Sample Economics Paper on Current Events
- Competition Is For Losers
- Give one way to measure the size of Google.
Google’s size can be measured in terms of the market share it has in the search engines category or in terms of the advertisement revenues it rakes in.
- Describe perfect competition.
Perfect competition occurs when the producer supply meets the consumer demand and the products are undifferentiated.
- Define “monopoly”.
A monopoly is the opposite of perfect competition and the monopoly owns the market and sets the prices. There is no competition and the quantity is produced and prices set to maximize the profits of the company.
- Why is competition the opposite of capitalism?
Competition is deemed to be the opposite of capitalism because it has the effect of eroding the profits while capitalism is concerned with the accumulation of capital
- Why do monopolists lie?
Monopolists lie because they fear getting scrutinized, audited and attacked by the public and the government.
- Give market shares of the top three search engine firms.
Google leads with 68% of the market share followed by Microsoft at 19% and Yahoo at 10%.
- For who is monopoly good for?
Monopoly is good for the insiders, that is, the owners and employees. The employees can be paid higher salaries and the owners have the time to think about other things besides money and the competition.
- What do monopolies drive?
Monopolies are generally based on creativity and are the ones that drive the progress of the society by bettering it using new inventions and services that cannot be replicated by potential competitors.
- How do you earn a monopoly?
The basis of most monopolies, especially in the tech sector, are the patents owned by the companies. These patents make it impossible for competitor to offer similar products.
- Big Freeze
Interpret the chart. Which country:
- Had the biggest wage gains in 2004 – 2008?
- Had the biggest wage loss in 2009 – 2013?
- Had the biggest wage gain from 2009 – 2013?
- What does weak pay sap from the economy?
Weak pay saps income tax and social security contributions from the economy. This makes it harder for governments to mend public finances.
- Over the Horizon
14,15,16. List the three issues facing business executives over the next 50 years.
- The rise of smart machines that might replace hordes of workers
- An aging population, which is likely to affect productivity and the availability of competent workers
- Globalization and the growing dominance of the emerging markets.
- How can productivity improve in the use of industrial materials?
Productivity can improve by recycling and reuse of metals and other materials and also in the replacement of suboptimal materials with sustainable ones.
- Where are businesses moving to better position themselves?
Business are moving into the cities in the emerging markets to position themselves better.
- What will take the place of management consultants?
Smart machines will take the place of management consultants.
- Incredible Stickiness of Wages
- What is “wage stickiness”?
Wage stickiness means that one is less likely to receive a pay cut during a recession than a pay rise when the economy is strong.
- How does this tie into John Maynard Keynes theory of the 1930’s?
It ties to the theory that workers are likely to resist pay cut when even when economy is bad forcing the company to save money using layoffs. Another approach is inflation while keeping the wages intact. This makes the workers less costly and easier to retain and is more acceptable.
- What is basic business sense in regard to?
Basic business sense is in regard to the morale of the workers, which if compromised, hurts the production of the company.
- Partly Cloudy/ The Beerhemoth
- What company operates the world’s biggest e-commerce site?
Amazon is the company that operates the world’s biggest e-commerce site
- On what product does Dell still rely?
Dell is reliant on the manufacture of PCs, servers and digital storage devices.
- What is EMC’s mainstay?
The mainstay of EMC is VMware, digital storage devices and related software.
- What is the next merger “step”?
The next merger step is to merge the different components of a basic computer and have software turn them into servers, storage devices or routers as required.
- What is the beer industry merger?
The beer industry merger is referring to the intended takeover of SABMiller by AB InBev.
- What beverage in the beer markets are customers switching to?
The consumers are switching to craft brews.
- What is the Coca Cola rumor?
The rumor is that AB InBev might try to buy Coca-Cola which might be an impediment to its acquisition of SABMiller.
- Emerging Economics Today
- What are the two ways for countries to grow demand?
One of the ways is to create a domestic demand-driven expansion that is based on higher domestic incomes and the second one is to have a debt-driven growth based on consumption and accumulation.
- For what did China incur debt?
China incurred debt to use in investments
- What has happened to exports and imports during the last year?
Chinas exports fell by 5% and the imports fell by 20%, thanks to the poor performance of the Northern economies.
- To what should we shift our focus from GDP growth?
The focus should be shifted to improving the real incomes and quality of life of the majority of the citizens.
- What obsession has to end?
Obsession with the growth of the GDP should end.
- Where are the monopolies in trade?
The monopolies in trade are found in the northern countries, where companies having intellectual property rights are based. This makes the products have a higher value there than in the developing countries where the actual production takes place.
- To where should our focus on economic activity shift?
The developing countries should focus their economic activity to reliance on domestic demand and move away from a system where the north-based multinationals take the rents and profits.
- Inversion Acceleration
- What is corporate inversion?
It is the movement of the headquarters of US firm to low tax nations using complex legal maneuvers.
- What do institutions gain from inversions beside the corporation involved?
Other institutions that grain from inversions apart from the corporations involved are the banks that facilitate that process.
- How do actual corporate tax rates compare to the official 35% rate?
The federal corporate tax rate is actually 19.4%, and when the state and local taxes are accounted for, it levels at 25.7%
- In regard to corporate tax rates, to what do both Democrats and Republicans agree?
The Democrats and Republicans agree that the tax rate in the United States is among the highest in the world.
- What is the crucial motive for inversion?
The crucial motive for inversion is to shield the foreign profits of the US corporations from federal taxation, easing the access to these assets.
- What do studies done by CTJ show?
Studies by CTJ over five years (2008-2013) revealed that the effective average tax rates for the consistently profitable corporations in the US were 19.4%, making it the 8th lowest in the 34 OECD nations federal tax. A further study released in April 2016 revealed that accounting for the state, local and federal taxes, the effective corporate tax rate in the US is 25.7%. This ranks US as the 4th lowest in OECD countries.
- To what country is Johnson Controls moving its headquarters?
Ireland where the tax rate is 12.5%
- What is “profit stripping”?
This is done by the multinational corporations that allocate costs to the US units and the profits are allocated to the foreign subsidiaries. This makes the company appear poor to the government and very valuable to the investors.
- What do inversions cost the U.S. Treasury?
Inversions cost the US treasury up to $100 billion annually.
- What prohibits changes to the corporate tax codes?
There is nothing wrong with the corporate tax code, and any changes made would not make the corporations stop inversions or seeking tax havens overseas. Any change made to the tax code has the possibility of causing other unintended complications.