Supply and Demand in a Global Market

Question 1 

Derived demand I normally the demand for a particular factor of production that comes from the demand of another intermediate of final good. . The demand for one depends on that whose demand is going to be derived from (Chirinko & Mallick, 2011). 

Question 2 

The concept of derived demand aids in determining labor in that labor is used to produce a particular good. Once the demand of that good increase there will be more labor needed thereby increasing its demand and vice-versa (Chirinko & Mallick, 2011). 

Question 3 

There are various factors that determine the supply of labor in the market they include: 

Economy whereby there is loss of jobs during hard economic times and vice=-versa 

Globalization where companies are expanding worldwide 

Better compensation in terms of individuals requiring higher pay 

Educational requirements 

Social Factors 

Emergence of new technologies and unforeseen future. 

Question 4 

In the last twenty years the labor market has been greatly influenced by the level of compensation. There have been reduced earning opportunities for a broad range of workers and that has led to the growth of workers with lo earnings who have to take any opportunities available. The other factor is the emergence of new technologies. The technologies are rapidly replacing the workers such as use of robots in industries (Okumura, 2011) . 

Question 5 

Firms determine their prices in the resource market depends more on the demand of the society. If the demand for a particular good offered by the company increases, then the price of that commodity will definitely increase. 

Question 5 

The quantity of labor required during a specific period is determined by the marginal decision rule whereby if there is extra output that can be obtained by hiring more units of labor will add to the total revenue that it will add to the total cost the company will increase its profits by getting more labor. (Okumura, 2011) 

Question 6 

Income inequalities exist because of wealth distribution factors that have happened over various historical times and there is also the aspect of socio-economic momentum and meritocratic forces where some people are good at making money than others. 

Question 7 

The Gini coefficient is a measure of statistical dispersion that is used to measure income distribution of country citizens and is normally used to measure inequality. 

Question 8 

Over the last twenty years there has been increasing levels of income inequalities across the world 

Question 9 

The US government role is to try and reduce income inequalities by at times distributing resources to those who are less fortunate. 

Question 10 

The government should ensure fair distribution of resources, however getting into that will b demeaning the capitalistic ideals that the US government is built on. 

Questions 11 

Countries trade when on their own they do not have the resources to satisfy their own needs and can produce a surplus of a particular good or service. 

Question 12 

Comparative advantage is the ability of the economy to produce a good at a lesser opportunity cost as compared to other entities. 

Question 13 

A nation would not be better off economically by practicing isolation policy since it may not produce all the required goods to satisfy its needs. 

Question 14 

With a significant trade imbalance the country is going to lose in terms of trade whereby other countries will benefit from it economically (Salvatore, 2006) . 

Question 15 

Trade imbalance can be corrected by some government fiscal policies that will include passage of appropriate laws such as some tax measures (Salvatore, 2006) . 

Question 16 

Exchange rates are determined by the market forces of supply and demand. 

Question 17 

When there is currency devaluation the home country is likely to get more exports as its god s will be cheap. 

Question 18 

For the other countries trading with the home country there are going to spend more so as to export their goods to the home country. 

References 

Chirinko, R. & Mallick, D. (2011). The elasticity of derived demand, factor substitution, and product demand: Corrections to Hicks' formula and Marshall's Four Rules. Labour Economics, 18(5), 708-711. 

Okumura, T. (2011). Nonparametric Estimation of Labor Supply and Demand Factors. Journal Of Business & Economic Statistics, 29(1), 174-185. 

Salvatore, D. (2006). Twin deficits in the G-7 countries and global structural imbalances. Journal Of Policy Modeling, 28(6), 701-712.