Effects on economic efficiency of government price controls and taxes Term Paper

Effects on economic efficiency of government price controls and taxes - Term Paper Example The marginal gain is the extra benefit to a consumer from the usage of one extra unit of the service and good. The overall quantity a consumer surplus in any market is equivalent to the region beneath the demand curve and over the market price. This region shows the gain to consumers in surplus of the price they exchanged for a commodity. In the diagram below consumer surplus is represented by region A where it is above market price of ? 5 and the units sold which amount 5,000. Source: (Sexton, 2010) Producer Surplus Producer surplus refers to the distinction amid the least price a company would have been eager to allow and the price the company actually obtains. The overall quantity of the producer surplus in a market is equivalent to the region above the market surplus curve and beneath the price in the market. The supply curve illustrates the eagerness of companies to supply a commodity at various prices. Firms will be willing to supply an extra unit of a commodity only where they obtain a price equivalent to the extra price of production of that unit. Marginal cost is the extra cost to a company of making one extra unit of a product or service. Normally, the marginal cost of making a product rises as additional products are made in a given time period. The diagram below shows the relationship between the consumer surplus and the producer surplus. The producer surplus on a demand curve is found below the consumer surplus and above the supply curve. Source: (Sexton, 2010) A competitive market is one which has numerous buyers and sellers. One of the advantages of a market system is that it leads into effectual results. In a competitive equilibrium the marginal benefit is equivalent to the marginal cost where equilibrium leads to an economical effectual level of outcome in a competitive market. On the other hand, deadweight loss refers to a situation where the cost of a product is above the average or equilibrium price, economic surplus is below what it could b e at the equilibrium price. The decrease in the economic surplus emanating from the market which is not in a competitive equilibrium is what is known as the deadweight loss. The diagram below shows the deadweight loss on a demand and supply curve. Source: (Sexton, 2010) Economic Surplus and Economic Efficiency As mentioned earlier consumer surplus gives the dimension of the benefits to customers from purchasing a specific type of good while the producer surplus provides the dimension of the benefits to firms from merchandising a specific commodity. Thus economic surplus is now the total of the benefits to the company plus the benefits to individual consumers. This is normally the most efficient measure of the advantage to the community from the manufacture of a product or service. Equilibrium in the aggressive market leads into the highest quantity of economic surplus or the entire gain to the community from the manufacture of product or service. In the diagram below the blue and th e brown region represents the economic surplus. Source: (Sexton, 2010) Economic efficiency on the other hand refers to the market results where the marginal gain to consumers of the final produced unit is equivalent to its marginal production cost and where the total of consumer surplus and that of producer surplus is at its highest best (Sexton, 2010). It must be noted that not every person is better off in case a market is

Inquiry into Samsung Essay Example | Topics and Well Written Essays - 1500 words

Inquiry into Samsung - Essay Example Samsung group has grown through acquisitions and mergers like the move to buy DongHwa department store in 1963 and two years later the acquisition of Saena paper industry followed. Samsung electronics were established by Samsung group in the year 1969. However, it was in the 1970s when Samsung made a decision to enter into industries petrochemical, heavy and chemical industries. This was followed by the establishment of a new Samsung shipping company. The Samsung heavy industry was established in 1973. The Samsung group procured Daesung heavy industry to develop the Samsung shipbuilding company. Samsung precision, which was later renamed to Techwin, was established in the same year. Samsung was rising at an extremely high speed and expanding its influence to expanding its industrial influence and empire. This positioned the company to the present day growth culture. Samsung group is known to be one of the companies that are leading in innovation. The company has been introducing the latest Smartphone and has increased its market share by introducing superior products like Smartphone and tablets. The growth of this multinational has been gradual but steadfast. Samsung was founded in the year 1938 by Byung-Chull. The company used to export fruits, vegetables and dried fish produced in Korea. The exports were destined for Beijing and Manchuria in China. The company then started small-scale manufacturing by establishing confectionary machines and flour mills. The company was incorporated in the year 1951. Samsung Corporation started to substitute imported goods with locally manufactured products through the establishment of the industry called Ceil Sugar in the year 1953. This was later followed closely by the establishment of Cheil industries. Samsung group then went ahead to acquire Feb Ankuk Marine and fire insurance in the year 1958. The company was later renamed as Samsung fire and marine insurance. This was followed closely by the acquisition of Jul Dong Bang Life insurance in the year 1963. The company was later renamed to Samsung life insurance in the year 1989 (Michell 2011). However, in 1983, Samsung group has begun to develop the interest in the field of semiconductors. Up to 1983, the company was known to develop semiconductors for the local market. The development of the 64k DRAM (dynamic random access memory) by Samsung Company marked a fresh beginning with regard to international influence (Michell 2011). This marked the beginning of production of many semiconductor chips for the international market from Samsung Company (Chang 2011). In 1985, Samsung data systems were established. The company was rebranded to Samsung SDS in 1986. The aim was to pave the way for Samsung economic research institute. In the following year, Samsung advanced institute of technology was developed as the company’s main research center. Samsung group acquired KOCA. This was a credit company which was renamed to Samsung credit card in the year 1 995 (Books 2011). Through this, Samsung Company was increasing asserting itself in the world of technology and financial security systems. Samsung began acquiring many international companies with an aim of asserting itself in the international market and increasing its market share. Samsung group faces incredible competition from other South Korean industries.