Principles of Economics Research Paper Example | Topics and Well Written Essays - 1500 words

Principles of Economics - Research Paper Example sgruntling customers, suppose that the company may introduce a different type of programming that is cheaper for the company to provide yet is equally appealing to customers. Explain what would be the effects of this action. The law of demand states that, ceteris paribas, the higher the price of a commodity, the less the demand will be. On the other hand, the law of supply states that, all factors being constant, sellers are more willing to supply goods at a higher price than at a lower price. This theoretical point at which sellers are willing to supply goods and buyers are getting all the commodities they are demanding is referred to as the equilibrium. The equilibrium is depicted in the figure below: Figure 1: Market equilibrium chart (â€Å"Economics Basics: Demand and Supply,† 2011) If the government make a price ceiling law on cable TV that sets the price below the current equilibrium price two things will happen immediately: (1) cable TV sellers will find the business less attractive because of increased possibility of lower revenues and thus they will lower their supply. (2) Consumers will find the lower prices attractive and thus they will increase their consumption and demand for cable TV. After some duration, the huge consumer demand and low supply will cause consumers to compete for the few cable TVs available. This is depicted below: Figure 2: Effect of price ceiling (Taylor, 2006) In a free market economy, the consumer competition for cable TVs will push the prices up, which will make sellers want to supply more and hence bring the price closer to its equilibrium. However, in this case, the price ceiling prevents suppliers from increasing the supply because of the low marginal benefits compared to marginal cost of supplying cable TVs. This eventually... The rationale for releasing the new guidelines to be used by the Department of Justice and the Federal Trade Commission for evaluating proposed mergers is to provide more clarity and transparency to businesses seeking to engage in mergers and acquisitions. This way business can tell beforehand whether they will be successful with their application or not. Additionally, the new Guidelines take into account changes that have taken place in the legal and economic arenas since the last revision in 1992. From the guidelines one thing that stands out is the Department of Justice’s and the Federal Trade Commission’s focus on protecting competition and innovation within the American business sector. Mergers and acquisitions that may substantially lower competition, or to tend to create a monopoly will be rejected. So too will those M&As that are viewed as done to kill innovation. Some of the major implications of these guidelines are that: (1) it will enable companies save on r esources that they may have wasted on a merger or acquisition that ends up being disapproved; and (2) it provides the legal fraternity with more clear guidelines for those who would like to seek legal redress