Microeconomics by McConnell Bruce

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Microeconomics

1.

A private property system gives individuals the exclusive right to use their resources as they see fit. The issue of property rights is coming to the countries moving toward a market economy. Such rights are at the heart of the privatization of state assets. In market economies, property plays a key role in helping individuals and corporations to obtain financing. It is critical because with this, the transfer of goods and properties will not be disorganized in the market system (McConnell & Brue, 2005). In a market system, private individuals and firms own most of the property resources. The right of private property gives the freedom to negotiate the legal contracts. It enables individuals and business organization to get, use and dispose property resources. The property right promotes investment, innovation, exchange, maintenance and economic growth (Reznik, 1996).
2.

(a) It can be explicated that the market economy is a profit and loss system. In general, profits are emphasized but it should be kept in mind that losses are equally necessary for an efficient economy. The nature of profits by the general public is sometimes misinterpreted. Profits are not an excess charge, neither an act of tightness by firms. For creating value, profits are an advantage to the capitalist-entrepreneur (Reznik, 1996). Profits are a signal to use resources in order to produce items highly valued by consumers, whereas losses are a signal to discontinue production of low-valued items. In an economy, losses are necessary to free up resources for use by those who are producing valued goods.

(b) Among economic units, the market system usually depends on competition. The basis of competition is exemption of choice in pursuit of a monetary return. Competition helps to diffuse the economic power within the businesses that make up the economy (McConnell & Brue, 2005). When there are independent sellers and buyers in a market, no buyer or seller is able to prescribe the price of the product. Due to competition, a firm that raises its price will lose all of its business. Competition also implies that producers can enter or leave an industry; there are no barriers to an industry's entry and exit (McConnell & Brue, 2005). A firm that fails to exploit new technology will lose profits. In the market system, competition is the basic regulatory force.

3.

Creative destruction is a model that seems to fit the systematic destruction of old theological system. The old are replaced by the new at a reckless step in the evangelical world.
It is a process of industrial variation that constantly overturns the structure of economic rather than destroying the old one and constantly creating a new (Creative Destruction, 2007). Creative destruction occurs when something new kills previous one. For example, personal computers, the industry led by Microsoft and Intel destroyed many mainframe computer companies but with this, ...