The Market Failure Term Paper Example | Topics and Well Written Essays - 2000 words - 1

The Market Failure - Term Paper Example A healthy market is one which acquires a balance between supply and demand. When an imbalance occurs between supply and demand, the market may consider as going through the failure phase. The market is not an absolute entity. It undergoes relative changes every time because of its association with so many internal and external parameters. In other words, the market fluctuates all the time when any problems may arise to the associated entities of the market. The market often fails when the individual interests try to dominate over the general interests of the market. For example, China is accused of implementing unhealthy strategies in the market. China is concentrating on mass productions of goods. They were able to sell their goods for cheaper prices because of the mass production. The cheaper prices will definitely attract the consumers and they will purchase more and more goods of Chinese origin. Even though the profit obtained from selling a single unit may less, China was able to overcome such problems by selling huge volumes of goods. Moreover, the huge volume of production may mobilize the economic resources of China and also the unemployed youths in China may get more employment because of the healthy movement of Chinese products in the world market. On the other hand, the consumers who purchased cheaper goods of Chinese origin may realize later that the goods they purchased were not adequate quality. When they face troubles with the products they purchased, they would try to look suspiciously at other genuine products also produced by other manufacturers. The reluctance of the consumers to enter actively in the market may cause problems not only for China but for other countries as well. In short, the market may fail in such cases because of the inefficient production and distribution of goods by even a single entity.

Financial report Essay Example | Topics and Well Written Essays - 1000 words

Financial report - Essay Example Notwithstanding the fact that both options were promising, there was a need to engage in complete evaluation of the viability of the options, based on the future predictions of the benefits obtainable from such options. The process of determining the viable option entailed the application of mathematical techniques and models such as the regression analysis, the LM test and the decision rule to arrive at the most promising and viable investment option. Therefore, variables such as the GDP per capita, the inflation rates, and the consumer price index were used to modify the mathematical models and reach at a conclusive decision on the most promising option that could be adopted. After the application of the mathematical models and the modification of these models with the above mentioned variable, a decision was reached that the option to receive the sure sum offered by the bank was not plausible, and so the decision was to reject the offer Introduction Financial decisions are among t he most difficult decisions to reach. This because, while making a financial decision, varied considerations should d be made, which call for a greater level of accuracy and precise estimations (Ingersoll, 1987 p47). Additionally, financial decisions are not hundred percent dependable, owing to the large number of factors that affect financial investments and savings. Most significant is the fact that the complexity of making financial decisions is added to, by the nature of the risks involved in the financial sector, where a slight mistake either in prediction or estimation could mean the success or failure of the investments made (Batyrshin, 2007 p23). Therefore, it is extremely important to ensure that financial decisions are reached with the highest degree of precision possible, while at the same time putting into consideration all the factors that determine the viability of the decisions. This financial report presents the considerations that were made to determine whether CORV ETTE Company should accept a sure sum of sum of $2,150,000 which is risk-averse, granted by a bank, at the expense of continuing with its business of selling cars to its customers worldwide, using a local currency, or it should reject the offer. Therefore, all the considerations that were made, courtesy of the mathematical models applied will be discussed, and the final decision that was made presented. Discussion The task required that we carry out a research on whether CORVETTE Company should accept a sure sum of sum of $2,150,000 granted by a bank, at the expense of continuing with its business of selling cars to its customers worldwide, using a local currency. The need to reach this decision was based on the fact that CORVETTE Company could receive the sure sum that was risk-averse, or reject the amount and continue taking the risks associated with selling cars to customers worldwide using a local currency. Both options presented financial benefits to the company. However, the b enefits obtainable needed to be quantified, to come up with a final decision regarding the most promising and viable option. When banks advance credits to customers, they do so with an intention of making profits (Narayanan & Nanda, 2004 p65). Therefore, while granting CORVETTE Company a sure sum of