Human Resource Management and the Business Context (Coursework Sample)

Human Resource Management and the Business Context (7HURM006W) Student's Name Institutional Affiliation Course Number and Name Instructor's Name Assignment Due Date Task 1 (a) (b) (c) In diagram in (a) above, the initial equilibrium, E1, is established where the demand curve, D, and the initial supply curve, S1, intersect. The initial equilibrium price is P1, and the equilibrium quantity is Q1. Following the increase in the cost of poultry feed, egg production becomes more expensive, causing S1 to shift leftwards to S2. The new equilibrium is established at the intersection of the demand curve and the new supply curve S2. Then, the new equilibrium price, P2, will be higher than P1, and quantity, Q2, will be lower than Q1. When the price of chicken feed increases, the egg producers will have a production cost that more or less captures the increasing cost. That is, if eggs are now more expensive to produce, then it would be less desirable for the suppliers to supply the same number of eggs at that initial price and quantity, thus decreasing the supply. Supply will shift from S1 to S2, which is a leftward shift on the diagram. Under the addition of the new supply curve, a new equilibrium is achieved in the market (E2) at a higher equilibrium price (P2) and a lower equilibrium quantity (Q2). This, in effect, tells that higher production costs lead to lower amounts supplied in the market and hence to increased prices since suppliers are eyeing maximization of revenues. (d) In diagram (b) above, E1 is the initial equilibrium that lies at the point of intersection made by the initial demand curve (D1) and the supply curve (S). The price at this initial equilibrium is P1, and the quantity at equilibrium is Q1. Now, with the rise in the cost of wristwatches, there is a decreased demand for wristwatches, thus, demand of wristwatch batteries falls. This is illustrated by the leftward shift of the demand curve from D1 to D2. A new equilibrium, E2, will form at the point where the new demand curve, D2, cuts the supply curve, S. A new equilibrium price, P2, will be below P1, and a new quantity equilibrium, Q2, will be below Q1. Wristwatch batteries are complementary goods to wristwatches, hence, their demand is directly related to the demand for wristwatches. If the price of wristwatches increases, therefore, fewer consumers buy wristwatches and demand for wristwatch batteries would, in fact, decrease. This would be shown by a leftward shift of the demand curve from D1 to D2. The movement out of the demand curve for wristwatches has no effect on the cost of production for batteries, so the supply curve (S) remains unchanged. The new equilibrium (E2) takes place at a lower price (P2) and lower quantity (Q2) than the initial equilibrium (E1). This example demonstrates that if the demand for a complementary good falls, then the price and the quantity of the goodwill also fall. The decreasing demand for the battery for the wristwatch raises the price, setting up a new market equilibrium with depressed prices and quantities. Task 2 (a) GDP Growth Gross Domestic Product (GDP) growth measures annually how much a country has added economic output to its development (Mügge, 2015). An economy with an increase in GDP growth is expanding, while the opposite occurs if the rate is negative. Usually, high GDP growth is associated with an increase in production, increased employment, and higher standards of living. Unemployment Rate The unemployment rate refers to the proportion of the labour force that is out of work yet actively looking for work (Mügge, 2015). A low unemployment rate means an economy is strong, with plenty of employment opportunities, and it tells of a booming economy. Conversely, high unemployment indicates hard times and job scarcity. Inflation Inflation measures the yearly value increase of consumer prices, which reflects the cost of living and purchasing power of a currency (Mügge, 2015). Moderate inflation evidences a growing economy, and on the other hand, hyperinflation is destructive for people's savings and earnings, while deflation might show falling prices and be an indication of economic stagnation. Balance of Payments Current Account The current account of the balance of payment records the country's transaction with the rest of the world in trade in goods and services, net income from abroad, and net current transfers (Mügge, 2015). A surplus indicates a country as a total net lender toward the rest of the world, and conversely, a deficit inclines toward a net borrower to the rest of the world. Interpretation of Data Year 1 In year 1, Country Z registered a moderately rising GDP of 2.5%, which was growing at a steady rate but not a robust level of economic