Microeconomics Term Paper Example | Topics and Well Written Essays - 1250 words

Microeconomics - Term Paper Example onsumption of services and goods by a consumer, the theory is an attempt to measure the general satisfaction a consumer derives from the consumption of a good, the utility theory also states the law of diminishing marginal utility, this concept states that as the number of units consumed by a consumer increase then the marginal utility level keeps on dropping until it reaches zero. For example the utility gained by consuming the first unit of a good or service is higher than the utility gained from the consumption of the second unit, this shows that as we increase the number of units we consumed the utility level keeps on declining. From the chart above it is evident that the consumption of more units of a good will increase the level of utility, however marginal utility declines as the number of units increase, the above diagram shows the total utility curve and the marginal utility curve, the point labeled 0 is the optimal point of consumption for a consumer whereby a consumer should consume to this point where the marginal utility value is equal to zero. For a rational consumer the optimal consumption of a good wil also be determined by the cost of price of goods and services and also their income, if we assume that a cionsumer consume two goods with different utility levels and that his income is 200 dollars, also assume that we have good A which costs 20 dollars and good b which costs 10 dollars then we can formulate a budget line by determining the maximum number of goods a consumer will consume, for good A the maximum number of units the consumer can purchase is 200/20 = 10 for good B the maximum number of units the consumer can purchase is 200/10 = 20, therefore we derive the budget line as follows: The chart shows the indifference curve, the higher the indifference curve the higher the level of utility derived and the lower the indifference curve the lower the level of utility derived. From our above example we determine the optimal level of consumption

Issues in International trade Essay Example | Topics and Well Written Essays - 1250 words

Issues in International trade - Essay Example They include consultancy and tourism among others. A product sold in the international market is an export while a product bought from the same market is an import. Trade issues often dominate and are a continuing theme in the international market. The issues include NAFTA, embargoes, sanctions, and the environment, trade deficits, The Euro, tariffs and WTO among others. Some of the issues are discussed as follows: A reduction in trade barriers allowing for integrated global economies and permitting international trade will affect the environment through the expansion of economic activities. It alters the composition and make-up of economic activity by bringing about a change in the techniques and means of production. The course of consideration and for environmental protection was raised by environmental groups on the potential North American Free Trade Agreement (NAFTA). This was just the first of a far cry to other voices opposing international or regional trade on the possible effects it may have on the environment. It is seen that an increase in international trade is detrimental to the objective of preserving a clean, healthy and sustainable global environment. It has been argued that any expansion of market to a global scale, ultimately leads to the environmental pollution and faster depletion of natural resources. These natural resources are scarce in nature. For example, international trade of coal has made it easier for countries to acquire it for economic activities. Coal has been known as a leading environmental pollutant. International trade has facilitated the growth of industries whose primary objective is the export of goods to the international market. For example, the United States has promoted several of such agreements such as the African Growth and Opportunity Act (AGOA) and the NAFTA. These agreements have led to the rapid growth of industries that have little government oversight and control. These