Examine the arguments in favour of a free-market system of resource allocation
Chapter 1: Markets and resource allocation
Case Study 1.1 Google Takes networking fight to Facebook
1. Variables in the ‘condition of demand’ that are being targeted by Google are the rise in advertisement of their own social network with the use of Gmail. This is a substitute of Facebook’s messages that can be sent within the social network. Another condition of demand that Google will target is the use of the ‘Google Buzz’ on smart phones. A large number of Facebook users access the network via smart phone which is something Google will try and obtain. A Rise in Income is another condition of demand Google will target because a rise in income will lead to an increase in the purchase of normal goods such as smart phones.
2. The main variables that Google will seek to target will be a Rise in advertising expenditure, with the use of Google “Gmail” they will seek to integrate Google Buzz via their online email set up. Another example of a Rise in advertising expenditure is also Google showing off ways to use Buzz from a smart phone, allowing the user to take advantage of it its advanced features.
Case study 1.2 Small Cars, Big question
1. In the market there is a great deal of evidence suggesting the there will be a move along the demand curve but it will be demand contracting. History of sales in North America suggests that most Americans will not pay between $14,000 – 20,000 for a “small” car such as a fiesta. The information provided states that most American households with cars purchased from Fords tend to be F-150 pickup trucks and large SUV’s. This suggests that the movement along the demand curve will be a contraction as opposed to an expansion. There is some evidence of a possible expansion of demand with the likes of president Obama introducing CARE standards and petrol prices heavily increasing.
2. There is some evidence to suggest there will be a shift in demand for both demand increasing and decreasing. There is evidence that demand
Case Study 1.1 Google Takes networking fight to Facebook
1. Variables in the ‘condition of demand’ that are being targeted by Google are the rise in advertisement of their own social network with the use of Gmail. This is a substitute of Facebook’s messages that can be sent within the social network. Another condition of demand that Google will target is the use of the ‘Google Buzz’ on smart phones. A large number of Facebook users access the network via smart phone which is something Google will try and obtain. A Rise in Income is another condition of demand Google will target because a rise in income will lead to an increase in the purchase of normal goods such as smart phones.
2. The main variables that Google will seek to target will be a Rise in advertising expenditure, with the use of Google “Gmail” they will seek to integrate Google Buzz via their online email set up. Another example of a Rise in advertising expenditure is also Google showing off ways to use Buzz from a smart phone, allowing the user to take advantage of it its advanced features.
Case study 1.2 Small Cars, Big question
1. In the market there is a great deal of evidence suggesting the there will be a move along the demand curve but it will be demand contracting. History of sales in North America suggests that most Americans will not pay between $14,000 – 20,000 for a “small” car such as a fiesta. The information provided states that most American households with cars purchased from Fords tend to be F-150 pickup trucks and large SUV’s. This suggests that the movement along the demand curve will be a contraction as opposed to an expansion. There is some evidence of a possible expansion of demand with the likes of president Obama introducing CARE standards and petrol prices heavily increasing.
2. There is some evidence to suggest there will be a shift in demand for both demand increasing and decreasing. There is evidence that demand