MICROECONOMIC THEORY Essay Example | Topics and Well Written Essays - 1500 words

MICROECONOMIC THEORY - Essay Example 1-12). On the other hand, consumers will purchase expensive products whenever their income goes up and less expensive products when the income reduces. It is apparent that consumers normally make various choices with an aim of maximizing benefits they receive in return for the money they spend and the theory posits that consumers spend only the money they have without accounting for saved money as this writing explains. Dean (2009, p. 25-42) explains that the level of satisfaction that a consumer obtains from purchasing various products is based on utility function whose arguments affect consumer’s overall satisfaction level. There are trade-offs faced by the consumers while making consumption decisions and these can be explained with utility function. Diminishing marginal utility describes consumer’s preferences in a very significant way making some economic analysis to take it as a basic starting point. According to Levin & Milgrom (2004, pp. 5-15), consumer theory il lustrates that a consumer prefers a group of products packaged together called bundle and that a consumer would prefer a bundle and disregard the brand. The theory explains that consumers would rather base their purchase decision on the number of products in the bundle or the size of the bundle but not the product’s brand. Sassatelli (2007, pp. ... n bundle, if consumers decide to give up on one good, they would add more of another substitute as a way of maintaining their level of utility (Sassatelli 2007, pp. 57-60). Consumers normally substitute products for others even if the two goods are not the same and this describes most people’s preferences. Slope of an indifference curve shows the maximum number of units of a particular good a consumer is willing to substitute to acquire one unit of the other thus providing an economic way of understanding what the indifference curve really show. It is also worth noting that the slope of an indifference curve depends on the consumption bundle considered. The slope of an indifference curve represents the marginal rate of substitution between two products (Sirgy 1982, pp. 287-300). Summary of Simon Herbert Article Simon attempts to explain the link between psychology and economics by resting on a notion of economics as a science and a discipline (Simon 1959, pp. 253-260). He expl ains that economics as a science can be used in describing and predicting the behavior of various kinds of consumers and entrepreneurs. His research endeavor intended to understand the processes that participate in human decision making although despite his effort to investigate the issue he did not have a huge impact in the decision making (Zalega 2012, pp. 77-99). He rejected the assumption of perfect rationality made in the mainstream economics and he further emphasized the limitations of the cognitive processes. Simon (1959, pp. 255-265) points out that economics is widely preoccupied by normative economics while descriptive macroeconomics offers the scientific base for policy prescription. He explains how the theory of consumer demand was derived from indifference curve and considering of

Business Regulation Simulation Essay Example | Topics and Well Written Essays - 1750 words

Business Regulation Simulation - Essay Example The simulation will be based on the Legal Environment of Business Simulation UOP. the aim of the paper is to identify and analyze the main facts, regulations, and legal issues which influence the company and its stakeholders. Also, the paper will cover risk analysis and ethical questions, and provide possible solutions to the problem exist. The aim of EPA rules is to promote better self-regulation of business. EPA rules and regulations have a great impact on decision-making process determining direction and strategies of future growth and development. EPA found that five years ago, Alumina violated environmental regulations and rules. According to commission results, PAH concentration was above the norm. Thus, Alumina asked for another test and received a good record of compliance. Except this case, the company strictly follows environmental rules and regulations. This adversarial mode of business-government relationships in the regulatory arena can be adapted to a more cooperative, less confrontational mode through positive interaction between compliance officials from the public and the private sectors. The central theme of interactive corporate compliance is the encouragement of effective compliance systems within each business so as to ensure that the purposes of public policy are reflected in the internal operatio ns of American businesses--not only through the threats of enforcement efforts for noncompliance, but also through the positive effects of recognition of the obligations to make corporate practices square with the requirements of public policy. Voluntary compliance can be made palatable, and even profitable, in an effective scheme of interactive compliance (Hildreth 2007; US. EPA 2006). The Freedom of Information Act (FOIA) is another important issue in simulation. Among most FOIA officers, the individuals who process the requests and authorize the disclosures, there is, in fact, a genuine respect for the FOIA. This act was signed by Even Lyndon Johnson in 1966. Following this Act, Alumina asked the Environmental Protection Agency (EPA) to disclose the information concerning their spill five years ago. No one, in or out of government, can deny the oppressive delays in agency response to FOIA requests, but this varies from agency to agency and is often due to the refusal of the executive branch to provide adequate funding and staffing for its FOIA sections. Indeed, there is considerable evidence that the career professionals overseeing the implementation of the FOIA in federal agencies have, for the most part, accepted the principle of the public's right to know (Richter, 2002). Another important factor covered by the study is the U.S Environmental Protection Agency Compliance Incentives and Auditing policy. The aim of this strategy is to identify all aspects of its production, storage, and transportation operations, analyzing its management systems, and other systems designed to avoid, prevent, or mitigate spills. More and more, individual citizens throughout the country are deciding to reward what they see as "good" businesses with patronage, support, and good will and to tell the dishonest or unethical corporations to shape up or lose their business. This is becoming particularly evident in the areas of the environment and public health. Kelly