Economic_for_Managers

Introduction: Clearly identify the firm chosen (including its characteristics that make it qualify as a Monopolistically Competitive firm/ Monopoly/Oligopoly Goods that have a relatively inelastic demand with respect to income are generally shielded. Food has a very inelastic demand. I feel no matter how bad the economy gets, people are going to eat and will continue to purchase food. This is particular true for staple foods and goods like insulin and bread. In addition, when the economy improves, people rarely eat more or buy more necessities. The fast food industry is steady growing every day. People love to eat out and with the economy in the shape it’s in both parents have to work and that leaves little time to cook so fast food will always be booming. Fast food industry is a monopolistic competition is a market structure characterized by a large number of relatively small firms. While the goods produced by the firms in the industry are similar, slight differences often exist. ( AmosWebb, 2011) The fast food market we find many firms that produce a hamburger, such as McDonalds, Burger King and Wendy’s. Each firm differentiates their hamburger and they are not made exactly the same. As Wendy’s raises their prices, some of their customers will begin eating at Burger King, while others will remain loyal to Wendy’s. This is a function of the downward demand curve that firms in a monopolistically competitive market structure experience. As price increases, quantity decreases. Similarly as price decreases, quantity increases Current Data on GDP, Inflation, Unemployment etc for the U.S economy Inflation can be defined as the overall general upward price movement of goods and services in an economy. BLS has various indexes that measure different aspects of inflation. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in April on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.2 percent before seasonal adjustment. The energy index posted another increase in April as the gasoline index continued to rise, the latter accounting for almost half of the seasonally adjusted all items increase. The household energy index also rose, with all of its major components posting increases. The food index increased as well in April, though the 0.5 percent rise in the food at home index was the smallest increase this year. Within the food at home component, the indexes for meats, poultry, fish, and eggs, for dairy and related products, and for nonalcoholic beverages all posted notable increases, though the fresh vegetables index did decline following recent advances.(CPI,2011) Unemployment, persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Persons who were not working and were waiting to be recalled to a job from which they had been temporarily laid off are also included as unemployed. Receiving benefits from the Unemployment Insurance (UI) program has no bearing on whether a person is classified as unemployed. The number of unemployed persons (13.9 million) and the unemployment rate (9.1 percent) were essentially unchanged in May. The labor force, at 153.7 million, was little changed over the month. Among the major worker groups, the unemployment rates for adult men (8.9 percent), adult women (8.0 percent), teenagers (24.2 percent), whites (8.0 percent), blacks (16.2 percent), and Hispanics (11.9 percent) showed little or no change in May. The jobless rate for Asians was 7.0 percent, not seasonally adjusted. In May, the number of long-term unemployed (those jobless for 27 weeks and over) increased by 361,000 to 6.2 million; their share of unemployment increased to 45.1 percent. The civilian labor force participation rate was 64.2 percent for the fifth consecutive month. The employment-population ratio remained at 58.4 percent in May. In May, the number of long-term unemployed (those jobless for 27 weeks and over)increased by 361,000 to 6.2 million; their share of unemployment increased to 45.1 percent. (Employment Situation Summary, 2011) Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the first quarter of 2011, (that is, from the fourth quarter to the first quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 3.1 percent. The GDP estimates released today are based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was also1.8 percent The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased. (GDP,2011) Analysis of the Industry, Business Cycle and effects of GDP, Inflation, Unemployment The concept of Economic Cycles, which are sometimes referred to as Business Cycles, is a theory that attempts to explain changes in economic activity that vary from a long term growth trend as observed in a developed market economy. Factors considered in defining an economic cycle include growth of GDP, household income, and employment rates. Economic Cycles are divided into two main categories: booms and recessions. Booms are associated with a strong economy, while recessions are characterized by below-trend economic growth. Economic Booms have above-trend GDP growth, higher disposable incomes, less unemployment and increased consumer spending. Features of recessions are below-average GDP growth, lower disposable incomes, higher unemployment rates, and decreased consumer spending which is caused by the above mentioned conditions, lower disposable income from inflationary pressure, higher commodity prices such as oil, or food source. The less spending can lead to high unemployment. Many times this first shows in the retail sector. Reference Bureau of Labor Statistics. Consumer Price Index. Retrieved June 6,2011 from http://www.bls.gov/news.release/cpi.nr0.htm AmosWeb Encyclonomic Web*pedia. Monopolistic Competition. Retrieved June 6, 2011 from http://www.amosweb.com/cgi-bin/awb_nav.pl's=wpd&c=dsp&k=monopolistic+competition Bureau of Labor Statistics. Employment Situation Summary. Retrieved June 6, 2011 from http://www.bls.gov/news.release/empsit.nr0.htm