Economics (Article Critique Sample)

Economic Concepts Student Name Institution Course Professor Date Table of Contents TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc133640914 \h 3Opportunity Cost PAGEREF _Toc133640915 \h 3People Respond to Incentives PAGEREF _Toc133640916 \h 4Price Floor PAGEREF _Toc133640917 \h 4Market Surplus PAGEREF _Toc133640918 \h 5Price Elasticity of Demand PAGEREF _Toc133640919 \h 6Conclusion PAGEREF _Toc133640920 \h 6References PAGEREF _Toc133640921 \h 7 Introduction Economics is the social science that studies how people allocate scarce resources among alternative uses to satisfy their unlimited wants and needs. The field of economics includes a broad range of topics, from the behavior of individuals and firms to the workings of markets and the global economy. It helps us understand the decisions that individuals, businesses, and governments make, and the consequences of those decisions. Economic concepts are the building blocks of economics. Economic concepts provide an outlay of tools necessary to analyze and understand economic phenomena. Understanding various economic concepts is vital in making business decisions and formulating business policies necessary for maximizing profits and minimizing operational costs. This paper seeks to analyze five articles highlighting how the economic concepts of opportunity cost, incentives, price floor, market surplus, and price elasticity of demand are typified in the articles. Opportunity Cost Opportunity cost is the value of the best alternative foregone when choosing among two or more mutually exclusive options. An article from Khaleej times asserts that the UAE government sought to reduce fees for 14 services as an initiative to enhance business attractiveness. The reduction in fees would cause a slight decline in tax revenue for the UAE government. However, the move to reduce the service fees would make UAE attractive for local and foreign investment which would contribute to economic growth (John, 2023). The UAE ministry of industry and advanced technology ascertained that the government was focused on formulating initiatives of creating attractive business environment for international and local investors to support SMEs and entrepreneurship. By reducing the service fees, the government sought to forego the benefits of tax revenue (John, 2023). However, the initiative would benefit local and international investors by reducing the cost of doing business in the UAE which would result to increased economic growth. https://www.khaleejtimes.com/business/uae-cuts-fees-for-business-services-in-drive-to-enhance-competitiveness People Respond to Incentives An incentive is something that motivates or encourages an individual to take a particular action or to behave in a certain way. Studies show that people are more likely to uptake a certain action if the marginal cost of the action taken is significantly less than the marginal benefit associated with the action. Based on an article from Gulf News, more UAE companies have adopted ILOE job loss insurance cover to incentivize new recruits and enhance company attractiveness (Aghaddir, 2023). According to the article, the number of companies offering involuntary loss of employment (ILOE) insurance scheme as an incentive for new employees have increased significantly over the past years. The ILOE insurance cover is offered at an average premium of between Dh60 and Dh120 per worker (Aghaddir, 2023). The ILOE incentive is meant to provide job security for workers and enhance the welfare package of the companies. Using the incentive, companies are more attractive in the job market which lead to high employability rate of top talent. More so, by paying the ILOE insurance cover, the companies show that they care for employee’s welfare (Aghaddir, 2023). https://gulfnews.com/business/banking/more-uae-companies-now-offer-iloe-job-loss-insurance-cover-as-incentive-for-new-recruits-1.1681275222970 Price Floor A price floor is a minimum price that is set by the government or other regulatory body for a particular good or service. The price floor is typically set above the equilibrium price, which is the price that would result from the free market forces of supply and demand. An article from Khaleej Times stipulates that the fuel price committee increased the minimum price of Super98, Super95 and E-plus to Dh3.09, Dh2.98 and Dh2.90 respectively per litre (Abbas, 2023). Despite the hike in the three variants of petrol, the committee reduced the diesel price for March to Dh3.14 per litre. The committee stated that the increase in petrol prices was much smaller compared to February prices which averaged 10% higher (Abbas, 2023). https://www.khaleejtimes.com/business/energy/uae-hikes-petrol-prices-for-second-consecutive-month Market Surplus Market surplus is a term used to describe the difference between the quantity of a good or service supplied by producers and the quantity demanded by consumers in a particular market, at a specific price level. It represents the excess of the quantity supplied over the quantity demanded. According to an article from Khaleej Times, the oil market is set to remain in surplus despite significant cuts by the IEA. The demand for oil is estimated to reach a total of approximately 102 million barrels each day in 2023 due to the reopening of Chinese economy post covid 19 pandemic crisis. The Dubai Mercantile exchange asserted that the oil market would maintain a significant surplus despite the OPEC cut (John, 2023). The IEA (International Energy Agency) forecasted that the global market for oil products will be in surplus in 2023 and the first quarter of 2024. The IEA ascertained that despite the decline from Russia and OPEC production, the global oil production would increase significantly by approximately 1.5 million bpd (John, 2023). The global oil production and consumption for 2024 is estimated to average 103.25 million bpd and 102.72 bpd respectively. The global production and conception for 2023 is expected to average 101.3 and 100.87 million bpd respectively. https://www.khaleejtimes.com/business/oil-market-to-remain-in-surplus-despite-cuts-iea-2 Price Elasticity of Demand Price elasticity of demand is a measure of the responsiveness of the quantity demanded of a product or service to a change in its price. It is a measure of the degree to which the quantity demanded of a good or service changes in response ...