation":"(Caporaso, Whitworth, Cui, & Fisk, 2018)","plainCitation":"(Caporaso, Whitworth, Cui, & Fisk, 2018)","noteIndex":0},"citationItems":[{"id":2168,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/9YESJ8B3"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/9YESJ8B3"],"itemData":{"id":2168,"type":"article-journal","title":"Variability of single bean coffee volatile compounds of Arabica and robusta roasted coffees analysed by SPME-GC-MS","container-title":"Food Research International","page":"628-640","volume":"108","author":[{"family":"Caporaso","given":"Nicola"},{"family":"Whitworth","given":"Martin B."},{"family":"Cui","given":"Chenhao"},{"family":"Fisk","given":"Ian D."}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Caporaso, Whitworth, Cui, & Fisk, 2018).

Imitators are present in the market that reduces profits.

Local cultures, political situations and policies also affect the coffee business. For example, in some counties, there are independent coffeehouse movements. They favour the operations of local coffeehouses and compete with the growth of multinational coffeehouse chains ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"KCXEBCNf","properties":{"formattedCitation":"(Baqueta, Coqueiro, Mar\\uc0\\u231{}o, & Valderrama, 2019)","plainCitation":"(Baqueta, Coqueiro, Março, & Valderrama, 2019)","noteIndex":0},"citationItems":[{"id":2147,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/UYATRAVG"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/UYATRAVG"],"itemData":{"id":2147,"type":"article-journal","title":"Quality Control Parameters in the Roasted Coffee Industry: a Proposal by Using MicroNIR Spectroscopy and Multivariate Calibration","container-title":"Food Analytical Methods","page":"1-11","author":[{"family":"Baqueta","given":"Michel Rocha"},{"family":"Coqueiro","given":"Aline"},{"family":"Março","given":"Paulo Henrique"},{"family":"Valderrama","given":"Patrícia"}],"issued":{"date-parts":[["2019"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Baqueta, Coqueiro, Março, &Valderrama, 2019).

During the sociocultural trends, consumer perception and purchasing behaviours also change.

This requires the marketing and branding strategies that call for more investments.

Increasing prices of raw material such as dairy products.

Supply disruptions can occur in international dealings.

Main competitors are; Golden Brazil, Comexim, and Nicchio Cafe.

International prices of Arabica are declining that will decrease the profits.

Recommendations

Currently, Vietnam is the second largest exporter of coffee. It has an objective to increase its exports as well as improve the quality of its product's further. There are many strategies that are needed to be changed under the results of this SWOT analysis. The industry is very promising locally and can be made strong with the use of more and more technology. This will not only improve the production capacity, remove the effects of climate but will also enhance the quality of its product's. Moreover, there is a need to increase the plantation area by making more investments in this sector. Objectives must be set for export and import. Farmers are knowledgeable and can easily learn new techniques. They are required to undergo training regarding the new methods of cultivation and processing.

In addition, the industry should conduct research about the addition of more products and deepen the product line. This will also increase the number of producers in the market when there will be more opportunities in the market. Companies should advertise about the health benefits of coffee products to increase consumer awareness. There must be the development of strategic relationships with buyers as well as sellers as it will bring loyalty. This will be an effective's strategy in facing the competition both at local and international level.

Conversely, Brazil is the largest exporter in the coffee industry among international players but does not have the high-quality coffee. Coffee is the social and cultural component of Brazil culture. It is the major export of the country and requires the improvement of coffee and other weaknesses to further increase its demand all over the world. After the quality improvement, there must be more stores in different countries to increase sales. Moreover, the United States market must not be the only market for the export of the coffee. Other options such as Asian markets are needed to be considered. All the international players that come to Brazil must get the necessary arrangements so they can support the industry. Farmers must also get finances and other facilities to improve their production.

References

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Acchar, W., &Dultra, E. J. (2015). The coffee industry in Brazil. In Ceramic Materials from Coffee Bagasse Ash Waste (pp. 23–30). Springer.

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Arzabe, C., Macieira, J. C., Menezes, R. S. S., Baliza, D. P., &Mourão, T. F. (2018). Women in coffee in Brazil. Embrapa Café-LivroCientífico (ALICE).

Baqueta, M. R., Coqueiro, A., Março, P. H., &Valderrama, P. (2019). Quality Control Parameters in the Roasted Coffee Industry: a Proposal by Using MicroNIR Spectroscopy and Multivariate Calibration. Food Analytical Methods, 1–11.

Caporaso, N., Whitworth, M. B., Cui, C., & Fisk, I. D. (2018). Variability of single bean coffee volatile compounds of Arabica and robusta roasted coffees analysed by SPME-GC-MS. Food Research International, 108, 628–640.

Carvalho, F. M., & Spence, C. (2018). The shape of the cup influences aroma, taste, and hedonic judgements of specialty coffee. Food Quality and Preference, 68, 315–321.

Castro, A., Oda, F. B., Almeida-Cincotta, M. G. J., Davanço, M. G., Chiari-Andréo, B. G., Cicarelli, R. M. B., … Corrêa, M. A. (2018). Green coffee seed residue: A sustainable source of antioxidant compounds. Food Chemistry, 246, 48–57.

Chalfoun, S. M., Angelico, C. L., & de Resende, M. L. V. (n.d.). Brazilian Coffee Quality: Cultural, Microbiological and Bioactivity Aspects. World Journal of Research and Review, 6(1).

Clontz, C. (2018). Coffee Versus the Climate: Coffee Production in Brazil. Retrieved from https://www.panoramas.pitt.edu/economy-and-development/coffee-versus-climate-coffee-production-brazil

de Almeida, L. F., &Zylbersztajn, D. (2017). Key Success Factors in the Brazilian Coffee Agrichain: Present and Future Challenges. International Journal on Food System Dynamics, 8(1), 45–53.

de Fátima Souza, C., dos Santos, C. R., Inoue, K. R. A., Tinôco, I. de F. F., & Ferreira, W. P. M. (2018). ADDITIVES TO CONTROL THE QUALITY OF COFFEE HUSK POULTRY LITTER. RevistaEngenharia Na Agricultura, 26(3), 197–206.

Doutriaux, S., Geisler, C., & Shively, G. (2008). Competing for coffee space: development‐induced displacement in the Central Highlands of Vietnam. Rural Sociology, 73(4), 528–554.

Foreign, Agricultural, & Service. (2018). Coffee: World Markets and Trade. Retrieved from https://apps.fas.usda.gov/psdonline/circulars/coffee.pdf

Gonzalez-Perez, M.-A., & Gutierrez-Viana, S. (2012). Cooperation in coffee markets: the case of Vietnam and Colombia. Journal of Agribusiness in Developing and Emerging Economies, 2(1), 57–73.

Guimarães, E. R., Leme, P. H. M. V., De Rezende, D. C., Pereira, S. P., & Dos Santos, A. C. (2019). The brand new Brazilian specialty coffee market. Journal of Food Products Marketing, 25(1), 49–71.

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Tax Principles

Tax Principles

Name

[Institutional Affiliation(s)]

Author Note

Tax Principles

The Benefit Received principal is a rule in public taxation. This rule emphasizes the importance of fairness in taxation as it imposes a tax on the bases of received benefits from the government. The person who gets more benefits from the government will pay more taxes and vice versa. In the provided situations, case one is more consistent with the tax principal of Benefits received. A 10 cent tax on the use of each gallon of gasoline is based on the principles of Benefits received. The person who uses more gasoline will have to pay more taxes. At the same time, a person who will purchase more gasoline will also get more benefits from the government as he will use drive more on the roads. He gets more benefits from the government and will pay more taxes. On the other hand, if a person does not use the roads for transportation, there will be no imposition of taxes on him.

While the second case in the provided case study is an example of proportional taxation. A tax rate is called a proportionate tax rate if all the citizens of the state have to pay an equal tax rate regardless of their income status ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"R0YDRZaf","properties":{"formattedCitation":"(Fried, 1999)","plainCitation":"(Fried, 1999)","noteIndex":0},"citationItems":[{"id":1136,"uris":["http://zotero.org/users/local/s8f0QVnP/items/8QG7LVQA"],"uri":["http://zotero.org/users/local/s8f0QVnP/items/8QG7LVQA"],"itemData":{"id":1136,"type":"article-journal","container-title":"Chap. L. Rev.","page":"157","title":"The puzzling case for proportionate taxation","volume":"2","author":[{"family":"Fried","given":"Barbara H."}],"issued":{"date-parts":[["1999"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Fried, 1999). This is also called flat tax and poor, middle and high-income classes all will pay an equal tax rate. In the provided scenario, every individual of the state has to pay 1% of his income as a tax to the government. Even this scenario does not follow the principle of Benefits Received as people have to pay the tax regardless of their usage of soccer fields. A person who neither plays the football nor has any interest in watching the football must have to pay the tax. Although such a person gets zero benefits from the soccer fields.

So, Scenario one is more consistent with the principles of Benefits Received.

References

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Fried, B. H. (1999). The puzzling case for proportionate taxation. Chap. L. Rev., 2, 157.

Taxes And Filmmaking

Movie Production Incentives in the United States

[Name of the Writer]

[Name of the Institution]

Movie Production Incentives in the United States

Introduction

Movie production incentives are tax benefits offered by states to movie makers. These incentives are aimed at encouraging in-state film-making. These tax incentives were first introduced in 1990s when a large number of film makers began moving out to other countries such as Canada in order to reduce costs. Since then, states have been introducing increasingly attractive incentive policies not only in competition with other countries but also other states within the U.S. Incentive policies vary from state to state. Mostly, they include tax exemption, cash grants, tax credits and fee-free locations for setting up studios. Advocates of such incentive programs argue that they increase economic activity and thereby create job opportunities. Others argue that the primary beneficiary of such incentives are out-of-the state cast and crew. The in-state talent doesn’t benefit much from these incentives, and therefore, the cost of such policies outweigh their benefits. However, the examples of many states including Georgia and Michigan show that if the film industry is stable enough, local emerging talent benefits from it. All the tax exemptions and grants provided by the state are spent with the state by the film industry, thereby not only accommodating local artists but also supporting associated business.

Discussion

Types of Film Production Incentives in the U.S.

There are five main types of film production incentives in America: tax credits, cash rebates, grants, sales tax and lodging exemption and no fee locations CITATION New17 \l 1033 (New York Film Academy, 2017). A production company becomes eligible for tax credits if it fulfils the minimum spending condition. The tax credit fund is basically an amount of the total income tax owed by the company to the state. The eligible company can claim it after filing tax returns. In this way, companies are enabled to do more with less. Some states also offer sales tax and lodging exemptions CITATION New17 \l 1033 (New York Film Academy, 2017). Production companies can save large amounts of their revenue if they are exempted from paying sales tax on production. Some states also exempt the companies from paying lodging taxes of their guests. The requirement to enjoy this exemption in most states is that the guests should be staying for more than 30 days. Some states also offer the incentive of allowing companies to film on state-owned property without paying any fee.

Current Trends of State Sponsored Film Incentives

Hollywood dominated the America’s motion picture industry for quite some time untill tax incentives were introduced by the state governments in the 1980s. These incentives attracted film production in many other states of the U.S. Today, policy makers of states compete with one another to attract film industry. The first state to introduce state tax incentives for film and TV production was Louisiana CITATION NCS19 \l 1033 (NCSL.org, 2019). Since 1992 when it introduced tax incentives, film industry began remarkable growth till 2002. Other states responded and by 2009, 44 states in addition to Washington D.C. and Puerto Rico were offering incentives to film industry. Over the years the popularity of such incentives have waned and today, only 31 states, Puerto Rica, Washington D.C, and the U.S. Virgin Islands continue to offer incentives. This means that since 2009, 13 states have renounced their incentive program CITATION NCS19 \l 1033 (NCSL.org, 2019).

Most states have devised such policies that aim at limiting the forgone revenue and minimizing the chances of losing film industry. In fiscal year 2018, Maryland, Colorado and Texas reduced the annual allocation for film incentive programs. Louisiana, arguably the initiator of state incentives to film production, introduced a cap of $150 million on budget allocation for film production incentives CITATION NCS19 \l 1033 (NCSL.org, 2019). Many other states have followed suit. These measures are primarily due to fiscal pressures and the uncertainty associated with uncapped credits. However, North Carolina, Utah and Virginia have increased their annual allocations for film incentives CITATION NCS19 \l 1033 (NCSL.org, 2019).

Benefits of Film Production Incentives

Filmmaking is a labor-intensive job. It requires manpower, resources and services. Therefore, a big-budget movie can help the local economy in multiple ways: new jobs are created; new infrastructure is introduced; small businesses flourish; and tax revenue is generated. Tourism of states also flourish as many hobbyists or film enthusiasts flock to film sites to see where and how movies and shows are filmed. An average film studio has about one hundred crew members CITATION New17 \l 1033 (New York Film Academy, 2017). Then it hires amost another one hundred from among the local people. During film production, millions of dollars are spent on salaries. Demand for food and lodging also increases. Most importantly, local people are trained in film making skills which promotes local film making in future.

One pertinent example in this context is Georgia. In the fiscal year 2018, Georgia filmed the highest number of movies in its film history CITATION Atl18 \l 1033 (Atlanta Business Chronicle, 2018). According to the Government Nathan Deal Report, film and television generated a revenue of about $9.5 billion in the year 2018 CITATION Atl18 \l 1033 (Atlanta Business Chronicle, 2018). There were a total of 455 production shots which is the highest ever annual production shots. As per the deal, these productions represent a direct spending of $2.7 billion within Georgia. One of the primary reasons for this boom in Georgia film industry is the Investment Act of 2008. Georgia joined the world’s biggest production hubs due to state investment programs such as awarding as high as 30% of the total production spending as tax credits. As per the Motion Picture Association of America, the film industry in Georgia provides about 92,000 jobs and pays wages of more than $4.6 billion to employees. To support the film industry, more than 300 new businesses associated with film production directly or indirectly have either relocated or further expanded in Georgia CITATION Atl18 \l 1033 (Atlanta Business Chronicle, 2018). The additional jobs created across other professions that indirectly support film industry include carpenters, fashion designers, medics, cloth-shops etc.