growth. Unemployment was relatively favorable, at a low rate of 3.5%, which meant that the job market was steady. The inflation rate was at 2.0% with constant prices, while the balance of payments was held at 0.0%. Year 2 In year 2, GDP growth increased to 3.5%, while the unemployment rate decreased to 3.0%, signs of an improved economy. Inflation slightly increased to 2.5% but remained within the moderate spectrum. The slight deficit at -0.5% in the current account showed higher imports or other outflows. Year 3 In the third year, we see GDP growth at a brisk 5.5% and unemployment moderating to 2.5%, both indexes of intense economic activity. However, the rate of inflation accelerates to 4.0%, and this shows demand pressure. The current account deficit widens to −2.0%, indicating rising economic activity that will see higher imports or capital outflows. Year 4 GDP was growing high at 8.0% in Year 4, while the unemployment rate fell to 1.5%, which means that the economy is overheating. Inflation gained pace at 7.5%, a sign of substantial demand-pull inflation. The current account deficit surged further to -5.0%, which suggested massive capital outflows or import surges. Business Cycle Phase As Year 4 ends, Country Z seems to be experiencing the expansion phase of the business cycle heading for a peak. The high rate of growth in GDP, low rate of unemployment, and inflation suggest an overheating economy growing at high speed. The high level of the current account deficit implies the overproduction of goods and services and an increased amount of imports. (b) In Year 5, the government of Z could introduce a fiscal policy by cutting public expenditure and increasing the level of taxes so that inflation may be brought under control. The central bank could also employ a monetary policy by raising interest rates and reducing the money supply to control inflation and stabilize the economy such that it attains sustainable growth and a balanced current account (Dolamore, 2013). Task 3 (a) Number of Workers Wage Rate (£) Total Physical Product of Labour (output in toys) Total Cost of Labour (TCL) Marginal Cost of Labour (MCL) Total Revenue Product of Labour (TRPL) Marginal Revenue Product of Labour (MRPL) 1 11.00 2 11 11 6 6 2 11.00 9 22 11 27 21 3 11.00 15 33 11 45 18 4 11.00 20 44 11 60 15 5 11.00 24 55 11 72 12 6 11.00 26 66 11 78 6 7 11.00 27 77 11 81 3 8 11.00 27 88 11 81 0 Formulas Used: TCL = Number of Workers * Wage Rate MCL = Wage Rate (since the wage rate is constant) TRPL = Total Physical Product of Labour * market price MRPL = ΔTRPL (b) To maximize profit, MCL = MRPL Profit = MRPL – MCL At 1 worker MRPL = £6, MCL = £11 Profit = MRPL - MCL = £6 - £11 = -£5 At 2 workers MRPL = £21, MCL = £11 Profit = MRPL - MCL = £21 - £11 = £10 At 3 workers MRPL = £18, MCL = £11 Profit = MRPL - MCL = £18 - £11 = £7 At 4 workers MRPL = £15, MCL = £11 Profit = MRPL - MCL = £15 - £11 = £4 At 5 workers MRPL = £12, MCL = £11 Profit = MRPL - MCL = £12 - £11 = £1 At 6 workers MRPL = £6, MCL = £11 Profit = MRPL - MCL = £6 - £11 = -£5 At 7 workers MRPL = £3, MCL = £11 Profit = MRPL - MCL = £3 - £11 = -£8 At 8 workers MRPL = £0, MCL = £11 Profit = MRPL - MCL = £0 - £11 = -£11 When the firm employs 2 workers, each additional worker contributes £21 to total revenue (MRPL), while the cost of hiring each extra worker is £11 (MCL). A third extra worker would thus serve to increase costs more than it would increase revenue, serving to decrease hour-by-hour profit. Therefore, employing two workers maximizes profit because it balances the extra income from hiring one more worker with the additional cost of hiring one more worker. In summary, the firm should employ two workers to maximize hourly profits because it is at this level of employment where the marginal revenue product of labour (MRPL) equals the marginal cost of labour (MCL), and, therefore, each extra unit of worker added will give a positive contribution to profit. (c) Profit = Total Revenue - Total Cost Total Revenue = MRPL * Number of Workers Total Revenue = £21.00 * 2 = £42.00 Total Cost = Total Variable Cost + Fixed Costs Total Variable Cost = MCL * Number of Workers Total Variable Cost = £11.00 * 2 = £22.00 Total Cost = £22.00 + £10.00 = £32.00 Profit = £42.00 - £32.00 = £10.00 (d) i) If the market price per toy decreases from £3.00 to £2.50 (while the wage rate remains at £11.00 per hour) New TRPL = 9 toys * £2.50 = £22.50 New MRPL = ΔTRPL = £22.50 - £0 = £22.50 New Profit = £22.50 - £11 = £11.50 Consequently, if the market price per toy falls to £2.50, the firm's profit increases very slightly from £10 to £11.50 at the optimal employment level of 2 workers. ii) If the wage rate increases from £11.00 per hour to £13.00 per hour (while the market price per toy remains at £3.00 New MCL = £13...