Microeconomics And Macroeconomics

Microeconomics and macroeconomics

BUSH ACCUSES VIETNAM AND CHINA OF DUMPING SHRIMP ON U.S. MARKET:

Introduction:

Microeconomics is the branch of economics that concerns itself with the processes that firm’s, households and individuals concerns themselves in allocating limited resources. In this sense microeconomics scrutinizes how these decisions affect the demand and supply schedules and helps determine not only the prices but also how these prices influence the supply and demand of goods and services in any given market segment.

On the other hand, macroeconomics concerns itself with economic aggregates of the nation’s economic activities. On this field, macroeconomics concerns itself with issues of government actions (spending and taxation), issues of unemployment, inflation as well as general economic policies.

ANALYSIS:

Microeconomic issues:

Among the microeconomic issues highlighted by the Elizabeth Becker report, include the issue of increased prices as well as the shifting and changing of the demand and supply curves of the shrimp or seafood consumption within the United States. According to the report seafood imports account for 90% of all the seafood consumed within the United States. Thus imposing a duty of more than 100% on these imports especially from china and Vietnam will mean that

Microeconomics and macroeconomics

the prices of these goods have the potential of even doubling within the long run.

There is also the issue of individual firms within the United States being negatively affected. Since many of the petitioners argued that, the low prices of these imports amounted to dumping within the United States. Thus, many of them claim that as a result the imports have led to the prices of these commodities being at levels hat are below an acceptable market value.

The main issue and major cause of the differences between the fair market value and the actual price is the differential in the level of utilization of new and modern technologies. There is no doubt that shrimp farms in both china and Vietnam have adopted new and modern technologies that have helped both economies to reduce their operating costs unlike their American counterparts.

Macroeconomic issues:

The article portrays some macroeconomic issues as well too. Among these macroeconomic issues, include the issue that the increased imports have led to loss of hundreds of American jobs.

Against this claim, the Chinese and their Vietnamese counterparts argue that the result has actually been the entire opposite. Both of them claim that their operations have resulted in the creation of more than 100,000 jobs within the United States in the form of more distributors, more retail outlets and more restaurants

In addition the lawyers of some of these firms argue hat the imposition of duties will lead to the loss of thousands of jobs not only in the united states but also back home in china and Vietnam where the shrimp comes from. This is because most of the shrimp is raised in commercial firms and it is not caught at sea, as most producers within the United States do.

Microeconomics and macroeconomics

The article made it clear that shrimp are the most popular seafood import into the United States. How would Adam Smith explain this observation?

Adam smith sometimes commonly referred to as the father of economics was a chief advocate for laissez faire. Smith believed that individuals and firms were free to exercise their own will and make informed decisions without the interference of the state. He argued that within a true capitalist economy the forces of demand and supply would always lead the market into an acceptable equilibrium. In his analysis, Adam smith would have advised the American producers to seek other areas where they had comparative advantage and produce those goods so that they may trade them in exchange. This would enable producers and consumers in all the involved parties to enjoy better prices as well as quality goods.

The term "fair market value" is continually mentioned in this article. Actual prices are compared to this "standard". What other term could you use to describe "fair market value?"

According to the United States Supreme Court, the fair market value could be defined as the price at which a property or pieces of property will change hands between willing seller(s) and willing buyer(s), given the condition that of the transacting parties is under neither undue pressure nor compulsion to buy or sell. There is also the condition that these same parties have reasonable knowledge of all relevant facts pertaining to the transaction.

The fair market value is quite subjective since it depends on the number of sellers and buyers within the market. It is applied both in accounting and legal processes.

The fair market value is more idealistic than realistic since it usually depends on place of transaction and on whether there is due acceptance of the product in a free market economy.

Microeconomics and macroeconomics

The fair market value in short could be assumed the most possible or likely price that a piece of property will change hands. This is in comparison to an imposed price. An imposed price on the other hand is legally set by a court or a taxation agency. Such prices usually have an absolute price that the property can sell.

Conclusion:

Issues of free and fair trade are very confusing. As countries try to protect their domestic industries, they adopt protective measures that end up interfering with the guidelines of free trade. These measures are in turn adopted by other countries and the result is unfair trading patterns. In the case of the shrimp saga, the adoption of high tariffs by the United States will ultimately end up destroying many industries and livelihoods within china and Vietnam.

References:

Elizabeth Becker. Bush Accuses Vietnam And China of Dumping Shrimp on U.S. Market. The New York Times, July 7, 2004.

http://www.prnewswire.com

U.S. Fishermen about to hear how high duties will be on imports. The Houston Chronicle, July 03, 2004