Another pertinent example is that of Michigan which opened its doors to film production in 2008. Movie making has increasing tenfold over the years. Michigan’s topography offered lakes, farms, hills, dunes, and rural as well as big cities. As per the Ernst and Young Report, for every single dollar spent by the Michigan government on incentivizing film production, 6 dollars are spent by the film industry within Michigan CITATION DAV11 \l 1033 (KRIEGER, 2011). Creative people now do not have to look elsewhere. In fact the condusive atmosphere is breeding creativity, innovation and ideas. Electricians, drivers, autoworkers and shoemakers who were earlier unemployed have found new jobs. Schools in Michigan have embarked upon film-making training programs. The film-making expertise of local people has enhanced at unprecedented pace. This means more jobs and returns for Michigan itself CITATION DAV11 \l 1033 (KRIEGER, 2011).

Perceived disadvantages

Some people argue that incentives for filmmaking are useless because the jobs thus created are only temporary. They point out that those who acquire skills in film production are left jobless once the production is wrapped up. Some people highlight that most of the states increase film production incentives by relying on success stories of other states without properly assessing how such policies will affect their own states.

Conclusion

The arguments of those who oppose state incentives for film making can be countered. The jobs created are temporary only when the state does not have a streamlined and stable production industry. If the film industry is stable enough, the local talent can set-up their own production studios. Moreover, states can always improve upon their assessment of such policies aimed at incentivizing film-making. With proper research and assessment, a balance can be struck between spending and attracting film industry. The example of Michigan and Georgia prove that the benefits of promoting film industry can be fully reaped when the film industry is made stable, local talent is promoted, and academic institutions are mobilized to promote innovation, creativity and the art of filmmaking.

References

BIBLIOGRAPHY Atlanta Business Chronicle. (2018). Gov. Deal: Georgia filmed more TV, movie projects than ever before in FY 2018. Retrieved from Atlanta Business Chronicle: https://www.bizjournals.com/atlanta/news/2018/08/16/gov-deal-georgia-filmed-more-tv-movie-projects.html

KRIEGER, D. (2011). How we all benefit from film incentives: An industry insider weighs in. Retrieved from Model Media: http://www.modeldmedia.com/features/filmincentives311.aspx

NCSL.org. (2019). State Film Production Incentives and Programs. Retrieved from NCSL: http://www.ncsl.org/research/fiscal-policy/state-film-production-incentives-and-programs.aspx

New York Film Academy. (2017). A Quick Guide to Movie Production Incentives. Retrieved from New York Film Academy: https://www.nyfa.edu/student-resources/a-quick-guide-to-movie-production-incentives/

Ten Principles Of Economy

Discussion

[Name of the Writer]

[Name of the Institution]

Ten Principles of Economy

The ten principles of economics create the ability to understand the financial world and it escalates the skills of investors, producers, citizens and consumers for savingbetter. Barter system was the practice of ancient people in which if a person wanted anything, he has to sacrifice the other one. If the maximum resources of a country are spending in its defense then these spending are used for the welfare of the country. The government usually taxes the rich people to spend this money on the welfare of poor people.It shows that people are facing this tradeoff in their daily routine. If I want to continue my graduation, I need to sacrifice my job to get the benefit. A rational person always thinks about the margin and maximum benefits from his investment and analyze the options from which he could get maximum benefit. The behavior of the consumer is not consistent if the price is changed his need and want for a product is also changed. Trade encourages the parties to make a better product which creates value for the consumer. It can also increase the expertise in making of product to gain a competitive advantage. The government should play a part to improve the market outcome. It is the responsibility of the government to impose a heavy tax on companies on the emission of carbon and give tax relief to companies which are producing less carbon. The standard of living in a country depends upon the quality of the products it is producing. The countries which are producing better products earn more and have a better standard of living as compared to countries which are producing substandard products. The main cause of inflation is having too much circulation of money in the market. The government should follow the rules while printing more money. Employment and inflation are insignificant to each other when the inflation has increased, the unemployment has decreased and when the inflation has decraesed, unemployement has increased

Term Paper #1

Term Paper #1

[Name of the Writer]

[Name of the Institution]

Term Paper #1

Product (Coffee)

There is a number of products and services that I use on a daily basis. Most of them are associated with my basic needs so that is why they are used on a routine based or every day. But the item that I like and use on a daily basis which is not highly associated with basic needs instead that is connected with the luxuriousness is the Coffee. I use Coffee almost every day as I prefer it over several other items like tea and juices. In addition to it, I am going to analyze this product because it is the products about which I consider myself having more knowledge about the things asked in the assignment. First of all, the market for this product is stable and exists in almost every corner of the world as Coffee is also is a luxurious product used by everyone who can afford.

Factors influence Coffee Demand and Supply

Factors influence Coffee Demand

Many factors are there that have a huge impact on the demand for Coffee products but it is a fact that priorities exist almost everywhere. Hence some factors are more important and crucial than others. It means that some factors have a higher influence on the demand for Coffee so the factors that have higher influence are;

Preference of Consumers of the Coffee and Taste it provides to them. This means that the demand would be higher if people or consumers prefer to use Coffee while the product ensures good and desired taste. Otherwise, the case would be different (MacCuaig, 2018).

Income and Income Level of People

The income level is the factors that almost influence the demand of Coffee the most because as high as the income level the demand would be similarly high and vice versa.

Changes in the Prices of related products

The demand also varies when changes in the related products come to see by the consumers. Like, if the prices of tea and other drinks goes higher then users would switch to coffee (MacCuaig, 2018).

Costs and Number of Consumers in the Market

The cost like production cost and advertisement cost etc. also influence the demand for coffee while the number of customer and consumers mattes highly. It means that the demand would be high if the costs are low that lead to lower prices and the number of users in the market are high.

The factors that influence the supply of Coffee the most are as follows.

The changes in the conditions like climate condition and weather etc. For example, the supply of hot coffee may be lower in summer and would be high in winters.

Inventory level or existing level of the coffee stocks with the company e.g. Starbucks that produce and sell coffee.

The number of producer and sellers of the coffee products in the market and industry (coffeehouses or chains).

The production and farming of coffee beans and other items used in the production of coffee and investments in coffee production (MacCuaig, 2018).

Effect on the Price Equilibrium

The factors listed above influence that demand and supply of coffee put enough impact on the Price Equilibrium of Coffee products. These factors affect and affected the price equilibrium in the following ways.

The companies or coffeehouses and chains such as Dunkin Donuts have changed their prices as per the preferences and income level of communities where they operate. In some regions, the companies have decreased the prices where the economic condition is not much impressive.

The price equilibrium is affected in a way that companies increase the prices when the costs go higher while they look for decreasing prices when the prices of alternate prices get down by competitors and when the number of customers goes lower.

Furthermore, the companies look to decrease the prices in the seasons where the demand of coffee decreases and prices goes high when the demand goes higher like the event of Christmas (Ghoshray, 2010).

Inventory and number of sellers affect price equilibrium in a way that prices are lowered when the number of sellers is more and companies have a huge amount of inventory at hand and vice versa.

The production of farming and investing in it by companies themselves e.g. Starbucks that invest in improving the farmers and farming of coffee affected the price equilibrium that the increase in such costs and investments lead to high and increase final prices of the coffee product.

Changes in Demand and Supply in Future

Based on my personal analysis and prediction as being a permanent and even loyal use consumer of coffee, I see that both demand and supply of coffee will be facing changes in the near future. These changes would be faced due to many different factors and forces. But the factors that may play huge and critical roles in these changes are but not only the following.

The increase in the economic conditions of families and individuals at any time in the future while their spending patterns for the luxury items and products.

The increase in supply may be seen if new competitors in the future entered the coffee industry and market.

The increase in demand and supply is likely in the future because most consumers of coffee expect better quality coffee products while companies like Starbucks are aggressively investing in improving quality (Ghoshray, 2010).

The offerings of new and substitutes products would also affect the demand (even inversely) in the future while the supply would be changed by the companies selling coffee products in the same way (MacCuaig, 2018).

References

Ghoshray, A. (2010). The Extent of the World Coffee Market. Bulletin of Economic Research, 62(1), 97-107.

MacCuaig, S. (2018). Up & Down: Supply vs. Demand Forces and the C. Retrieved 12 December 2019, from https://dailycoffeenews.com/2018/11/26/up-down-supply-vs-demand-forces-and-the-c/

Term Paper Title

Housing Market

[Name of the Writer]

[Name of the Institution]

Housing Market

The housing market is made up of the supply and demand of houses made on land where we live. The stock of housing consists of various types like occupied houses, privately owned, privately rented, property owned by housing associations, local authority rented accommodation, and selling of land for construction of houses. Just like markets of goods and services, the housing market also linked with economic indicators including supply, demand, pricing, inflation, mortgage, interest rate, and many more. Therefore, it directly affects the economic growth of the nation. This is why it is important to learn about the basic information about the housing market.

Demand for housing

The law of demand, which states that when the price increases demand, the good decreases, and when the price of the good decreases, it leads to an increase in demand for that good. In the housing market also, when the price of the land or house increases, demand starts decreasing and vice versa. There are numbers of factor that affects the demand for housing, including current income, price, interest rate, and wealth of the households. The market demand curve indicates the change in demand for housing with the change in house pricing. It is downward sloping due to the inverse relationship between quantity demanded and price of the houses. Whereas when factors other than price affect the demand, then it resulted in a shift in the market demand curve. Some of the reason for demand shift includes an increase in interest rates of mortgages, risk of the future economy, change in taste and preference, and change in total wealth of the individuals. Following is the demand curve of the housing market.

The graph shows that when the demand increases due to the factor other than price, curve shifts to the right that is from point D to D1. Similarly, when the demand decreases due to the factor other than price, curve shift to the left that is from point D to D2 ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"slmVtvbL","properties":{"formattedCitation":"(Adair, Berry, & McGreal, 1991)","plainCitation":"(Adair, Berry, & McGreal, 1991)","noteIndex":0},"citationItems":[{"id":1493,"uris":["http://zotero.org/users/local/mlRB1JqV/items/3GMURQ3D"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/3GMURQ3D"],"itemData":{"id":1493,"type":"article-journal","title":"Land availability, housing demand and the property market","container-title":"Journal of Property Research","page":"59-69","volume":"8","issue":"1","source":"Taylor and Francis+NEJM","abstract":"The interaction between the planning process, housing demand and private sector development in Great Britain shows the need to assess the performance of property variables from a market area perspective. Analysis drawn from Northern Ireland suggests an inverse land supply model with variations in land zoning practice influencing the type and scale of new development and contributing to an imbalanced residential property market.","DOI":"10.1080/09599919108724020","ISSN":"0959-9916","author":[{"family":"Adair","given":"A. S."},{"family":"Berry","given":"J. N."},{"family":"McGreal","given":"W. S."}],"issued":{"date-parts":[["1991",3,1]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Adair, Berry, & McGreal, 1991).

Supply of housing

The market supply curve of the houses can be obtained by adding the supply curve of individuals in the economy. The supply curve is positively sloped due to the positive relationship between price and quantity supplied. It means that with the increase in price, there is an increase in the supply of houses, which resulted in the rightwards movement on the curve and vice versa. However, price effects in two ways. First, with the increase in price, firms increase the house’s quantity to earn more profit. Second, an increase in price leads to an increase in the entrance of new firms in the market, which lowers the profit of existing firms. The factors that affect the supply curve of the housing market include the change in the cost of production, delays in construction, damage in construction, and change in rules and regulations. These factors lead to a shift in the house market supply curve.

The graph shows that when the supply of houses increases, it leads to shifting in a curve towards the right while fall in supply due to the factor other than price result in shifting of the curve towards the left side ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"hZA1IhmS","properties":{"formattedCitation":"(Paciorek, 2013)","plainCitation":"(Paciorek, 2013)","noteIndex":0},"citationItems":[{"id":1495,"uris":["http://zotero.org/users/local/mlRB1JqV/items/2PSYWPF4"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/2PSYWPF4"],"itemData":{"id":1495,"type":"article-journal","title":"Supply constraints and housing market dynamics","container-title":"Journal of Urban Economics","page":"11-26","volume":"77","source":"ScienceDirect","abstract":"Although the volatility of house prices is often ascribed to demand-side factors, constraints on housing supply have important and little-studied implications for housing dynamics. I illustrate the strong relationship between the volatility of house prices and the regulation of new housing supply. I then employ a dynamic structural model of housing investment to investigate the mechanisms underlying this relationship. I find that supply constraints increase volatility through two channels: First, regulation lowers the elasticity of new housing supply by increasing lags in the permit process and adding to the cost of supplying new houses on the margin. Second, geographic limitations on the area available for building houses, such as steep slopes and water bodies, lead to less investment on average relative to the size of the existing housing stock, leaving less scope for the supply response to attenuate the effects of a demand shock. My estimates and simulations confirm that regulation and geographic constraints play critical and complementary roles in decreasing the responsiveness of investment to demand shocks, which in turn amplifies house price volatility.","DOI":"10.1016/j.jue.2013.04.001","ISSN":"0094-1190","journalAbbreviation":"Journal of Urban Economics","author":[{"family":"Paciorek","given":"Andrew"}],"issued":{"date-parts":[["2013",9,1]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Paciorek, 2013).

Equilibrium in the Housing Market

When the demand for the housing market is equal to the supply of the housing market, then we say that the housing market is in equilibrium. When the demand is higher than the supply of the houses, then the market is said to be in shortage of houses. In this condition, equilibrium can be achieved by contracting more houses. Construction of houses takes time, so for the short-period producers, increase the price of already built houses to decrease the demand. Similarly, when the supply is higher than the demand for the houses, then the market is said to be in surplus. It means buyers of houses are less than the houses available for sale in the market. In this condition, producers lower the price of the houses to attract buyers so that demand can be increased. In-equilibrium happens in the short-run because producer gets less time to manage the production with the change in demand, but in the long-run, they get enough time to manage demand and supply. Therefore, in long-run demand and supply come back to the equilibrium point.

