Read Luke 12:18. How do you think this Scripture passage applies to economics?
The selected verse of the Bible subtly discourages the accumulation of wealth. For instance, the verses, from the Gospel of Luke, suggest that our world is a not an eternal reality, but rather a place of temporary living; therefore, material wealth has no significance. It has also been suggested that wealth acquired has no meaning or significance, as it can benefit an individual only for a brief period. The uncertainty regarding life must shatter the desire to generate wealth and increase it. The passage of the scripture proposes that a person should earn only that much income that suffices his/her basic needs. This divine suggestion may strongly impact the contemporary capitalist system if observed or adhered to by most of the people. The immediate impact would be about the size of consumption, which is considered the engine of economic growth. The long-run impact would be on the exploitation of scarce resources. The production emphasis would shift to necessities from luxury goods.
As there would be changes in production, employment nature would also change. The agriculture sector will be the largest sector of the economy. This passage of the Scripture will produce mixed results if it is applied to bring changes in the economic system. For instance, it will address the issue of waste and overproduction. However, after applying this passage as an economic principle, innovation will suffer. The incentive to invest to earn a high profit will gradually disappear. Though, the economic-political system will become more stable than the current one, which is inherently flawed because of the greed of corporate firms.
Discuss what is meant by long-run and short-run costs. Use a real-world example to support your discussion.
In the Short-run there are two types of cost, which a firm generally incurs: 1) fixed cost and 2) variable cost. These two types of costs are viewed as a single entity or cost curve, Total Cost Curve. However, in both short and long runs, the real significance is the average cost curve. We obtain an average cost of dividing the total number of units. The shape of the average cost curve is U-shaped, which implies that as the production increases, the cost of production decreases to a certain point, after which it starts to increase. It is because, with the increase in production, the size of permanent or fixed cost starts to grow smaller.
The increase in cost after passing the minimum point is because of the decrease in the marginal productivity of variable resources. Real world example of Fixed Cost is rent that is paid by a firm for using land or building. Many firms acquire land or buildings on lease, which, if the fixed cost these firms incur. As the production increases, the size of fixed cost decreases, which is why the shape of the cost curve is like a U. In the northern part of my city, several restaurants have rented the building to start their business. The rent these restaurants pay is a fixed cost that these restaurants incur.
In long, a firm incurs only variable costs, because the fixed cost becomes insignificant. The variable cost changes in the size of production, which suggests that it can be regulated to some extent.
Discuss what is meant by sunk costs and why these are ignored in management decisions on projects.
It is a type of cost or investment, which cannot be recovered. There are many types of products which a firm can resell; however, there are certain types of products that cannot resell. Similarly, there are various types of costs that cannot be recovered in the future. For instance, rent paid by a firm cannot be recovered; therefore, it is a sunk cost and management ignores it for that particular reason.
There are many types of machinery and materials that can be used for an only particular period, which is why the cost of this machinery and materials is a sunk cost.
+447462439809