Unemployment

Unemployment might sound so hard to understand but to be honest, if you understand the concept of it, I’m pretty sure you’ll get it. In general, it is defined as individuals who are willing and able to work but have not been able to find employment. It has become a major world problem after the economic slowdown which has affected almost the entire world. Many experts have tried to find solutions but none of that brings benefits. Labour force consists of people who are working and those who are not working but are looking for work. People who are not working and are not looking for work are not considered to be in the labour force. For example, students who is studying in school or university, housewives who stay at home taking care of their children and retired workers. 

There are 3 types of unemployment. Lets start with the first one which is frictional unemployment. Basically this unemployment is always present in the economy. For example, a person who has just graduated might lack the resources or efficiency for finding the job that is available and suitable for the person itself. Besides that, a company might not hire the person because they believe that they are not good enough for the position that they have offered, when in actuality they can if they put more effort. 

    
The second one is structural unemployment. In general, it is a longer lasting form of unemployment which is caused by the fundamental shifts in an economy and it occurs for a number of reasons. For example, the workers might be lacking the requisite job skills, or they are unwilling to work because the salaries are too low. Structural unemployment is exacerbated by extraneous factors such as government policy, technology, competition and many more.

    
The last one is the cyclical unemployment. It is a factor of all of the types on unemployment that relates to the cyclical trends in production and growth that occurs within the business cycle. When the business cycles are at their peak, it will be low because the total economic output is being maximized. When the economic output falls, the business cycle is low and the cyclical unemployment will rise which is measured by the gross domestic product (GDP).

Demand & Supply

   In the world of economics, demand and supply are considered as one of the most fundamental concepts. In basic explanation, demand and supply are closely related to each other. Have you ever thought of how firms achieve countless of profits? In this essay, I’m going to tell you every detail of demand and supply that you need to know.

    In general, demand is defined as the amount or quantity of a product that the customer is willing to pay at a given price, assuming all other factors remain unchanged (ceteris paribus). The law of demand states that if all other factors remain equal, the higher the price of good, the lower the demand of the product in the market and vice versa. As a matter of fact, there is an inverse relationship between the price and the quantity demanded for any particular good in the market. The quantity purchased by the buyers at a higher price is less because if the price goes up, the opportunity cost of buying that product also increases. Therefore, consumers would avoid buying the product, which could force them to consume something else that they value more. The graph below is a demand curve which represents the price of good and the quantity demanded.

   

     You should know that price isn’t just the only thing that affects the demand. There are other factors such as income, price of related goods, preferences and expectations. If there is a change in price of goods or services, it shows that there is a movement along the demand curve. 

   If there are any changes of level of income, tastes and preferences, prices of related goods or services and expectations, it shows that the demand curve will shift. When the quantity demand increases, the demand curve will shift to the right and when the quantity demanded decreases, it is vice versa. Do refer to the graphs below.

   

     Supply on the other hand is defined as the amount or quantity of a product that producers are willing to supply in the market at a given price. In the law of supply, it states that the supply of good increases when the price is higher for the same in the market as the producers want to maximize their profit. That shows that there is a reverse relationship between the price of the commodity and the quantity supplied. Most firms take risk when supplying their products or services. They must be very sure that the amount must exceed the demand of the consumers in order to get more profits. The graph below represents supply curve which shows the price of the good and the quantity supplied.

   If there is a change in price of goods or services, it shows that there is a movement along the supply curve. When the price rises, the quantity supplied will rise and this is known as ‘expansion’ but when the price falls, the quantity supplied will fall as well and this is known as ‘contraction’.

   If there are changes in the price of goods, prices of factors of production, state of technology and many more, it indicates that there is a change in supply and thus it will shift the supply curve to the right when the quantity supplied increases and if the quantity supplied decreases, it shifts to the left.

Elasticity of Demand

• Elasticity of demand is a measure of the responsiveness of people to change in economics variables.

There are many elastic demand and inelastic demand created by marketer. For examples, luxury goods, car and  building are elastic goods. Elastic demand means the changes of price is smaller than the changes of the quantity demanded. That is because those are not necessary goods and people are not really use in their daily life, and when the price change will give impact to the quantity demanded. Furthermore, elasticity of demand will be influenced by level of income, habit, time period and price product itself. For instance, people have lower income they will cut their hair at normal saloon for only RM5 but will not cut their hair at high-class saloon.







To explain the graph, when the price of   gold increase, people will not buy it. when the price of gold fall, people will buy more and more. 

Let us talk about the two types of substitute products: Gardenia bread and Massimo bread. These products are under necessary goods for human and necessary goods are under inelastic demand. But consumers will consider buy the lower price one, because taste of bread between the Gardenia and Massimo are almost same. Moreover, when the price of Gardenia bread increase people will tend to buy Massimo bread, whereas when the price of Massimo bread increase, people will buy the Gardenia bread instead the Massimo bread.

To best describe the situation, when the price of Gardenia bread increase, consumers will buy  Massimo bread instead Gardenia bread as the price for Massimo is lower.

Monopoly

TNB( Tenaga Nasional Berhad) Monopoly Electricity In Malaysia

          Monopoly is one of the marketing structures. TNB is one of the monopoly company in Malaysia. Characteristic of  the monopoly companies are they are price marker, they have high barrier to enter the market, selling unique products and make super-normal profit. TNB is only direct supplier electricity to every customers and they have ability to control the price.

          Why TNB is the only electricity company in Malaysia? That is because to produce electricity the company needs to invest huge amount of money and the risk of it is high. Government need to control the electricity price equilibrium, remain the price and avoid marketer to mark up the price. Furthermore, TNB company is operated by government and it is only have a license to operate in Malaysia. For example, have two electricity company in Malaysia, that  are TNB and HHB, customers will choose the cheaper one to be their customers, that will cause the price lost the equilibrium. Moreover, TNB have their own coal field and hydroelectric power plant to supplier TNB materials to produce electricity, it can lower down the production cost to keep the price low.

Based on the graph where production at the Marginal Revenue(MR) = Marginal Cost(MC) output. Company want to gain maximum profit, the price must set at the point X(Average Revenue) and it must above the Average Cost(AC).