The above graph shows the demand and supply curve of the housing market. The point of intersection is the equilibrium point of the housing market. At equilibrium total quantity of the houses is Q with the price at 200,000 dollars ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"6Zp6l3Fy","properties":{"formattedCitation":"(Goodman & Thibodeau, 1998)","plainCitation":"(Goodman & Thibodeau, 1998)","noteIndex":0},"citationItems":[{"id":1497,"uris":["http://zotero.org/users/local/mlRB1JqV/items/YZHI4MFY"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/YZHI4MFY"],"itemData":{"id":1497,"type":"article-journal","title":"Housing Market Segmentation","container-title":"Journal of Housing Economics","page":"121-143","volume":"7","issue":"2","source":"ScienceDirect","abstract":"Housing submarkets are typically defined as geographic areas where the price per unit of housing quantity (defined using some index of housing characteristics) is constant. This paper defines housing markets as geographic areas where (1) the price of housing (per unit of service) is constant and (2) individual housing characteristics are available for purchase. We examine housing market segmentation within metropolitan Dallas using hierarchical models and single-family property transactions over the 1995:1 through 1997:1 periods. We supplement the transaction data with information on elementary school student performance for public elementary schools. A demonstration of the technique using data for the Carrollton–Farmers Branch Independent School District suggests that the metropolitan Dallas housing market is segmented by the quality of public education (as measured by student performance on standardized tests). We also conclude that hierarchical models provide a useful framework for delineating housing submarkets. Finally, while this paper examines single-family housing submarkets, the methodology could be adapted to other property types to delineate submarket boundaries for multifamily, office, retail, and industrial/warehouse properties.","DOI":"10.1006/jhec.1998.0229","ISSN":"1051-1377","journalAbbreviation":"Journal of Housing Economics","author":[{"family":"Goodman","given":"Allen C."},{"family":"Thibodeau","given":"Thomas G."}],"issued":{"date-parts":[["1998",6,1]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Goodman & Thibodeau, 1998).

Factor affecting house price

Numbers of factors are included in the growth of the housing market both from the supply and demand side. Factors that affect the housing market from the demand side include the availability of mortgages, number of households, interest rate, speculative demand, affordability of housing, and overall economic growth. Factors that affect the housing market from the supply side include new build and numbers of selling houses.

Supply-side

When the number of selling increases, producers increase the price of the houses to meet the demand to bring the market in equilibrium. Whereas, when the producers build new houses, they keep the price lower to attract individuals who increase demand for new build houses.

Demand-Side

The first thing that individuals think while buying the house the affordability of housing. When the income or total wealth of the individuals is lower than the demanding price of the houses, then it leads to a decrease in demand for houses. Therefore, producers lower the price of houses to increase the demand. In addition, many individuals do not buy from their wealth or income at once; instead, they take a loan to buy houses, which is known as a mortgage. When they get loans easily, demand for houses increases, but an increase in the regulation or availability of mortgage leads to the low demand, which ultimately lowers the price of the houses. Besides, when the numbers of households increase, it results in low demand for houses and low housing price.

The interest rate is a crucial factor that affects the demand for housing. When there is a fall in interest rate than the price of houses decreases which increased house demand. In addition, low-interest-rate impact the mortgage rate, and people get a mortgage at lower rates, which encourages people to invest in this market and producer to enter for business. In other words, the low-interest rate has a positive impact on the demand of the houses while high-interest rate increases the profit and opportunities for the suppliers or producers of the houses ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"TL4cz8nB","properties":{"formattedCitation":"(Diao, Fan, & Sing, 2018)","plainCitation":"(Diao, Fan, & Sing, 2018)","noteIndex":0},"citationItems":[{"id":1492,"uris":["http://zotero.org/users/local/mlRB1JqV/items/ASTKJRP5"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/ASTKJRP5"],"itemData":{"id":1492,"type":"report","title":"Demand restrictions; government interventions; resale public housing market; private housing market; housing wealth","collection-title":"ERES","publisher":"European Real Estate Society (ERES)","source":"ideas.repec.org","abstract":"Singapore's government imposes demand restrictions in 2011 and 2013 disallowing Singaporean residents to concurrently own a private housing unit and a resale public housing flat. The restrictions, however, do not affect public housing owners, who fulfill the minimum occupation period requirement. This paper uses the policy shocks to set up a quasi-experiment to test if differential housing purchasing behaviors exist between the private housing and the public housing buyers. Using private housing transaction data between 2005 and 2015, we find that prices decline by 2.4% and 1.8% for the private housing owners’ purchases after the policy took effects in 2010 and 2013, respectively, relative to public housing owners' purchases. Public housing owners could be motivated by housing wealth accrued to their existing flats to pay higher prices in their private housing purchases. We also find stronger treatment effects in resale market, core central region, medium to high-end market, and market with large size units.","URL":"https://ideas.repec.org/p/arz/wpaper/eres2018_32.html","number":"eres2018_32","language":"en","author":[{"family":"Diao","given":"Mi"},{"family":"Fan","given":"Yi"},{"family":"Sing","given":"Tien Foo"}],"issued":{"date-parts":[["2018",1,1]]},"accessed":{"date-parts":[["2019",10,16]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Diao, Fan, & Sing, 2018).

Importance of the housing market

Fluctuation in the housing market affects the rest of the economy. House is the largest good of consumer wealth, and it shows the biggest single purchase by the consumer. In addition, pricing in the housing market has a direct link with the overall economic growth of the nation. When the price of the houses increases, it encourages the consumer to spend more to buy a house, which results in high economic growth. Whereas a rapid fall in the price of the houses results in more money in the hand of the consumer to save. They buy houses at a lower price and save remaining money for future consumption or investment. It lowers the circulation of money in the market, which results in low economic growth. House price, interest rate, and wealth effect are the three main factors that develop a strong relationship between the housing market and economic growth. Therefore, for stable economic growth, it is important to bring equilibrium in the housing market. This is why the government also plays a role in the housing market by deciding the mortgaging regulation, interest rate, and other policies related to the housing market.

Conclusion

Similar to the goods market, there is a housing market that affects the economic growth of the nation. Supply and demand of the housing market are relying on the interaction between the buyers and sellers of the houses. Price plays an important role in bringing the supply and demand in equilibrium. Price and quantity demanded to have a negative relationship, which makes the market demand curve negatively sloped. In contrast, price and quantity supply have a positive relationship, which results in a positively sloped housing market supply curve. Several factors affect the housing price, both from supply and demand side like mortgage, interest rate, availability of housing, wealth, total income, future risk, build houses, and government rules and regulations. The interest rate plays a crucial role in determining the prices and stability of the housing market.

References

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Adair, A. S., Berry, J. N., & McGreal, W. S. (1991). Land availability, housing demand and the property market. Journal of Property Research, 8(1), 59–69. https://doi.org/10.1080/09599919108724020

Diao, M., Fan, Y., & Sing, T. F. (2018). Demand restrictions; government interventions; resale public housing market; private housing market; housing wealth (No. eres2018_32). Retrieved from European Real Estate Society (ERES) website: https://ideas.repec.org/p/arz/wpaper/eres2018_32.html

Goodman, A. C., & Thibodeau, T. G. (1998). Housing Market Segmentation. Journal of Housing Economics, 7(2), 121–143. https://doi.org/10.1006/jhec.1998.0229

Paciorek, A. (2013). Supply constraints and housing market dynamics. Journal of Urban Economics, 77, 11–26. https://doi.org/10.1016/j.jue.2013.04.001

The Comparison Of The United States And China

The Comparison of the United States and China

Your Name (First M. Last)

School or Institution Name (University at Place or Town, State)

The Comparison of the United States and China

Introduction:

The United States of America and China are the countries who are growing with a boost. The relationship between China and the United States was corporative before the governance of Donald Trump but after his governance and trade war of his governance made the situation critical. The trade war will affect both the economies negatively. In this assessment, we are be going to compare some of the key economic indicators of both the countries ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"ajr6c278ov","properties":{"formattedCitation":"(Jacobs, n.d.)","plainCitation":"(Jacobs, n.d.)"},"citationItems":[{"id":1207,"uris":["http://zotero.org/users/local/ccgWoSRn/items/DLSXQI2W"],"uri":["http://zotero.org/users/local/ccgWoSRn/items/DLSXQI2W"],"itemData":{"id":1207,"type":"webpage","title":"The biggest difference between China and the US today explains why China is taking over the global economy","container-title":"Business Insider","abstract":"China has outpaced the US economically according to a number of economic metrics. A Chinese professor who has lived in both the US and China believes that there is a core cultural difference leading to the country's diverging paths.","URL":"https://www.businessinsider.com/biggest-difference-between-china-america-right-now-2018-6","author":[{"family":"Jacobs","given":"Harrison"}]}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Jacobs, n.d.).

Key Economic indicators:

Country

United States

China

Gross Domestic Product (GDP)

$20.66 trillion

$13.457 trillion

GDP per Capita

$62,517

$9,633

Durable and Non-Durable Goods

$4.4 trillion

$4.481 trillion

Retail Sales

452.97B

 462B

Housing Starts

1256 thousand unit

9.70

Unemployment Rate

3.9

3.8

Inflation Rates

2.9

1.9

Population

326 million

1390 million

Median Household Average Income

$59,039

$12,472.51

Human Development Index (HDI)

0.924

1.9

Trade Deficit or Trade Surplus (In millions of dollars)

-55488

571

Summary:

The United States of America is a developed country while China is a developing country. The above table shows the population of both the countries, U.S total population is 326 million while China total population is 1390 which is more than four times of U.S. If we notice the household average income America has higher income level than China, i.e. $59,039 and $12,472.51 respectively. This income difference can be affected by many other economic indicators like inflation rate, unemployment rate, and human development index (HDI). The unemployment rate has not much difference with respect to the population sizes of both the country ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"a19ntd7ue56","properties":{"formattedCitation":"{\\rtf (\\uc0\\u8220{}Durable Goods,\\uc0\\u8221{} n.d.)}","plainCitation":"(“Durable Goods,” n.d.)"},"citationItems":[{"id":1211,"uris":["http://zotero.org/users/local/ccgWoSRn/items/7XUKPXZW"],"uri":["http://zotero.org/users/local/ccgWoSRn/items/7XUKPXZW"],"itemData":{"id":1211,"type":"webpage","title":"Durable Goods","URL":"https://www.referenceforbusiness.com/encyclopedia/Dev-Eco/Durable-Goods.html#ixzz5dbcai98T","accessed":{"date-parts":[["2019",1,25]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Durable Goods,” n.d.). Economist believes that in developing country unemployment is more than the developed country, but in the case of these two countries this statement is not that much true. China has 3.8% while the US has 3.9% more than China. One major reason for this unemployment rate is that China is more business oriented and focused on economic advancement while the US is more focused on individual freedoms and politics. This fact can be noticed by the comparison of housing starts in two countries. US housing starts are 1256 thousand units, and China has 9.70 only. Consumption of durable and non-durable goods are almost the same which is 4.4 trillion dollars and 4.481 trillion dollars in US and China respectively. Retail sales are recorded in the US is 452.97 billion while in China it is 462 billion. This is the good indicator for China as he has maintained his consumer consumptions and retail sales with the inflation rate of 1.9%. America who has the strongest economy is failed to increase the retail sales more than China. The retail price of the US is 452.97 billion with the same inflation rate that is 1.9%. Indicators like the retail sale, inflation rates, average income, and population affected the human development index (HDI). HDI of US is 0.9 while China has 1.9, 1 unit more than America. The balance of trade shows that America is facing a trade deficit of -55488 and China is having a trade surplus of 571. Most of the above indicators that China is doing better than the US but total GDP and GDP per capita is better in America. America total GDP is about 20 trillion dollars, and GDP per capita is 62,517 trillion dollars. China GDP is 13.457 trillion dollars, and GDP per capita is 9,633 dollars ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"a2hioviqv1n","properties":{"formattedCitation":"{\\rtf (\\uc0\\u8220{}Final consumption expenditure (current US$) | Data,\\uc0\\u8221{} n.d.)}","plainCitation":"(“Final consumption expenditure (current US$) | Data,” n.d.)"},"citationItems":[{"id":1212,"uris":["http://zotero.org/users/local/ccgWoSRn/items/CJHRGYRR"],"uri":["http://zotero.org/users/local/ccgWoSRn/items/CJHRGYRR"],"itemData":{"id":1212,"type":"webpage","title":"Final consumption expenditure (current US$) | Data","URL":"https://data.worldbank.org/indicator/NE.CON.TOTL.CD","accessed":{"date-parts":[["2019",1,25]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Final consumption expenditure (current US$) | Data,” n.d.).

Conclusion:

Many economic indicators show the progress of China as a developing country. Although GDP and GDP per capita are much better in the US while many other factors like HDI, trade surplus and retail sales show that China is growing on boost ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"a28in3k3mls","properties":{"formattedCitation":"{\\rtf (\\uc0\\u8220{}China vs. United States - Country Comparison,\\uc0\\u8221{} n.d.)}","plainCitation":"(“China vs. United States - Country Comparison,” n.d.)"},"citationItems":[{"id":1208,"uris":["http://zotero.org/users/local/ccgWoSRn/items/5FVIWB4L"],"uri":["http://zotero.org/users/local/ccgWoSRn/items/5FVIWB4L"],"itemData":{"id":1208,"type":"webpage","title":"China vs. United States - Country Comparison","URL":"https://www.indexmundi.com/factbook/compare/china.united-states","accessed":{"date-parts":[["2019",1,25]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} ("China vs. the United States - Country Comparison," n.d.). It is possible that in the next few years China will be much better than many developed countries including the US.

References

ADDIN ZOTERO_BIBL {"custom":[]} CSL_BIBLIOGRAPHY China vs. United States - Country Comparison. (n.d.). Retrieved January 25, 2019, from https://www.indexmundi.com/factbook/compare/china.united-states

Durable Goods. (n.d.). Retrieved January 25, 2019, from https://www.referenceforbusiness.com/encyclopedia/Dev-Eco/Durable-Goods.html#ixzz5dbcai98T

Final consumption expenditure (current US$) | Data. (n.d.). Retrieved January 25, 2019, from https://data.worldbank.org/indicator/NE.CON.TOTL.CD

Jacobs, H. (n.d.). The biggest difference between China and the US today explains why China is taking over the global economy. Retrieved from https://www.businessinsider.com/biggest-difference-between-china-america-right-now-2018-6

The Contemporary Benefits Of Flexible Loans In Developing Countries To Reduce Poverty And Unemployment

The contemporary benefits of flexible loans in developing countries to reduce poverty and unemployment

The contemporary benefits of flexible loans in developing countries to reduce poverty and unemployment

The developing countries face numerous challenges in the present world. There are areas in which they seriously lack behind for reasons such as the absence of resources and inability to explore their own resources. Despite being part of the globalized world, these countries have experienced negligible growth for many reasons. There are problems which expand from domestic affairs and impact negatively on their global identity. Such situations require attention from the wealthier world. Such countries should be provided resources which can benefit them in a useful manner. The world is a witness to many multilateral programs which are helping them in substantial ways, but there are many areas which still need consideration. Temporarily, building the capacity to aptly fight any menace remains counterproductive. Contrary to this, the benefactors need to build their capacity which can benefit them in the longer run. The post-World War history are suggestive of such experience.

