Question

1.How does unemployment affect economic stability? must be 100 words

2.Discuss the four principles of private enterprise systems? must be 100 words

3.What is required for perfect competition to exist, and what principles must be in place to achieve those conditions? must be 100 words

Answer 1

1. Loss in jobs for the unemployed. Unemployment is one of the UK's most significant causes of poverty. Long-term unemployment will drive households into debt, and increase relative poverty levels.
Possible homelessness. Loss of income will leave people without enough money to cover the costs of housing. Rises in joblessness often exacerbate homelessness rates.

Higher unemployment would lead to a decrease in tax revenue due to less people paying income tax and thus less spending (hence lower VAT). The government would therefore have to spend more on joblessness and associated benefits. Not only does the government pay unemployment benefits, but a family with unemployment will be more likely to receive housing and income support

Higher Economic GDP. High unemployment suggests that the economy works below maximum potential and is inefficient; this will result in decreased production and profits. The unemployed are therefore unable to buy as many items, which would lead to lower consumption and lower production. A rise in unemployment can have a negative multiplier effect.
Rise in social problems. High unemployment areas (particularly youth unemployment) tend to get more crime and vandalism. It may lead to isolation and difficulties in the social integration of young unemployed people.

2. Private enterprise system is an economic structure in which private people own all the capital needed for production and profit, not public bodies like government. Private enterprise is based on four principle or rights: the right to private property, freedom of choice, profits, and competition.

The right to private property: Persons in the private business system have the freedom to buy, possess, use and sell land as they see fit. This right of ownership includes, such as inventions, land, houses, equipment and intangible property.

The right of freedom of choice: The system of private enterprise also grants the right of choice. This freedom of choice extends to the right of individuals to decide what kind of work to do, where to work, and how and where to spend money. This means that people can work for others or work for themselvesif they so choose. It also means that a person is free to change jobs and work for the importation of his or her living economic status.

Profit right: The individual who takes the risk to start the company by investing is promised the right to all income in the private enterprise system. The right is what drives people to start business and it's the ultimate business target.

The right to compete: Individuals have the ability to compete with others in the private market scheme. Competition is the foundation of the private-enterprise economy along with profits. Companies compete by creating new goods, adjusting prices, implementing innovative promotional campaigns and providing the product or service where and when the customer needs it.

3. When economists evaluate a company's output decisions they take into account the business environment the company operates in. The market structure is defined by four specific market characteristics: the number and size of the firms on the market, the ease with which firms may enter and leave the market, the degree to which firms' goods are differentiated, and the amount of knowledge accessible to both buyers and sellers about costs, product characteristics, and production techniques.

For there to be a reasonably competitive market system there must be four characteristics or requirements. First, the industry has to have several businesses, none of which is big in terms of their revenues. Second, companies should be able to quickly enter and leave the market. Third, a non-differentiated or homogeneous commodity is developed and sold by each firm on the market. Fourth, all companies and consumers on the market have complete information on prices, quality of the product and production techniques.