Globalisation refers to the integration and interdependence of the world economy and can be seen by the fact that communications, media and business spans the world, not just one given economy or even type of economy. Boyes (2011, p.6) reports that there are now close to 40,000 transnationals companies, and increase of 300% on just 25 years ago, and that these companies make up approximately 33% of all private-sector assets.
The world wide economic fact of life is that all over the world, people’s wants appear to be unlimited and exceed the resources available to satisfy those wants. Firms seem to have expanded across country boundaries in an attempt to satisfy those demands for resources and in doing so have fuelled globalisation.
Economists study the what (output), the how (techniques of output) and incomes (for whom) across and between countries. In doing so, they have come to find that world production is likely to be geared towards satisfying consumer demand in the countries that have the resources and can pay – the wealthy countries.
Dangers don’t just include the generation of products and services just for those that can pay, but also may include a homogenisation of markets, implying that the same products and services will be everywhere and dominate the market to the potential exclusion of local brands and firms. (MacDonald’s on every corner!) and therefore consumer choice may be reduced. However, the truth is that even the most global of brands varies its products and services the world over through name changes (such as 7-Up in Shanghai – since it means ‘death by drinking’ in the local dialect) to product adaptations – where some MacDonald’s burgers in Mexico come with chilli peppers. Even the Disney company had to adapt its product in Paris, by selling alcohol among other issues, and continues to do so as it opens up more parks across the globe to meet local and global demands.
The focus may be on international policies to reduce potential barriers to trade and to work towards gaining a greater equality in income distribution – but while it remains unequal (and the big question is how strong the push to create equality really is), is that it is the countries with the buying power that are likely to dictate what and how all manner of goods are produced, priced and distributed.
2. There is a saying in economics – ‘There is no such thing as a free lunch’ - What does this mean?
This implies that everything has a cost since everything and anything requires the allocation scarce resources. It may be the case that your lunch may well have been paid for by someone else, but you will still have allocated your time to that lunch date, and you may be required to ‘pay’ with another resource such as your advice.
In addition, the opportunity cost of taking that lunch over a choice of doing something else is also measured as the value. If you can answer what else are you sacrificing to take this lunch, then that is the value.
3. ‘Students unable to buy food’
i. Explain the problem of scarcity faced by many students attending university today. What are their choices?
The existence of limited resources (supply) and unlimited wants (demand) gives rise to the basic economic problem of scarcity. Scarcity implies that choices must be made regarding resources use and allocation. In the case of the students, their lack of funds or lack of time to earn potential funds (as they are spending their productive time studying rather than earning money) implies that the scarce resources in each students’ case is both time and money. The article indicates that their rather stark choice is between earning money or studying - the emotive element in this article is that scarcity of money in the students’ case is so bad that it is a pay off between eating and studying. Each student, it seems needs to face a choice of spending...