Such experiences suggest that flexible loans remain much productive in these situations, since they built their abilities and provide strength to their financial institutions. Different to the post-World War, in the present world and especially in the developing countries, things are different. The central financial system of developing countries faces inefficiencies which resultantly impacts negatively on their other affairs. These inefficiencies impact adversely on other areas of development too. Since the financial basics remain wasteful, other critical areas face repercussions too. We observe that many multilateral institutions are investing in infrastructure related projects and are promoting sustainable developments, this is how the developing countries can acquire profitability and growth. In this wake, the mandatory stride need to be integrated is the delivery of positive effects to the poorer populations. Once the poorer classes will experience growth, they will strive for more betterment, hence improving the overall efficiency of the national economy.

There are other contemporary benefits of flexible loans for the developing countries. After being successful in getting the flexible loan facility, it has been widely acknowledged that countries invest in programs which ultimately improves the access to public facilities. For example, once the loan is acknowledged, the smaller economies tend to microfinance small projects in distant parts. It benefits in two ways. Firstly, it helps those in need to sustain their small businesses and secondly, it benefits the domestic economy as well. Interestingly, the recipients of such finances are women or girls from distant places. They establish small businesses, improve their strength to fight social evils and augment their share to domestic economy. If they have been granted the ownership of these finances, they can develop more ability to endure these programs. The state sponsorship in such manner remains of vital importance, since it helps them in building their own resources.

The flexible loan can also be invested in programs which aim at eradicating poverty and unemployment. There are many models which explains the fact that flexible loans are invested in programs which builds the capacity of youth. Such youth invests the amounts in profitable businesses and create profit, which relaxes the ratio of unemployment. Lastly, the flexible loan facility is the strengthening of the financial institutions. The developing countries when collaborate with the developed economies, show interests in adopting practices already embraced by the major economies. This transfer of experience benefits them. Since they struggle to adopt similar practices and gradually a uniform financial systems becomes apparent. The economic practices in a uniform system becomes more doable and productive. Although, it’s a time taking phenomena but has been experienced many times in the history.

The Economics Of Technology

Your Name

Instructor Name

Course Number

Date

The Economics of Technology

Introduction

World has moved towards technology age with most of the processes becoming digital. Technology has transformed not only businesses but also the way economies work. The number of businesses is increasing day by day as technology has made it very easy for entrepreneurs to set up operations online. This in return helps the whole economy of any country. Technology has also helped the businesses to reach regions outside their countries as well. Therefore, technology is attributed to increasing sustainable development of economy. All the products that are produced can be easily developed and people’s inventions can be brought in the market. CITATION Sal15 \l 1033 (Farid) It is an emerging subject in the modern world as people are realizing the importance of technology in economy.

Macro-economic Factors

Real GDP per capita

The real GDP per capita of US of 2018 as calculated by The World Bank in 2019 is $62,641.051 as compared to real GDP of 2017 that was $59,927.93. CITATION The19 \l 1033 (The World Bank) This increase is contributed to increased investment in the technology sector. As more means of production are introduced, the output is evidently increased. Increase in production and outputs result in increase of GDP per capita. US is one of the high-income developed countries that have been implementing technology in its production processes. Solow model explains that investing more capital results in increased production and the GDP per capita rises. CITATION Rui19 \l 1033 (Zhao) Information Technology has also greatly affected the increase in GDP per capita. As US is a high-income country, the impact is more than the low-income countries. CITATION Ele18 \l 1033 (Toader, Firtescu and Roman)

The GDP per capita rate of UK in 2018 was $42,491 as compared to GDP per capita rate in 2017 which was $39,932.06. CITATION The191 \l 1033 (The World Bank) UK has increased its GDP per capita value since last year. It is said that UK has been increasing its investment in the technology sector. UK’s economic growth is believed to be increased due to the implementation of artificial intelligence in its businesses. Due to this implementation, demands can be stimulated among the consumers increasing sales of businesses. UK has been making advancements in its technology industry as a means to enhance its economic growth. The increase in GDP is due to this implementation. CITATION Kar18 \l 1033 (Flinders)

Unemployment Rate

The unemployment rate increased to 3.6% till the third quarter of 2019. There was an increase in number of unemployed persons by 86,000. CITATION Tra19 \l 1033 (Trading Economics) The unemployment rate of men was 3.9 while unemployment rate for women was 3.8 in 2019. The rate of unemployment of UK decreased from 3.9% to 3.8% in 2019. The rate of unemployment for women was 4.1 while unemployment for men was 4.2 in 2019. CITATION The192 \l 1033 (The Guardian)

It is believed that technology will be one of the reasons why unemployment will increase in the world especially in the developed countries. The reason for this is that businesses have started to realize that automation in the operations can decrease the long-term costs. Artificial intelligence has been introduced and is being widely practiced in the business world. This is due to the reason that this technology has many applications. It is being used in the services sectors, in the operations, etc. There is a belief that this technology will replace many jobs. These are being used in the customer services, HR recruitment, etc. Similarly robotics are also being used in businesses. Many factories have automated their operations in order to make use of resources and decrease the danger of defects. The repetitive tasks can be performed better by robots than humans. CITATION Haf18 \l 1033 (Ahmed)

The introduction of machinery made the operations easier in the past. Labor market could use heavy machinery to make sure that construction could be done easily. Similarly, the production of goods could be aided by machines. However, it is seen that many jobs that humans could perform are being employed to technological machinery. However, this means that humans will be required to work highly specialized jobs such as managing these machines. This means that the people who are not highly skilled are at risk of losing their jobs. This further adds to the problems of unemployment because a number of people will lose their jobs in this way. While automation and technology will not affect the whole labor market, experts believe that there is a chance that 30 million people in US will be unemployed due to technological advancement. CITATION Mar19 \l 1033 (Market Watch)

Technology and implementation of machines has also caused underemployment. Banks and financial institutions have introduced machines such as ATMs, cash machines, kiosks, etc. in order to make their operations accurate and error-free. These machines have their own disadvantages such as technology failing, networks being hacked, etc. Even then institutions focus on the benefits of these machines. This is the reason many people who were skilled in the financial institutions are being forced to work jobs that are not according to their skills. Similarly, in many other industries this problem is prevailing.

Inflation

The inflation rate in US rose to 1.8% in October 2019. It is found that technology has resulted in lower level of inflation in US due to the advantages of technology. CITATION Lei19 \l 1033 (Lv, Liu and Xu)

The inflation rate in UK fell to 1.5% in October 2019. When production levels increase, the prices are pushed down because there is an abundance of supply in the market. As discussed above, there are many advantages due to which businesses have used technological equipment in their operations. Although this has resulted in unemployment (to some extent) in the economy, there are benefits to the business side of economy. These benefits are that the production can be done in mass volume, without errors and efficiency can be increased as these machines perform the tasks that they are programmed to do. As machinery is adopted in the businesses, there is no need for humans to be working those jobs. This reduces the cost of wages and other compensations that are provided to the workers. This results in decreased cost of production in the bigger sense. Although investments in technology are very high, the long term costs that the companies have to face are lower. The production in US has increased rapidly in the past few decades due to implementation of technology. When production increases, supply is increased which ultimately decreases inflation. Similarly, unemployment is developed due to technology which also results in decrease in inflation as purchasing power of consumers is diminished.

Conclusion

This research study focuses on the impact that technological advancement has on different factors of macro-economics. This research will help in strengthening the concepts about technology in economy further by focusing on two countries, USA and UK. It has been established that the advancement in technological trends have affected the factors in economy. Technology has the most impact on unemployment and it is seen that this impact is negative. GDP per capita has increased in both of these countries due to implementing technology. The impact of technology on inflation is usually negative as production is increased that results in lower prices of the commodities as supply is increased and demand is pushed up.

Works Cited

BIBLIOGRAPHY Ahmed, Hafiza Elbadi. "AI Advantages & disadvantages." International Journal of Scientific Engineering and Applied Science (2018): 22-25. Document.

Farid, Sally. "THE ROLE OF TECHNOLOGY IN THE SUSTAINABLE ECONOMIC DEVELOPMENT- THE CASE OF AFRICA." Journal of Economic Research (2015): 1-11. Document.

Flinders, Karl. UK tech sector growing 2.6 times faster than overall economy. 2018. Website. 2019.

Lv, Lei, Zhixin Liu and Yingying Xu. "Technological progress, globalization and low-inflation: Evidence from the United States." Public Library of Science (2019). Journal.

Market Watch. Over 30 million U.S. workers will lose their jobs because of AI. 2019. Website. 2019.

The Guardian. UK employment takes biggest tumble in four years. 2019. Website. 2019.

The World Bank. GDP per capita (current US$) - United States. 2019. Website Report. 2019.

—. GDP per capita (current US$) - United States, United Kingdom. 2019. Website Report. 2019.

Toader, Elena, et al. "Impact of Information and Communication Technology Infrastructure on Economic Growth: An Empirical Assessment for the EU Countries." Sustainability (2018): 2-22. Article.

Trading Economics. United States Unemployment Rate. 2019. Wbsite. 2019.

Zhao, Rui. "Technology and economic growth: From Robert Solow to Paul Romer." Wiley Periodicals 19 December 2019: 62-65. Article.

The Ethics Of Big Data

The Ethics of Big Data

Melanie

[Institutional Affiliation(s)]

Author Note

The Ethics of Big Data

Principles of microeconomics and demand impact

Markets are a good source for organizing economic activity according to one of the basic principles of microeconomics. Big companies like Facebook, Google, Microsoft and other small companies gather the personal data of consumers in order display items of their preference (Martin, 2014). People respond to incentives, another microeconomic principle, data of income, personal preferences, geographic location and behavior of the consumer is collected in order to utilize it for market activity. Demand for big data will go up as companies believe in more is better and this include gathering more and more of consumer personal data but the demand of consumers can be affected if their insecurities are not addressed properly by companies.

Evaluation of different market structures

Big companies gather every kind of personal data of the consumer like illnesses, pregnancies and other private data which can affect the image of the company. A similar case happened with Target in the year 2012 so it can be inferred that the more is not always the better (Martin, 2014). Benefits from big data can be achieved by using specialized tools like logarithms to aggregate people preferences and purchasing behavior. This method would help big companies to save time and data of the consumer would be more protected.

Concerns for consumers as big data proliferates

Concerns of the consumers are on a rise along with the proliferation of the big data. Consumers are highly concerned of their identifiable data, as it is not protected and in the hands of even unsanctioned companies. Consumers are concerned of their personal data being used against them by unsanctioned companies and the most critical data of consumers like their religious, sexual and political preferences.

What purpose do barriers to entry serve

Barrier to entry in any industry is the economic strategy regulated by the government in order to protect the existing industries from competition. This also protects inferior products being distributed in the market. As there is no competition then prices can be determined on monopolistic bases and would help government increase and decrease prices of certain products

Barriers to entry in pharmaceutical industry

General barriers to entry in a pharmaceutical industry include research and development cost of certain drug, secondly it is difficult for new manufacturers to compete with companies already manufacturing at economies of scale. Thirdly brand name recognition also plays a vital role as consumers do not prefer buying a drug from a new brand they have least known. Lastly there are artificial barriers to entry which include approval from Food and Drug Administration which usually takes more than 17 months in the United States

Should Drug Patents be extended

Patents are granted for 20 years but FDA approval takes more than seventeen months so technically the patent lasts for 12 to 14 years. It is advisable to extend the patent to 20 years after FDA approval. This would help in restricting infringement of generic drugs and companies with patent would be able to cover their research and development cost on the drug.

Costs and benefits from the extension

The benefit of extending the patent period to 20 years would help the industry from generic entry and price competition as pharmaceutical companies gain a patent for 20 years but due to FDA approval procedure the time is cut into 7 to 12 years and the extension would compensate for their research and development costs (Dohm, 2007). The extension would cost a delay to generic drug industries in case of extension

References

Dohm, J. (2007). Expanding the Scope of the Hatch-Waxman Act's Patent Carve-out Exception to the Identical Drug Labelling Requirement: Closing the patent Litigation loophole. University of Pennsylvania Law Review, 156(1), 151-196. doi:10.2307/40041367

Martin, E. R. (2014, March 27). The Ethics of Big Data. Retrieved May 16, 2019, from Forbes: https://www.forbes.com/sites/emc/2014/03/27/the-ethics-of-big-data/#4740e05b6852

The Federal Reserve

[Name of the Writer]

[Name of Instructor]

[Subject]

[Date]

Article Critique

The article talks about talk about some of the reasons that how Federal Reserves are always going to be the main part of the economic discussion about the economy and the financial situation at the given point of time. During the course of the article, it talks about how some of the reforms of the nation’s banking system is supposed to be carried out. It has always been speculated that the Federal Reserves are always used to make depict the fact that how they are reflective of the monetary policy of the nation at the given point of time. The other thing that is being talked about during the article is that what is the decision-making rationale by FED and how the decision making is being done in this regard.

In the next section, the article talks about how the banking system that controls the reserves works out. The idea behind the Federal Reserves is to make sure that the proper monitoring of the economic condition is being done. The idea behind is to make sure that some sort of insight is being provided with regards to how the overall aspect of the national criticism is supposed to be done. The article sheds light about how the structure of the banks is another thing that is talked about in the article. The FED chair meetings that discuss about how the policy making is being done at the broader level and how the money supply and demand is controlled by these banks. Generally, higher interest rates encourage banks to leave more money at the Federal Reserve, therefore reducing the amount of money that the bank is willing to lend. For the loans that they do issue, such as mortgages and other consumer credit, banks will also raise rates and thus increase borrowing costs across the economy.

The other thing that is being talked about during the course of the article is that how the FED is supposed to set an interest rate for given point of time. The idea that is being given during the article is that how the determination and how are the ripple effects supposed to be working out at the given point of time. The article sheds light on the role of the Federal bank and how much of a critical role that it performs when it comes to making sure that the certain sense of stability is being maintained in the economy at the particular point of time. It talks about how the FED’s policies are supposed to be working out where it sets the rate for the reverse repurchase program and how the it tends to ensure that the weeds in the system are being determined in an appropriate manner.

The article then provides insight about how the interest rates are not only tool that are being used during the course of the financial crisis as there are some other tools that are at the disposal of the economists to make sure that the sense of insight is developed in terms of how the crisis is being controlled. The idea that is being talked about here is that how much of an effort is carried out to make sure that the economic balance is maintained and the role that treasury tends to perform during the course of the whole process. After the financial crisis, the Fed took on trillions of dollars in assets to absorb the negative shock of the mortgage collapse. As part of an effort to stop the contagion of the housing market, the Fed booked a large amount of agency mortgage-backed securities and agency debt in a strategy of unconventional monetary policy called “quantitative easing.”

