Price Fixing free essay sample

Price fixing assignment: 1. Why is price fixing an offense? Price fixing my cause market failures and distortions as it harms competition in a free market. This in turn adversely affects economic efficiency and consumer welfare. In India, price fixing and other such activities that have an adverse effect on competition are offense under Competition Act,2002. In US, price fixing can be prosecuted as a criminal federal offense under section 1 of Sherman Antitrust Act. 2. What are the implications of price fixing? Price fixing has various implications:- †¢Elimination or narrowing of competitive products. †¢Consumers are forced to pay more. †¢Consumers are confronted with deflated product lines in narrow price range. †¢Without competition and diverse product lines, a stagnant market place smothers retailer’s ability to offer strategic promotions and incentives to the market. †¢When the price of one commodity is established, it becomes imperative that the price of other related commodities be adjusted, triggering a chain reaction. We will write a custom essay sample on Price Fixing or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page 3. How does it affects producers and consumers? There are two major effects: 1. Reduced quantity 2. Raised prices. There is a transfer of wealth from consumers to producers. A portion of consumer surplus is shifted to producer surplus and also creates a deadweight loss. When prices increase from p0 to p1 due to price fixing, rectangle A, from consumer surplus gets shifted to producer surplus. At the same time there is also a deadweight loss of triangles B and C. The quantity that could be produced is reduced from Q0 to Q1.

The Growth of the Early American Economy in the West

The Growth of the Early American Economy in the West Cotton, at first a small-scale crop in the American South, boomed following Eli Whitneys invention of the cotton gin in 1793, the machine that separated raw cotton from the seeds and other waste. The production of the crop for use had historically relied on arduous manual separation, but this machine revolutionized the industry and in turn, the local economy that eventually came to rely on it. Planters in the South bought land from small farmers who frequently moved farther west. Soon, large southern plantations supported by slave labor  made some American families very wealthy. Early Americans Move West It wasnt just small southern farmers who were moving west. Whole villages in the eastern colonies sometimes uprooted and established new settlements looking for new opportunity in the more fertile farmland of the Midwest. While western settlers are often depicted as fiercely independent and strongly opposed to any kind of government control or interference, these first settlers actually received quite a bit of government support, both directly and indirectly. For example, the American government began investing in infrastructure out west including government-funded national roads and waterways, such as the Cumberland Pike (1818) and the Erie Canal (1825). These government projects ultimately helped new settlers migrate west and later helped move their western farm produce to market in the eastern states. President Andrew Jackson's Economic Influence Many Americans, both rich and poor, idealized Andrew Jackson, who became president in 1829, because he had started life in a log cabin in American frontier territory. President Jackson (1829-1837) opposed the successor to Hamiltons National Bank, who he believed favored the entrenched interests of the eastern states against the west. When he was elected for a second term, Jackson opposed renewing the banks charter and Congress supported him. These actions shook confidence in the nations financial system, and business panics occurred in both 1834 and 1837. American 19th Century Economic Growth in the West But these periodic economic dislocations did not curtail rapid U.S. economic growth during the 19th century. New inventions and capital investment led to the creation of new industries and economic growth. As transportation improved, new markets continuously opened to take advantage. The steamboat made river traffic faster and cheaper, but the development of railroads had an even greater effect, opening up vast stretches of new territory for development. Like canals and roads, railroads received large amounts of government assistance in their early building years in the form of land grants. But unlike other forms of transportation, railroads also attracted a good deal of domestic and European private investment. In these heady days, get-rich-quick schemes abounded. Financial manipulators made fortunes overnight while much more lost their entire savings. Nevertheless, a combination of vision and foreign investment, combined with the discovery of gold and a major commitment of Americas public and private wealth, enabled the nation to develop a large-scale railroad system, establishing the base for the countrys industrialization and expansion into the west.

Keynesian Stabilization Policy Essay Example | Topics and Well Written Essays - 1750 words

Keynesian Stabilization Policy - Essay Example John Maynard Keynes grew up in and attended Cambridge. He was a prominent member of the Bloomsbury Group, which was a literary group in London which, among other things, espoused socialist and interventionist solutions to economic and social problems. Keynes' experience during and after World War II in the Treasury helped to form his ideas about pricing, demand and monetary policy. He predicted the hyperinflation in Germany as a result of the unrealistic demands of the Versailles Treaty of 1919. Keynes supported the theory of "pump priming" during the depression of the 1930's, which was formalized in his magnum opus of 1936, The General Theory of Employment, Interest and Money (Keynes). One can view Keynes' formative years as a response to the realities of post-war Europe, a stagnating English economy, and subsequent Depression throughout the world. He saw that government's relatively small role in the economy could be increased if governments overcame their short-term resistance to increasing debt in peacetime. He saw the Great Depression reduce overall output in the world by 50% from 1929 to 1932 (Sachs). Contrary to subsequent accounts, the 1920's was not a period of uninterrupted prosperity in Europe. Sustained growth started only in 1925, and was cut short four years later. According to Kindleberger: Recovery from the First World War was hindered in Europe by the loss of the cream of its youth and the relative setback to its position owing to the stimulus to economic growth in the dominions, Japan and the United States2. Thus Keynes' entire adult career saw only a short period of nearly full employment, preceded and followed by periods of stagflation and outright depression. The respective governments' response to the economies' poor performance was fiscal restraint which, in Keynes' view, was clearly not working. The Fundamentals of Classic Keynesian Theory Keynes claimed that demand buoyed economies. Central to his theory was that demand from both the private and the public sector was essentially the same. To the extent that the private sector did not provide demand, the public sector could increase demand in order to keep the economy humming. Keynes felt that inflation was not a major problem unless the economy approached "full" employment, which was a much higher number than attributed by most economists at the time. Keynes' theories included three basic tenets: 1. Aggregate demand is composed of government and private demand. Both stimulate the economy when they increase. Aggregate demand is not inflationary unless it increases at a time when the economy is fully-employed. 2. Changes in demand do not affect prices, at least in the short term. Their main effect is on output and employment. Prices do not change readily-particularly in the case of wages-to accommodate demand. 3. Since wages respond slowly (both up and down), unemployment acts as a "balancing" mechanism. That