Description
I need responses for both of these discussion post
1. Marginal economics applies to economic tools and techniques to business and administrative decision making. Having an understanding of marginal economics helps managers and administrators set standards for their company and develop plans in order to meet each objective efficiently. The gradual understanding of marginal economics, cost and revenue, and incremental analysis is essential in order to make effective and competent decisions within any company.
Cost and revenue is the most important aspect of decision making within a business industry. Managing a company can be difficult, especially when it comes to optimization of profits. Imagine going into business with high expectations of revenue or profits but the overall costs are even higher. This will cause the business to go downhill quickly.
Incremental analysis evaluates the true cost of the different sectors of the company. Understanding incremental change is understanding the results of a specific decision that has been put into place. Every decision is not made lightly; the understanding of these profits, losses, and expected value maximization is all considered before moving forward. Without this understanding, one wrong decision can affect the budget of the company which in term can throw off incremental profits.
2. I do agree that consumer spending greatly determines prosperity or recession. I believe that the economy is a very fragile machine that has to maintain a balance between the consumers, businesses, and government. Too much, or not enough, spending in either sector and decisions on financial reinvestment can influence the economic scales to tip to prosperity or recession. However, the consumer sector holds the most weight.
Experts declare a recession when a nations economy experiences negative gross domestic product (GDP), rising levels of unemployment, falling retail sales, and contracting measures of income and manufacturing for an extended period of time (Rodeck, 2022). With the ongoing pandemic, especially during the earlier months, consumer spending was at a low, 9.8% lower than the same point in 2019 (BLS, 2022). However, spending was not the only thing that had decreased. Businesses were failing to garner new contracts, laying off populations, shifting to remote work, and having to close their doors. During this time, the government tried to assist businesses and individuals with incentives and funding. Rising costs of living, caution, and mandates equated to consumers not reinvesting money into their communities. This eventually led to a cycle of businesses not wanting to invest in labor capital or innovation.
According to Datalab, most government spending has been the same since 2017. However, there is a marked increase of spending in healthcare in that time period. From fiscal year 2017 to fiscal year 2019, spending was around $550 billion per year (Datalab, n.d.)In 2020, that spending was increased to $1.33 trillion and has stayed inflated since then. Other spending, such as military and social security, have stayed relatively unchanged.