Works Cited

Langevoort, Donald C. "Statutory obsolescence and the judicial process: the revisionist role of the courts in federal banking regulation." Mich. L. Rev. 85 (1986): 672.

https://finance.yahoo.com/news/federal-reserve-explainer-how-the-fed-works-140623625.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAANmFPH2v1ti8rWk-QPyRQPDvCGGj2GE5q5LVHs_VpbAK9xQ5eXlrTQGU-yOckKs_6j5SUfAyoVJxJP9FlVkCbUSo4InoMZJQqt0ToNu2f4JpIYC3Jqtu7CrL4oJxQ9X8gTVdEXPi_ZFYIJSp-g4E_NDEiFOIjCn2UBb_EEK3JWcm

Goodhart, Charles, and Dirk Schoenmaker. "Should the functions of monetary policy and banking supervision be separated?." Oxford Economic Papers (1995): 539-560.

The Impact Of Immigration In U.S GDP

Rolando Junior

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Date

The Impact of Immigration in U.S GDP

The endeavors provide the migrants to have a tendency to be more successful. Immigrants found more than half of US” Unicorns” as well as 40 per cent of Fortune 500 corporations. The pattern is recurring everywhere.  The immigrants as compared to the US born people tend to start their own company, win awards like Nobel prizes and Academy Award or produce a patented invention. These migrants play a significant role in providing dynamic and ground-breaking economics. These countries progress and appeal the immigrants as they are powered by access to the global endowment. Higher productivity, salaries and female workforce involvement and lower unemployment associated to the presence of the immigrants. As there is uneven distribution of benefits, a disconnect is established between positive financial impact which also increases the negative insights of immigration.

Most of the economist argue that there is still plenty of scope for the immigrants to make the country richer ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"0beDWFly","properties":{"formattedCitation":"(Cohen)","plainCitation":"(Cohen)","noteIndex":0},"citationItems":[{"id":172,"uris":["http://zotero.org/users/6144444/items/MCU4PIBQ"],"uri":["http://zotero.org/users/6144444/items/MCU4PIBQ"],"itemData":{"id":172,"type":"article-newspaper","abstract":"Restaurants, farms and other businesses say they need more foreign workers. And economic growth may depend on it, given lower birthrates.","container-title":"The New York Times","ISSN":"0362-4331","language":"en-US","section":"Business","source":"NYTimes.com","title":"Is Immigration at Its Limit? Not for Employers","title-short":"Is Immigration at Its Limit?","URL":"https://www.nytimes.com/2019/08/22/business/economy/trump-immigration-employers.html","author":[{"family":"Cohen","given":"Patricia"}],"accessed":{"date-parts":[["2019",12,10]]},"issued":{"date-parts":[["2019",8,22]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Cohen). The native gain from the migrants as they contribute to science, technology and entrepreneurship. The perfect example would be child of a Syrian Muslim, Steve Jobs who bought revolution to the technological world and created a fortune company in the country he migrated to.

According to economists, soon everyone will realize the benefits and positive impacts of immigration to the economy. However, the migrants get more benefit of their migration. It is observed that as compared to their origin country, they more chances to get better jobs and they earn more in the richer countries. In 2009, a paper was which showed that the economists assessed the “place premium” an immigrant worker possibly will make in America in relation to the income of a native worker who does same work in his country. The shocking results show that a Mexican worker can possibly earn two or more folds her wage in America, than in Mexico. The figure astonishingly increases to 10 folds for a Haitian worker is over 10 and even 15 times for Yemenis.

The reason they are able to earn on foreign countries and not their own is that no matter how hard they perform to earn; they are not able to build infrastructure and institution which is available in countries like America. So, when he migrates to a richer and developed country, he instantly avails opportunities which amplifies his value and earnings. It does not matter if he is an engineer or a plumber, both get multiple times of benefits in the immigrated country.

Those who defend Open Border Strategy are of the opinion that if migration is limited, many fortunate opportunities for rich countries will be wasted which could have improve the living standard of millions of natives.

Now the concern is what is the rationale behind refusing golden opportunities of progress and hindering a fruitful outcome. According to some of those who oppose migration are of the opinion that the migrants should earn more in their own countries and make themselves rich. However, it is not possible for them to achieve that status so soon.

In past two decades, the infrequent quick development of emergent economies is improbable to be recurring. Deteriorating cost of industrializing industrial work is also discouraging industry’s role in growth. This is termed as a phenomenon presented by an Economist, Dani Rodrik, ‘‘premature deindustrialization’’. According to it, the industry role in developing marketplaces summits at increasingly lesser income levels over a given time. Though sought economic growth is, asserting upon it as the way ahead tricks billions of people in poverty. The critics of immigration claim that the immigrants might stain the countries they migrate to, with cultural values of their origin country.

Thus, the theory that GDP decreases and economy suffers due to migration is an effort to offer an economic base for a cultural bias. On this basis, it is argued that human tendency to feel more comfortable is when they are surrounded by alike people and not people from different cultures ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"0opPH8Hx","properties":{"formattedCitation":"(\\uc0\\u8220{}The Progressive Case for Immigration\\uc0\\u8221{})","plainCitation":"(“The Progressive Case for Immigration”)","noteIndex":0},"citationItems":[{"id":"aBdvwEEQ/tSIGKj7o","uris":["http://zotero.org/users/local/YgsdZK9k/items/PAEPU9Y8"],"uri":["http://zotero.org/users/local/YgsdZK9k/items/PAEPU9Y8"],"itemData":{"id":534,"type":"article-magazine","abstract":"Whatever politicians say, the world needs more immigration, not less","container-title":"The Economist","ISSN":"0013-0613","source":"The Economist","title":"The progressive case for immigration","URL":"https://www.economist.com/finance-and-economics/2017/03/18/the-progressive-case-for-immigration","accessed":{"date-parts":[["2019",12,9]]},"issued":{"date-parts":[["2017",3,18]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“The Progressive Case for Immigration”). It can be concluded that the immigration uplifts the GDP and strengthens the economy.

Works Cited

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Cohen, Patricia. “Is Immigration at Its Limit? Not for Employers.” The New York Times, 22 Aug. 2019. NYTimes.com, https://www.nytimes.com/2019/08/22/business/economy/trump-immigration-employers.html.

“The Progressive Case for Immigration.” The Economist, Mar. 2017. The Economist, https://www.economist.com/finance-and-economics/2017/03/18/the-progressive-case-for-immigration.

The Impact Of The Development Of The U.S. Railroad System On The U.S. Economy

[Name of the Writer]

[Name of Instructor]

[Subject]

[Date]

The Impact of the Development of the U.S. Railroad System on the U.S. Economy

The railroad system has a positive impact on the American economy. It not only benefits the producers but the common people are also getting advantages of the railroad system. The basic reason for this enormous impact is the linkage of America with the entire continent east to west in the 1860s. Rail history is vast in America which started from the railroads that were horse-drawn. Later on, the steam engine made the railroad system more efficient and productive. During 1832-1837, over twelve hundred miles of railroad track were made. The first and most prominent impact of the railroad was the revolution of communication for America with the new territories.

Nations got more opportunities by making easy and reliable travels to different regions. Work became easier and travel time decreased. American investors, shareholders, and producers started to move to the regions where they could earn more profit. In other words, railroads allowed individuals to change their places for the sake of economic interaction and to improve their livelihood. The market of goods gradually expanded as more producers, and investors joined it. For instance, an item produced in New York could easily be sold in the west and to further distant regions. It resulted in a two-sided impact on the economy ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"PGjIi53R","properties":{"formattedCitation":"(Khaled et al.)","plainCitation":"(Khaled et al.)","noteIndex":0},"citationItems":[{"id":1638,"uris":["http://zotero.org/users/local/mlRB1JqV/items/F4Z6GSWG"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/F4Z6GSWG"],"itemData":{"id":1638,"type":"article-journal","title":"Train design and routing optimization for evaluating criticality of freight railroad infrastructures","container-title":"Transportation Research Part B: Methodological","page":"71-84","volume":"71","source":"ScienceDirect","abstract":"Freight transportation by railroads is an integral part of the U.S. economy. Identifying critical rail infrastructures can help stakeholders prioritize protection initiatives or add necessary redundancy to maximize rail network resiliency. The criticality of an infrastructure element, link or yard, is based on the increased cost (delay) incurred when that element is disrupted. An event of disruption can cause heavy congestion so that the capacity at links and yards should be considered when freight is re-routed. This paper proposes an optimization model for making-up and routing of trains in a disruptive situation to minimize the system-wide total cost, including classification time at yards and travel time along links. Train design optimization seeks to determine the optimal number of trains, their routes, and associated blocks, subject to various capacity and operational constraints at rail links and yards. An iterative heuristic algorithm is proposed to attack the computational burden for real-world networks. The solution algorithm considers the impact of volume on travel time in a congested or near-congested network. The proposed heuristics provide quality solutions with high speed, demonstrated by numerical experiments for small instances. A case study is conducted for the network of a major U.S. Class-I railroad based on publicly available data. The paper provides maps showing the criticality of infrastructure in the study area from the viewpoint of strategic planning.","DOI":"10.1016/j.trb.2014.10.002","ISSN":"0191-2615","journalAbbreviation":"Transportation Research Part B: Methodological","language":"en","author":[{"family":"Khaled","given":"Abdullah A."},{"family":"Jin","given":"Mingzhou"},{"family":"Clarke","given":"David B."},{"family":"Hoque","given":"Mohammad A."}],"issued":{"date-parts":[["2015",1,1]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Khaled et al.). First, producers got a new market to sell their goods and services to the large population of the consumer which increased the supply in the economy. Second, consumers got more goods and services to purchase as huge variety maintained the price level that was suitable for the consumers. This is how railroads put this great impact on the economy of America and made it smoother and growing.

The second great impact of the railroads was the social changes that ultimately affected the economy. Society of America starts changing with the improvement in the railroad system. People from different regions moved to other places for jobs and settlement. For instance, during 1868, Davis settlement near the University of California was started. In addition, transcontinental railroad construction helped European settlements of the west to move near Native Americans living in the plain’s states. This impacted the Native American culture and diversity increased. It results in the need for more markets and economic activities to fulfill the demands of the people ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"ZC3OM2mr","properties":{"formattedCitation":"(Chopra and Khanna)","plainCitation":"(Chopra and Khanna)","noteIndex":0},"citationItems":[{"id":1637,"uris":["http://zotero.org/users/local/mlRB1JqV/items/ZFQAUGVK"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/ZFQAUGVK"],"itemData":{"id":1637,"type":"article-journal","title":"Interconnectedness and interdependencies of critical infrastructures in the US economy: Implications for resilience","container-title":"Physica A: Statistical Mechanics and its Applications","page":"865-877","volume":"436","source":"ScienceDirect","abstract":"Natural disasters in 2011 yielded close to $55 billion in economic damages alone in the United States (US), which highlights the need to reduce impacts of such disasters or other deliberate attacks. The US Department of Homeland Security (DHS) identifies a list of 16 Critical Infrastructure Sectors (CIS) whose incapacity due to disruptions would have a debilitating impact on the nation’s economy. The goal of this work is to understand the implications of interdependencies among CIS on the resilience of the US economic system as a whole. We develop a framework that combines the empirical economic input–output (EIO) model with graph theory based techniques for understanding interdependencies, interconnectedness and resilience in the US economic system. By representing the US economy as a network, we are able to analyze its topology by separately looking at its unweighted and weighted forms. Topological analysis of the US EIO network suggests that it exhibits small world properties for the unweighted case, and in the weighted case, the throughput of industry sectors follows a power-law with an exponential cutoff. Implications of these topological properties are discussed in the paper. We also simulate hypothetical disruptions on CIS in order to identify industrial sectors that experience the largest economic impacts, and to quantify systemic vulnerability in economic terms. In addition, insights from community detection and hypothetical disruption scenarios help assess vulnerability of individual industrial communities to disruptions on individual CIS. These methodologies also provide insights regarding the extent of coupling between each CIS in the US EIO network. Based on our analysis, we observe that excessive interconnectedness and interdependencies of CIS results in high systemic vulnerability. This information can guide policymakers to design policies that improve resilience of economic networks, and evaluate policies that might indirectly increase coupling between CIS.","DOI":"10.1016/j.physa.2015.05.091","ISSN":"0378-4371","title-short":"Interconnectedness and interdependencies of critical infrastructures in the US economy","journalAbbreviation":"Physica A: Statistical Mechanics and its Applications","language":"en","author":[{"family":"Chopra","given":"Shauhrat S."},{"family":"Khanna","given":"Vikas"}],"issued":{"date-parts":[["2015",10,15]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Chopra and Khanna). The increase in settlements and usage of railroads increased the demand for new jobs and opportunities. Linking businesses of America with other territories, freight railroads have played a vital role in the economic development of the nation for almost 190 years.

Railroads became the reason for money-saving in America. Every year, billions of dollars are saved in the economy by the consumption of railroads for business and domestic use. In 2018, inflation-adjusted revenue per ton-mile that is average U.S. freight rail rates is 44% less than it was during the 1980s. This is because goods and services that individuals use every day are transferred through railroads. For instance, millions of carloads of sugar, birdseed, chickens, animal feeds, flour, beer, and various other food products are transferred to other places for selling in the nation ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"MUNl0k6L","properties":{"formattedCitation":"(Donaldson and Hornbeck)","plainCitation":"(Donaldson and Hornbeck)","noteIndex":0},"citationItems":[{"id":1639,"uris":["http://zotero.org/users/local/mlRB1JqV/items/LFLZXHUN"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/LFLZXHUN"],"itemData":{"id":1639,"type":"article-journal","title":"Railroads and American Economic Growth: A “Market Access” Approach","container-title":"The Quarterly Journal of Economics","page":"799-858","volume":"131","issue":"2","source":"academic.oup.com","abstract":"Abstract. This article examines the historical impact of railroads on the U.S. economy, with a focus on quantifying the aggregate impact on the agricultural s","DOI":"10.1093/qje/qjw002","ISSN":"0033-5533","title-short":"Railroads and American Economic Growth","journalAbbreviation":"Q J Econ","language":"en","author":[{"family":"Donaldson","given":"Dave"},{"family":"Hornbeck","given":"Richard"}],"issued":{"date-parts":[["2016",5,1]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Donaldson and Hornbeck). Chemicals that package our food, clean our water, protect our health, build our cars and homes, and improve individuals' livelihood is expanded through railroads. Besides, other goods like coal, intermodal, vehicles, lumber, paper, and other metallic products are reached to different markets to increase selling through railroads. Therefore, the American economy grows by increasing selling in less time through the development of railroads.

In a nutshell, the development of railroads has a great impact on the economy of America. It helped to develop new settlements and markets. Producers, as well as buyers, got more opportunities to increase their economic activities. These changes resulted in the positive growth of the American economy.

Works Cited

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Chopra, Shauhrat S., and Vikas Khanna. “Interconnectedness and Interdependencies of Critical Infrastructures in the US Economy: Implications for Resilience.” Physica A: Statistical Mechanics and Its Applications, vol. 436, Oct. 2015, pp. 865–77. ScienceDirect, doi:10.1016/j.physa.2015.05.091.

Donaldson, Dave, and Richard Hornbeck. “Railroads and American Economic Growth: A ‘Market Access’ Approach.” The Quarterly Journal of Economics, vol. 131, no. 2, May 2016, pp. 799–858. academic.oup.com, doi:10.1093/qje/qjw002.

Khaled, Abdullah A., et al. “Train Design and Routing Optimization for Evaluating Criticality of Freight Railroad Infrastructures.” Transportation Research Part B: Methodological, vol. 71, Jan. 2015, pp. 71–84. ScienceDirect, doi:10.1016/j.trb.2014.10.002.

The National Debit

The National Debt

Your Name (First M. Last)

School or Institution Name (University at Place or Town, State)

The National Debt

Introduction:

National debt also known as government debt and public debt is the debt owed by the government. It is divided into two categories that are internal debt and external debt. A period of general economic decline observed in the world market is known as a Great Recession. It results in a fall of tax collection, aggregate income, and employment level ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"adm7dp1h6d","properties":{"formattedCitation":"(Amadeo, n.d.)","plainCitation":"(Amadeo, n.d.)"},"citationItems":[{"id":1246,"uris":["http://zotero.org/users/local/ccgWoSRn/items/XZ5HN3Q3"],"uri":["http://zotero.org/users/local/ccgWoSRn/items/XZ5HN3Q3"],"itemData":{"id":1246,"type":"webpage","title":"The Surprising Truth About the U.S. Debt Crisis","container-title":"The Balance","abstract":"Between 2010-2013, the U.S. faced a debt crisis as tea party Republicans resisted raising the debt ceiling. Fortunately, their plan didn't work.","URL":"https://www.thebalance.com/us-debt-crisis-summary-timeline-and-solutions-3306288","language":"en","author":[{"family":"Amadeo","given":"Kimberly"}]}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Amadeo, n.d.). The government has two options, i.e., to decrease spending or increase borrowing. The fluctuation in national debt and its long term costs make the government to take wise decisions for eliminating the budget deficit.

Theoretical Views on National Debt:

Keynesian point of view on national debt is positive. They believe that it is beneficial to have current accounts deficit for boosting aggregate demand. Neo-Keynesian do not support this statement. They support fiscal policy. According to the neo-Keynesian, deficit in government spending should come into account only when monetary policy shows ineffectiveness and the nominal interest rate reaches to zero.

The Great Recession falls in IMF criteria in 2009 due to the decrease in world GDP per capita. According to US research agency, recession started in December 2007 and ended in June 2009 ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"a1hv6ghudm6","properties":{"formattedCitation":"{\\rtf (\\uc0\\u8220{}The Fiscal & Economic Impact of the National Debt,\\uc0\\u8221{} n.d.)}","plainCitation":"(“The Fiscal & Economic Impact of the National Debt,” n.d.)"},"citationItems":[{"id":1244,"uris":["http://zotero.org/users/local/ccgWoSRn/items/TQQBX4H6"],"uri":["http://zotero.org/users/local/ccgWoSRn/items/TQQBX4H6"],"itemData":{"id":1244,"type":"webpage","title":"The Fiscal & Economic Impact of the National Debt","abstract":"See the consequences of our growing national debt and learn how our economic future is at risk if we fail to improve the U.S.’s current fiscal policy.","URL":"https://www.pgpf.org/the-fiscal-and-economic-challenge/fiscal-and-economic-impact","language":"en"}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“The Fiscal & Economic Impact of the National Debt,” n.d.). The cause of the Great Recession and the increase in National debt is due to the following main factors:

Shadow Banking System: Failure of the system leads to the interrupted flow of credit to organizations and consumers.

Housing System: Investment in housing construction decreased up to four percent. This decrease created the gap between GDP and consumption up to one trillion dollars.

Balance sheet recession: Household debt was the result of the balance sheet recession.

Government policies: Policymakers forced to contribute in tax lending standard and indebtedness even for those people who could not afford it.

Long-Run Costs of National Debt:

The Great Recession leads to a high national debt. Many countries face economic problems due to this increase. America national debt reaches to 21.97 trillion dollars. If the long-run challenges regarding fiscal issues remain unsolved, it can result in many negative consequences. Some of the major long-run costs of national debt are:

Investment: With the increase in federal debt both the public and private investment will reduce. The government will increase its spending over costs which result in crowding out public investment. On the other hand, federal borrowing in the capital market will increase the interest rate which leads to the decrease in new private investment.

Economic Opportunities: National debt has a negative impact on economic opportunities. National debt directly hits the interest rate, and due to high-interest rate opportunities of buying house, car, payment for education and training, demand for technology all will fall.

Fiscal Flexibility: High national debt decreases the fiscal flexibility and government face difficulties in future like unpredicted challenges, natural disaster, recessions, and war.

Elimination of budget deficit:

Increase in tax increase and the decrease in transfer payment has a cost of budget elimination deficit. Transfer payment includes healthcare, Medicaid, and social security along with discretionary spending of different budgets like education, and defense, etc. With the increase in personal tax, deflation of economy starts which results in the low growth of the economy with the decrease in employment level. If the government decides to decrease the spending through fall in transfer payment, it would lead to the decrease in economy aggregate demand. The decrease in aggregate creates problems for people to obtain even the basic service of health care, Medicaid, and social security. Low spending on these services may cause low productivity in the economy. However, discretionary spending impact is critical in the long run. Discretionary spending is the primary investment of the government which is not easy to decrease rapidly if the government tries to do so. It will cause a negative impact on productivity and economic growth.

References

ADDIN ZOTERO_BIBL {"custom":[]} CSL_BIBLIOGRAPHY Amadeo, K. (n.d.). The Surprising Truth About the U.S. Debt Crisis. Retrieved from https://www.thebalance.com/us-debt-crisis-summary-timeline-and-solutions-3306288

The Fiscal & Economic Impact of the National Debt. (n.d.). Retrieved from https://www.pgpf.org/the-fiscal-and-economic-challenge/fiscal-and-economic-impact

The Value Of Financial Statement And Big Business Vs Small Firms

The Value of Financial Statement and Big Business vs. Small Business

Tahirah Lee

Author Note

The value of the Financial Statement and Big Business vs. Small Business

Financial statements play a vital role in deciding the direction of any business. They are more important for big businesses because there are many matters which have to be considered in them. The performance of big businesses can be judged by its financial statements, whereas a small business may manage things without financial statements for a short period of time. These small businesses will need financial statements before making any decision regarding expansion ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"RWKFWirh","properties":{"formattedCitation":"(Wu et al. 2017)","plainCitation":"(Wu et al. 2017)","noteIndex":0},"citationItems":[{"id":116,"uris":["http://zotero.org/users/local/8reWiRZH/items/ZIUMF8GD"],"uri":["http://zotero.org/users/local/8reWiRZH/items/ZIUMF8GD"],"itemData":{"id":116,"type":"article-journal","container-title":"Applied Economics Letters","issue":"7","page":"490–493","source":"Google Scholar","title":"Value relevance of financial statements in convergence with IFRS: analyses in the abnormal pricing error method","title-short":"Value relevance of financial statements in convergence with IFRS","volume":"24","author":[{"family":"Wu","given":"TsingZai C."},{"family":"Hsieh","given":"Wan Ting"},{"family":"Yu","given":"Chun Chan"},{"family":"Chu","given":"Hsin Ti"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Wu et al. 2017). The income statement will tell businesses about the efficiency of their operations in terms of increasing revenues and controlling expenses. The smaller businesses should be keener to save on expenses because they will have to use their resources more efficiently. The balance sheet compares the sources and resources of a business. Whether big or small, businesses have to rely on these financial statements. Another aspect related to their importance is that businesses are started on the going concern assumption, which means that they have to go on and on.

This assumption applies that businesses review their performance from time to time basis and rectify their past mistakes. The best way to do this is a comprehensive financial statement analysis. Smaller firms may also prepare quarterly or even monthly financial statements so that their true direction can be revealed to their owners. For smaller firms, the most important financial statement will be a statement of cash flow, showing the various sources and uses of cash. This will show owners how much cash is generated by the business ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"drRU1UnO","properties":{"formattedCitation":"(Wu et al. 2017)","plainCitation":"(Wu et al. 2017)","noteIndex":0},"citationItems":[{"id":116,"uris":["http://zotero.org/users/local/8reWiRZH/items/ZIUMF8GD"],"uri":["http://zotero.org/users/local/8reWiRZH/items/ZIUMF8GD"],"itemData":{"id":116,"type":"article-journal","container-title":"Applied Economics Letters","issue":"7","page":"490–493","source":"Google Scholar","title":"Value relevance of financial statements in convergence with IFRS: analyses in the abnormal pricing error method","title-short":"Value relevance of financial statements in convergence with IFRS","volume":"24","author":[{"family":"Wu","given":"TsingZai C."},{"family":"Hsieh","given":"Wan Ting"},{"family":"Yu","given":"Chun Chan"},{"family":"Chu","given":"Hsin Ti"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Wu et al. 2017). There are three main components of a statement of cash flow, namely operations, investment, and financing. The most appropriate for a small business will be operations and financing because these will tell the owners and lenders about the sources of finance for business and how well they are used.

References

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Wu, TsingZai C., Wan Ting Hsieh, Chun Chan Yu, and Hsin Ti Chu. 2017. “Value Relevance of Financial Statements in Convergence with IFRS: Analyses in the Abnormal Pricing Error Method.” Applied Economics Letters 24(7): 490–493.

The Value Of Financial Statements

The Value of Financial Statements

Tahirah Lee

[Institutional Affiliation(s)]

Author Note

Why SEC requires the presentation of Financial Statements to float shares in the Stock Exchange? What kind of useful information do these statements have for investors?

The Value of Financial Statements

The United States’ Security and Exchange Commission (SEC) places a requirement that all companies that want to float shares in the Stock Exchange to generate extra capital must present their updated financial statements for assessment CITATION Nim15 \l 1033 (Nimtrakoon, 2015). This directive has gained a lot more importance was the recent Enron debacle that has raised renewed interest of the public in this issue. There are several reasons that this rule makes perfect sense. First, the financial statement provides details of the company in question (which are required to be more market-sensitive) after the enforcement of the Sarbanes-Oxley or SOX Act. These details include several essential aspects that can be useful for the evaluation of the company to be SEC. some of these factors are details of accounting practices, auditing procedures, responsibilities of officers and directors of the company, conflict of interests by stock analysts, previous years' disclosures to predict the financial future of the company, and violations committed as made evident by chartered accountants or financial analysts. Another main reason for this rule is the practice of standardizing the accounting system of all the companies to eliminate differences in financial reporting under the Generally Accepted Accounting Practices or GAAPs.

Potential investors are also presented with these detailed disclosures for increasing their confidence in the stability of the company. This is necessary as the main aim of the shares is to raise capital, which are bought by these investors. These figures are quoted in the Initial Public Offerings, or IPO, to attract customers to buy and sell shares to facilitate the running of the company. Another reason that such disclosures are required by the investor is that these statements provide information about the financial condition of the company. Such is also declared compulsory under the SOX act after the recent Enron debacle that has shaken the confidence of many investors.

References

BIBLIOGRAPHY Nimtrakoon, S. (2015, July 13). The relationship between intellectual capital, firms' market value, and financial performance. Journal of Intellectual Capital, 16(3), 487-618. DOI:10.1108/JIC-09-2014-0104

Three Essay

Three Essay

[Name of the Writer]

[Name of the Institution]

Three Essay

Question#1

Introduction:

The utility is the main term that defines the behavior of the consumer where qualities of the commodity help the consumer to make the decision for the commodity to but it. Consumer prefers the commodity which provides maximum utility within the given income. Neuro-economics explains the concept of happiness linked to the utility where qualities of the commodity do not affect the choice of the consumer rather consumer makes the decision on the basis of happiness he will get by getting the commodity. The happiness of consuming the commodity is all about inducing secretion of chemical in the brain like dopamine. The significant shift of the consumer choice from conventional sedans and wagons towards the four-wheel drive and sports utility vehicles indicates the same behavior of the consumer where happiness is the priority rather than the quality of the commodity ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"kDXh15Jv","properties":{"formattedCitation":"(Camerer, 1999)","plainCitation":"(Camerer, 1999)","noteIndex":0},"citationItems":[{"id":470,"uris":["http://zotero.org/users/local/mlRB1JqV/items/VUCMLCIP"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/VUCMLCIP"],"itemData":{"id":470,"type":"article-journal","title":"Behavioral economics: Reunifying psychology and economics","container-title":"Proceedings of the National Academy of Sciences","page":"10575-10577","volume":"96","issue":"19","source":"www.pnas.org","abstract":"“Behavioral economics” improves the realism of the psychological assumptions underlying economic theory, promising to reunify psychology and economics in the process. Reunification should lead to better predictions about economic behavior and better policy prescriptions.","DOI":"10.1073/pnas.96.19.10575","ISSN":"0027-8424, 1091-6490","note":"PMID: 10485865","title-short":"Behavioral economics","journalAbbreviation":"PNAS","language":"en","author":[{"family":"Camerer","given":"Colin"}],"issued":{"date-parts":[["1999",9,14]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Camerer, 1999).

Discussion:

Behavioral economics helps to understand the concerned with the study of the decision-making process. Behavioral economics makes some assumptions false that it considers the natural barrier linked to the consumer while making the choice. The factors behind the making decision for buying more of 4WD and SUVs include; rationality, bounded rationality, social pressure, self-interest, mental accounting, status and amount of information. In economics, we assume that the consumer selects the choice from different bundles of choice which provide the best outcome and best outcome is linked to the utility maximization. However, in reality, there is a difference between the choice and utility. Consumers often give priority to the choice rather than utility which means the decision making depends on irrationality rather than typical indicators like price, preference, and substitution. Whenever consumer makes his mind to buy a car he may visit the nearby showroom or manufacturer's website. The research does not end there, decision making remains in process and consumer considers product attributes like speed, drive capacity, space, mirror size, and car size. These attributes develop fluctuation in the decision and change consumer's preference.

Process of decision making:

The process of decision making starts when the consumers identify the problem. They try to find out the possible solutions to the problem. These solutions are analyzed in terms of their ability to solve the issue. Economists do not consider this long term process while consumer most probably makes a decision after analyzing the available solutions of the problem. Therefore, consumers who made a choice may not able to implement it. In that case, they may shift to the next best solution and it is not necessary that the outcome of the second solution is identical to the first solution. If the given aspect is applied to the scenario, there will be the chance that a person may prefer the quality of the car and choose wagons and sedans. However, at the nearest showroom, the selected model will be unavailable. In that case, the consumer will rather wait for the availability of wagons or sedans or he will simply switch to the available car i.e. 4WD or SUVs. The process of decision making is whether too fast that does not require much effort to select the best solution while in some cases the process is slow and take time and effort to be put in by the consumers. The contrast in the decision is associated with the difference in consumers and the process for making decisions. A heuristic method is an approach to solve the problem. It helps in speeding up decision making through mental shortcuts and intuitive judgment.

Possible reasons for the decision:

Non-Rational Choice:

In economics we frame, price, defaults as the barrier of consumer choice and consumers make choice by careful analysis of information, benefits, and costs of the products through existing preferences. However, prospect theory indicates that the decision is not always optimal. Willingness to take the risk changes the preference and influence the irrational decision making. Therefore there are two types of consumers in the market. First, who are risk takers, they make an irrational choice and second are the consumers who do not like losses and make a choice after careful framing of gain and loss. Price is considered as the indicator of quality and can serve as the cue with physical significances. Therefore, in the case of the car scenario, the same price of all the models of the car eliminates the factor of quality for decision making. The same price makes all models with the same quality and physical significance. Therefore, people who make price or quality as their initial priority may move towards SUVs or 4WD.

Information:

Human experience infinite experiences time to time which are mostly identical for the people living in the same society. However, information human brain store is finite in number that means when new information comes to the brain some of the old information gets disappeared. The human brain can assess some limited information at a time; this phenomenon is known as procedural rationality. For the general public, behavioral economics use the information aspect to understand their decision making ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"LxTamxPx","properties":{"formattedCitation":"(Camerer, 1999)","plainCitation":"(Camerer, 1999)","noteIndex":0},"citationItems":[{"id":470,"uris":["http://zotero.org/users/local/mlRB1JqV/items/VUCMLCIP"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/VUCMLCIP"],"itemData":{"id":470,"type":"article-journal","title":"Behavioral economics: Reunifying psychology and economics","container-title":"Proceedings of the National Academy of Sciences","page":"10575-10577","volume":"96","issue":"19","source":"www.pnas.org","abstract":"“Behavioral economics” improves the realism of the psychological assumptions underlying economic theory, promising to reunify psychology and economics in the process. Reunification should lead to better predictions about economic behavior and better policy prescriptions.","DOI":"10.1073/pnas.96.19.10575","ISSN":"0027-8424, 1091-6490","note":"PMID: 10485865","title-short":"Behavioral economics","journalAbbreviation":"PNAS","language":"en","author":[{"family":"Camerer","given":"Colin"}],"issued":{"date-parts":[["1999",9,14]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Camerer, 1999). Therefore, the case of making a choice for the car is also linked with the information that the consumer acquires while making the decision. Consumers mostly use the review to find out the quality and outcome of the product. If the consumer gets more positive reviews on the 4WD and SUVs because of the increase in the sale he may follow the same choice as the previous consumer had made.

Mental accounting:

Richard Thaler explained the concept of mental accounting. Mental accounting provides the idea about the behavior of the people that is they often do not treat money in terms of formal accounting. Informal accounting all money are the same without any label however, people assume product as less fungible than reality through mental accounting. Consumers frame product as belonging to current income and wealth, and future income. The car models SUVs and 4WD provide more physical consequences that are its appearance, tools, and modern system which successfully gain the preference of the consumers and make it less fungible therefore resulted in more sales of the products than the wagons and sedans.

Status and Symbol:

Another factor for the misbehaving of the consumer can be the status and symbol. These are the factors which enable consumers to make an irrational decision. Society pressure makes consumer select the product which may not be best in term of quality and reliability. However, it becomes a symbol of status. For instance, the increase in the sale of SUVs and 4WD in the initial phase can increase the social pressure that by purchasing these models consumers can maintain their status in the society. Therefore, by eliminating the facts that wagons and sedans are more reliable than the other two models, consumers make choice to buy the whether SUVs or 4WD.

Materialism:

Some individual makes the decision on the basis of present and future resources they have while some people are materialistic. They prefer the appearance and popularity of the product rather than its price and quality ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"WII8gA5e","properties":{"formattedCitation":"(\\uc0\\u8220{}Behavioral Economics | Exploring Economics,\\uc0\\u8221{} n.d.)","plainCitation":"(“Behavioral Economics | Exploring Economics,” n.d.)","noteIndex":0},"citationItems":[{"id":469,"uris":["http://zotero.org/users/local/mlRB1JqV/items/X2DQIYBL"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/X2DQIYBL"],"itemData":{"id":469,"type":"webpage","title":"Behavioral Economics | Exploring Economics","abstract":"Behavioural economics deals with observing behaviour and economic decision making behaviour.","URL":"https://www.exploring-economics.org/en/orientation/behavioral-economics/","language":"en","accessed":{"date-parts":[["2019",5,30]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Behavioral Economics | Exploring Economics,” n.d.). In the case of cars, SUVs and 4WD have somehow managed the popularity and commercial values through advertisement and making the product according to the desires of the consumer. Wagons and sedans managed to develop the most reliable product by providing the number of benefits that are better fuel economy, better luggage space and better ride quality and handling due to being lower and longer than 4WDs and SUVs in the same price bracket. However, for the consumer who is materialistic, for him, these benefits are not enough to maximize his satisfaction. He will choose the product which is the choice of most of the consumer already and has a better physical appearance. Therefore, his choice would be either SUVs or 4WD.

Methodology:

The above are some of the factors that can be linked to the misbehavior of consumer choice. However, to find out the other factors or most effective factor research can be developed. The best methodology for the case can be the experimental method. It helps to find out how the market works and what the strategies are and elements that make the consumer make the irrational decision. It is a laboratory-based approach where a group of participants can play either the role of buyer or seller and make the decision by different variable to be assessed. The behavior of the participants will provide data about decision making in a strictly controlled manner. The other method can be a qualitative method in which consumers are used as participants and we can ask them to provide the reasons and information that they used while making the decision for car selection.

Conclusion:

Economics believe that consumer makes the decision by careful analysis of costs and benefits while in reality this assumption may not be processed. Various factors like bounded rationality, mental accounting, status symbol, materialism, and information can lead to the difference in the decision of various consumers. Proper research can be helpful to analyses the decision-making behavior of the consumers.

Question#3

Introduction:

Traditional economics does not study this aspect that price or profit can be based on preferring one supplier on another. There are different types of the market system in which some are price taker and some are price makers. Price is the most important factor for both consumer and seller to maximize the utility and profit. Monopolists are price maker due to non-competitive market. Lack of competition or substitution enables monopolist to increase the price without considering the criteria of "good enough" for the customer. Market deregulation policies and globalization are helping the competitive market to compete with their rival and to increase the rate of productivity. In addition, these two factors are working towards human happiness which relies on the fulfillment of desire through limited resources that are available worldwide.

Discussion:

It is the fundamental fact that the consumer when get satisfied with the supplier there is the maximum chances that he will make the transaction with the same supplier in the future. For instance, a customer get defected product with the new product from the supplier then the supplier will become the default supplier of the customer. On the other hand, the supplier who are unable to satisfy their customer or do not help in minimizing their risk, then he needs to struggle for ensuring the customer next time regarding the goods and services that meet the supplier criteria for "good enough". For instance, if the supplier provides the service or product which shows the problem after a few years then it will be satisfactory for the consumer than the product that shows the problem in a short period of time. Therefore, the consumer will think twice before purchasing the product from the same supplier or will prefer some other supplier. In other words, the wise customer keeps on check over the supplier whether he considers the customer's query and his offers in line with his competitors or not. However, a competitive market is opposite to the monopolist where firms are price taker and unable to change the prices. Due to this characteristic, traditional economics does not consider the substitution of one supplier for another. Firms make a price on the basis of marginal revenue and marginal costs. They believe that the true price of the product is based on the full average cost. However, through the impact of the globalization and market deregulation policies, more firms now consider long term profit into account rather than short term profit. Long term profit strategy take goodwill into account and consumer face less discrimination or fluctuation of prices ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"AKlTlxsQ","properties":{"formattedCitation":"(Gino, 2017)","plainCitation":"(Gino, 2017)","noteIndex":0},"citationItems":[{"id":685,"uris":["http://zotero.org/users/local/rVaVAHaF/items/K24MACX3"],"uri":["http://zotero.org/users/local/rVaVAHaF/items/K24MACX3"],"itemData":{"id":685,"type":"article-magazine","title":"The Rise of Behavioral Economics and Its Influence on Organizations","container-title":"Harvard Business Review","source":"hbr.org","abstract":"Nobel winner Richard Thaler changed how we think about human behavior.","URL":"https://hbr.org/2017/10/the-rise-of-behavioral-economics-and-its-influence-on-organizations","ISSN":"0017-8012","author":[{"family":"Gino","given":"Francesca"}],"issued":{"date-parts":[["2017",10,10]]},"accessed":{"date-parts":[["2019",5,30]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Gino, 2017).

The rate of productivity growth:

As discussed earlier traditional economics set rules and regulation for the firm depend on the market they are in. The policies established by the government make their access to production limited due to government control. However, in contemporary time role of government in the market is limited which provide the number of opportunities to the firms regarding production. Every firm has its own capacity and strategies therefore, in reality, there is no common production function for all the firms. Globalization increases the competition as well as investment to the firms. Different investors invest in the market from where they can get profit in return firms to get able to increase their production from the given investment. The other positive aspect of globalization is the advancement in technology. New innovations and method for the production enable firms to develop useful strategies which enable them to maintain the competition in the global market. Here the market government regulation of the same price for all firms can affect the profit of the firms. However, deregulation policies make opportunities for the firms to get the monopolist profit while producing in the competitive market. For instance, Apple Company is the best example which gets profit from the globalization and market deregulation policies. Apple is the monopolistic competitive company which works in the competitive market but making the profit of monopolistic market. The reason behind this profit is the globalization through which Apple introduced its customized software and apps. The other competitors can copy the software to make the profit but the self-production of Apple make the company the best brand in the market. The deregulation policies helped the firms to expand globally. Firms not only expanded in their own countries but a number of brands and company are producing their products in various nations. For instance, Apple is producing its products in Japan, China, and India. The role and regulation of the government is not the barrier in other countries, therefore, the company is producing the product at a lower cost and making more profit.

Another positive aspect of globalization is customer satisfaction. Due to government policies, the interaction or communication gap was wider between the suppliers and consumers. However, by minimizing the government role communication gap is least in the modern globalized world. Now consumers not only communicate and the customers of their own country but also satisfying the foreign customer. Through communication, firms are getting customer loyalty that means when the customer gets satisfied by sharing the query regarding the product or the service. He makes the supplier as default supplier and the firms increase their customers through their satisfying service. Another significant role in the rate of productivity growth is the internet. Customers get complete information regarding the firms and their products along with reviews from the customers who already used the service. It helps both the firms and customers to maximize their benefits by making a productive decision.

Human Happiness:

Human happiness is directly linked to the fact that how much their needs are being fulfilled. For the consumer, happiness is to maximize the utility while for the firm's happiness is the maximization of profit. However, happiness may not depend on the GDP growth of the nation rather it relies on the sense of justice. In an unequal society, it becomes difficult to maintain human happiness because of high insecurities among the people. Significance of a sense of control and hierarchies are the crucial factors behind human happiness. The government set the minimum wages for the labor of the nation which every firm has to follow. However, due to limiting the role of government various firms are now offering the wages higher than the minimum wage rate set by the government. It is significant as the wage rate was set decades ago and there is the need to review the poverty line, basic needs, and expenses of the household. This is because the happiness of the people does not depend on the absolute wage rate or relative wage rate; it is linked to the needs to be fulfilled ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"1YZ0qcdr","properties":{"formattedCitation":"(Fox, 2012)","plainCitation":"(Fox, 2012)","noteIndex":0},"citationItems":[{"id":686,"uris":["http://zotero.org/users/local/rVaVAHaF/items/N46J4U4D"],"uri":["http://zotero.org/users/local/rVaVAHaF/items/N46J4U4D"],"itemData":{"id":686,"type":"article-magazine","title":"The Economics of Well-Being","container-title":"Harvard Business Review","issue":"January–February 2012","source":"hbr.org","abstract":"Have we found a better gauge of success than GDP?","URL":"https://hbr.org/2012/01/the-economics-of-well-being","ISSN":"0017-8012","author":[{"family":"Fox","given":"Justin"}],"issued":{"date-parts":[["2012",1,1]]},"accessed":{"date-parts":[["2019",5,30]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Fox, 2012). In other words, if the human is getting the resources to fulfill their needs and desires they are happy. Government policies often consider all citizens at the same level where every household have their own needs and problem. Therefore, government policies in such condition do not satisfy all people. Limited role of government provides people more opportunities to get the resources to fulfill their needs. The impact of globalization is also positive for human happiness. For instance, different brands expanded their production by establishing firms in a different nation, especially in developing countries. The reason behind expanding production in developing nations is the cheap and skilled labors. International companies get labor cheaper in developing countries which help them to increase production. However, as we understand that human happiness does not rely on the GDP growth or wage rate so let us consider the same scenario from a different aspect. When the companies expand their production in other countries it provides them jobs. In developing countries employment is the main issue. Therefore, when people get jobs, they become able to earn their livelihood or to fulfill their need. By fulfilling their need they get happiness. The society with unequal distribution of wealth and opportunities faceless happiness but globalization has minimized this problem. It attracts international employees and the unemployment rate is decreasing globally. The less barrier developed by the government helped companies to expand. Therefore, human happiness is increased by decreasing the control of the government on the market and the increase in globalization.

Conclusion:

Government policies often restrict the capacity of the firms and it becomes difficult for the firms to increase their growth. However, through market deregulated policies, it becomes easier for the firms to maximize their profit and maintain the competition with their rivals. In addition, globalization enables firms to expand internationally and to make competition in the global market. Global competition helps in adopting new strategies that can increase production growth. Human happiness is depending on the fact that everyone is able to fulfill their need. The role of GDP growth or wage rate is zero for human happiness. The market deregulated policies and globalization leads to an increase in the opportunities for the people to fulfill their desires through limited resources. Therefore, it can be concluded that market deregulation policies and globalization have a positive impact on the rate of productivity growth and human happiness.

Question#4

Introduction:

Richard Thaler in his book “Misbehaving” notes that an increasing proportion of homeowners in the United States of America are reaching normal retirement age without having fully paid off their mortgages. In behavioral economics, the issue can be understood firstly through the concept of search goods, experience goods, credence goods and then the concepts of lifestyle, bounded rationality and heuristic bases. The main factor that is linked to the making transaction is the search or gathering the information of the product. People use different sources to collect useful information that can help them to make the choice. Search goods are the products for which resolving the issues of uncertainty, risk, and information can be resolved before making the transaction. Experience goods are the goods which may not resolve the issues of the consumer before purchasing the products however; issues can be resolved by using the product under normal condition. Lastly, credence goods are the products whose issue cannot be resolved before the purchasing and even after using it. The case of failure of paying for mortgage lie under the credence goods where number of consumers were not aware of the future consequences of the land and the risk issues made it impossible for them to pay their loan till retirement ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"YS6lWR0p","properties":{"formattedCitation":"(\\uc0\\u8220{}Millions of homeowners will still be paying off mortgage after retirement, research warns | The Independent,\\uc0\\u8221{} n.d.)","plainCitation":"(“Millions of homeowners will still be paying off mortgage after retirement, research warns | The Independent,” n.d.)","noteIndex":0},"citationItems":[{"id":481,"uris":["http://zotero.org/users/local/mlRB1JqV/items/5L3VENXY"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/5L3VENXY"],"itemData":{"id":481,"type":"webpage","title":"Millions of homeowners will still be paying off mortgage after retirement, research warns | The Independent","URL":"https://www.independent.co.uk/money/spend-save/mortgage-pension-retirement-house-prices-property-interest-loans-a8647681.html","accessed":{"date-parts":[["2019",5,30]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Millions of homeowners will still be paying off mortgage after retirement, research warns | The Independent,” n.d.).

Discussion:

In the contemporary era, the homeowners in the United States of America (USA) are faced with the challenge of paying their mortgage after reaching the retirement age. Several factors account for this menace and the incidents of the past are also associated with it. The fundamental reason is the inability to comprehend the complexities involved in financial systems as loans and debts. The citizens rarely pay critical attention to maintain a balance between needs and consumption. For instance, a common perception in society indicates possible factors which fuel the existence of the lack of ability to pay a mortgage upon reaching the retirement age. The low household holding savings have also increased in the United States. The neglect is causing severe problems too, especially low and moderate-income families. However, it is essential to discuss the economic features of choices, information processing and perception of specific ideas. Primarily, behavioral economics is the study of economics which encompasses and discusses elements of choices and information processing in daily life ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"2r97Oy2K","properties":{"formattedCitation":"(McDonald, 2009)","plainCitation":"(McDonald, 2009)","noteIndex":0},"citationItems":[{"id":482,"uris":["http://zotero.org/users/local/mlRB1JqV/items/B6JWTXQ4"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/B6JWTXQ4"],"itemData":{"id":482,"type":"article-journal","title":"The Global Financial Crisis and Behavioural Economics*","container-title":"Economic Papers: A journal of applied economics and policy","page":"249-254","volume":"28","issue":"3","source":"Wiley Online Library","abstract":"Conventional economics, which is based on Homo economicus, cannot provide a satisfactory explanation for the global financial crisis. However, behavioural economics, and the concept of present bias, self-serving bias, ‘new era’ stories, money illusion, comparisons with reference levels and herding, can provide an explanation.","DOI":"10.1111/j.1759-3441.2009.00026.x","ISSN":"1759-3441","language":"en","author":[{"family":"McDonald","given":"Ian M."}],"issued":{"date-parts":[["2009"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (McDonald, 2009).

To begin, income is the prominent source of wealth for a wide range of Americans citizens. As per an estimate, a family with an income worth $45,000 can expect to receive $2,000,000 in their course of a lifetime. In the past few decades, households have utilized more than 905 of these households for the purpose of consumption. However, these consumptions have a critical impact on their standards of living. To meet the mortgages and pay other debts before retirement, the key is to make rationale and economic choices. The differences between the consumption make it difficult to save a sufficient amount of income to pay mortgages before reaching the retirement age.It is imperative to highlight these families are inclined toward living a lavish lifestyledespite receiving modest income. However, families receiving good income are alsofaced with the challenge of paying off their mortgages before reaching their retirement age.

Furthermore, behavioral economics relies on the principles of bounded rationality. It means the failure to comprehend critical loan contracts and refraining from paying attention to details of the loan. It is the major flaw which causes the failure to pay for a mortgage before reaching the retirement age. For instance, a citizen may assume the property prices cannot rise if the income does not. It sounds like a flawed comprehension of the key values of economics. Most of the American citizens are not acquainted with the values necessary to be able to understand the bounded rationality. Meanwhile, it is also worthwhile to discuss that one size fits all approach also causes troubles while establishing a structure for spending and savings. As per the principles of behavioral economics, the information processes by people is largely influenced by social values and observations. If a person claims he/she can advance to pay the mortgage before reaching the retirement age but can also spend lavishly, it is not necessary every other person can pursue the same lifestyle. The information processed by people matters significantly as observed in the previous example. The tendency to save, consume and pay attention to loans and debts essentially relies on information processing and observing others.

In addition, heuristic bases are the key factors involved in behavioral economics. Therefore, citizens are bound to have an optimist view related to generate and pay returns. Most of the decisions made by them are not aligned with the way of living. For instance, psychological and cognitive shortcuts are the key factors involved in making decisions which later impact the tendency and potential of people to pay their mortgage with and timely. However, the cognitive limitations of each person are not the same and decision making often seeks shortcuts regardless of the consequences. In these circumstances, it becomes very challenging for citizens to pay a mortgage through their savings or income while doing a job. The income differences also matter but choices define the nature of consumption, income, and savings. For instance, it is the choice of a person whether or not to buy an expensive car. The choice is influenced by several economic and psychological factors which seek ways for the shortcut. If a person cannot pay mortgage easily by buying an expensive car, it is not necessary he/she will refrain from buying the car. The lack of technical knowledge related to the complex nature of loans and debts further make it challenging for them to have significant savings or an economic plan to pay for the mortgage in time.

All of the above factors emerged due to the core issue of lack of information. It is necessary for the consumer to collect the useful information that is available and most importantly available through an authentic source. When there is a lack of information for any transaction, the consumer makes their decision by taking the risk. In other words, a consumer is at risk of accepting a problematic decision when there is a shortage of both imagination and experience. Here another issue arises that is the issue of the time. When the consumers have a shortage of time it becomes impossible to collect all the information to minimize the risk. Therefore, the consumer who makes the decision in less time have more chances of facing losses in the future ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"qlypkujP","properties":{"formattedCitation":"(\\uc0\\u8220{}\\uc0\\u8216{}Should I pay off my mortgage?\\uc0\\u8217{} Five thing to consider before you do,\\uc0\\u8221{} n.d.)","plainCitation":"(“‘Should I pay off my mortgage?’ Five thing to consider before you do,” n.d.)","noteIndex":0},"citationItems":[{"id":479,"uris":["http://zotero.org/users/local/mlRB1JqV/items/Z3BY4CZH"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/Z3BY4CZH"],"itemData":{"id":479,"type":"webpage","title":"\"Should I pay off my mortgage?\" Five thing to consider before you do","URL":"https://www.getrichslowly.org/pay-off-mortgage/","accessed":{"date-parts":[["2019",5,30]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“‘Should I pay off my mortgage?’ Five thing to consider before you do,” n.d.).

In case of a mortgage, the lender and buyers are both somehow made the transaction with less information. If the price of the product is not finalized during the transaction or before the agreement then it can lead to the significant switching costs. For instance, when the future amount is not identified at the present time it may result in benefit as well as the loss for any one of the party. The consumers were unable to pay the loan after reaching the retirement age which indicates that they were not aware of the future value of the mortgage. The lack of knowledge leads to the low saving for the payment of the loan. Therefore, the families who were not even much poor or spending the normal lifestyle faced the crisis when reached the retirement age. Home-buyer made the agreement in ignorance of the payment they had to pay on a monthly basis also lead to the financial crisis from 2007 to 2008. All these concepts provide a complete overview of what actually happened that the families were unable to repay the amount of the loan.

Conclusion:

Some consumers are risk taker while most of the consumer avoid risks and do not rely on the products which are on risk. The risk depends on the information that the consumer gathers before purchasing the product. Some products provide complete information before purchasing it while some do not provide complete information. However, risk can be minimized by experiencing the product in normal conditions. Homebuyer signed the home mortgages agreement with getting the complete information regarding the future amount and monthly repayment which made difficult for them to pay the loan even after reaching to their retirement age. The other factors related to behavioral economics that are linked to the financial crisis of the 2007-8 in the United States of America include; lifestyle, bounded rationality and heuristic bases. Thus, all these factors account for American citizens facing the challenge to pay the mortgage before reaching their retirement age under the paradigm of behavioral economics.

References

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Behavioral Economics | Exploring Economics. (n.d.). Retrieved May 30, 2019, from https://www.exploring-economics.org/en/orientation/behavioral-economics/

Camerer, C. (1999). Behavioral economics: Reunifying psychology and economics. Proceedings of the National Academy of Sciences, 96(19), 10575–10577. https://doi.org/10.1073/pnas.96.19.10575

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Fox, J. (2012, January 1). The Economics of Well-Being. Harvard Business Review, (January–February 2012). Retrieved from https://hbr.org/2012/01/the-economics-of-well-being

Gino, F. (2017, October 10). The Rise of Behavioral Economics and Its Influence on Organizations. Harvard Business Review. Retrieved from https://hbr.org/2017/10/the-rise-of-behavioral-economics-and-its-influence-on-organizations

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY McDonald, I. M. (2009). The Global Financial Crisis and Behavioural Economics*. Economic Papers: A Journal of Applied Economics and Policy, 28(3), 249–254. https://doi.org/10.1111/j.1759-3441.2009.00026.x

Millions of homeowners will still be paying off mortgage after retirement, research warns | The Independent. (n.d.). Retrieved May 30, 2019, from https://www.independent.co.uk/money/spend-save/mortgage-pension-retirement-house-prices-property-interest-loans-a8647681.html

“Should I pay off my mortgage?” Five thing to consider before you do. (n.d.). Retrieved May 30, 2019, from https://www.getrichslowly.org/pay-off-mortgage/

Too Big To Fail

Student’s Name

Instructor

Course Code

Date

Too big to fail

What has the treasure Dept done to Bears and JP MORGAN?

The Treasury department instructed the JP Morgan to find out the best deal with Fed so that the Fed would provide billions of dollars in credit form to the Bears and therefore, hold on some collateral damage on the mortgages which the Bear Steams owed. It was a strategy to safe the failing company, something, which the treasury has done to few companies. This could mostly be done in a situation where the company’s collapse would be of a great impact to the company and therefore, Bank of American would wish for the same treatment.

what is the significant of the conversation of secretary Paulson had with Chinese finance minister at the Beijing Olympic

The significant of the Secretary Paulson conversation with Chinese Finance Minister in Beijing is that it strengthens the economic ties within China which was very significant at the time when the economic was under pressure. The conversation led to several deals, which improved the business partnership between the two countries. It also meant to convince the Finance Minister to allow the yuan to appreciate faster as it expected since capping the rate of yuan was disadvantaging the American businesses and therefore, increased the trade deficits between the two countries.

a. Why did the proposed deal to have Barclay’s Bank buy Lehman Brothers fall apart?

There was a proposed delay to permit Barclays to purchase Lehman Brothers. The delay was caused by the lack of guarantee from the U.S. government over the losses incurred by Lehman and therefore, U.S. government declined to provide guarantee because Barclays Bank is one of the largest British banks.

b. What was the objection the British had to the deal?

The objection was because the United Kingdom had rules, which would require the bank to ask shareholders to shade off some shares. This made the fed to take long and raised serious issues regarding the takeover.

Why did the negotiations between Lehman and “the Koreans” break down

The negotiation between Koreans and Lehman broke down because of the toxic mortgage which the two parties failed to agree on.

Why didn’t the Chairman of the SEC instruct/direct/order Lehman to file for bankruptcy?

The chairman of SEC did not order the Lehman to file for the bankruptcy because he believed he did not have power to do so.

A. What does it mean when a company files for bankruptcy?

The bankruptcy occurs when a company is unable to honor its financial obligations, and when that happens, the company is valued and paid for its assets. In some cases, the company is placed under the receivership for a specific time.

Why would that be beneficial to the company?

The company would be able to get a window to reorganize itself and therefore, it will not be required to pay off its debts until it has recovered. It is beneficial to the company.

Why was A.I.G. in so much financial trouble? What had they been doing that was so risky and dangerous?

The AIG was so much in need of financial bailout due to trouble with its investment. The company experienced a lot of decline in sales and profit and the share in the stock market reducing. This caused a lot of problems in a major company in the U.S. and as a result the Fed reserve bailout it to save jobs and make the company viable again. However, AIG had a problem with its sales, accounting divisions, which exposed the company to a lot of financial problem.

a. What is meant by the statement “the economy runs on credit?

The economy run on credit means that the company spends on borrowed finances to run the government. The country does not generate enough levy which can be enough to for both expenditure and infrastructure development.

b. How do big companies use the revolving credit lines they maintain with banks?

Big corporations utilize them by revolving the credit lines they credit they maintain with the bank and investing them into the various stock and bands in order to earn profits.

Why is the ability to secure “credit” so important to even the average person?

Good credit rate is essential for getting credit or loan from bank. And loan is essential for everyone

What do they indicate they will use the money for?

They will use the money to invest into the market by giving the public loans.

What are the banks supposed to do with the money from the government, and what happens?

The money, which the banks asked from the government, is a bailout being used by the banks to invest in order to create jobs and also to offer credit facilities to the public. However, the banks do not issue loans to the public as required a lot of them get lost.