Practical Assignment

Student’s Name

Institutional Affiliation

Concept – Opportunity Cost

Opportunity cost is the loss of a benefit that a person or business could have enjoyed if a particular decision had not been taken. It also includes the lost economic or utility benefit when one alternative is taken instead of another one.

In the selected story, Emirates has taken several measures to enhance the safety of its customers during the COVID-19 pandemic. The organization distributes complimentary hygiene kits and has constructed protective barriers at check-in desks. The most notable decision was to provide free COVID-19 insurance cover to its customers (Borbon, 2020). By deciding to invest in enhancing customer safety, the organization forewent the chance to enjoy increased profits, instead choosing to use more money to adopt all measures possible to ensure that travelers are at minimal risk of getting COVID-19. Many companies in the aviation industry are just implementing the measures that are mandatory as per government requirements, which gives them the opportunity to dedicate more money to the recovery from the losses incurred when flights were grounded. Emirates has foregone that opportunity by deciding to invest more in customer safety.

Link to article: https://gulfnews.com/business/aviation/emirates-rated-safest-airline-to-travel-in-its-response-to-covid-19-1.1605511389574

Concept – People Respond to Incentives

The principle means that incentives affect the cost that people incur when they produce or purchase a particular good or service. Therefore, people will always respond to incentives, depending on how those incentives affect their operations.

The story chosen explains that the Trump administration slashed taxes for big American companies. By so doing, the government anticipated that the companies would invest more in the United States and avoid taking their profits to other countries that have better tax rates (Drucker & Tankersley, 2019). The big companies even asked for more incentives from the government to make the business environment more conducive for them. While the government may generate less revenue, such a move would see more big companies invest in the country, thereby making the economy more vibrant and successful.

Link to Article: https://www.nytimes.com/2019/12/30/business/trump-tax-cuts-beat-gilti.html

Concept – Trade Can Make Everyone Better Off

This concept means that trade has the capacity to bring the best out of every person, business, or nation. Since nobody can produce everything that he or she needs, the dependence on each other ensures that every person specializes and perfects in what he or she does.

The chosen article explains that Dubai has been improving its non-oil trade with Africa for more than nine years. The author notes that the trade between the two parties will help Dubai diversify its economy (Khan, 2019). At the same time, the opportunities presented by Dubai will be critical in helping Africa to unlock its economic potential. Therefore, the two parties stand to benefit by trading with each other, meaning that they all become better. By trading with Africa, Dubai has the opportunity to sell its products to the continent with more than 1 billion people. At the same time, Africa stands to benefit because it can sell its products to Dubai and also acquire technology and skilled labor.

Link to article: https://www.thenationalnews.com/business/economy/dubai-s-non-oil-trade-with-africa-to-touch-dh1-trillion-over-nine-years-1.939195

Market Surplus

Market surplus refers to a situation where the supply of goods or services is more than demand. Consequently, some sellers cannot get people to purchase their products, forcing them to lower their prices.

In the chosen article, the author explains that the prices of crude oil went down due to decreased demand caused by the coronavirus pandemic. The stay-at-home lockdown measures pushed demand for crude oil down as airlines grounded their fleets while many cars were not on the roads (Zoellner, 2020). Consequently, supply became far more than then demand for the product. With storage capacity having filled up, many producers had nowhere to take the oil that was already in their hands. With the pandemic situation being highly unpredictable, it was risky to continue holding the commodity. Many people that were in possession of oil were ready to dispose it off at any price to avoid incurring even bigger losses later. Resultantly, the prices of crude oil went down exponentially.

Link to Article: https://www.independent.co.uk/news/world/americas/oil-price-us-record-low-coronavirus-crude-stock-barrel-latest-a9475116.html

Concept: Demand Curve: A Change in Tastes and Preferences

The demand curve depicts the relationship between the price of a particular product and the quantity demanded at that particular price. A change in tastes and preferences can affect the quantity demanded at a specific price. When people like something, they are likely to buy it even at high prices. However, when another commodity becomes preferred, buyers will not be willing to purchase it at such a price.

In the selected article, the author explains that the demand for European luxury sedans is deteriorating as customers increasingly prefer electric SUVs. Many people now appreciate the gas-saving and little maintenance of SUVs when compared to sedans (Siddiqui, 2019). Consequently, the demand for SUVs has been going up, despite the fact that the prices for such cars are much higher than the cost of other vehicles. Even at the same prices, the demand for various types of cars has been affected by the changing tastes and preferences of customers.

Link to Article: https://www.washingtonpost.com/technology/2019/12/05/ok-beemer-why-european-luxury-sedans-are-becoming-relic-past-electric-suvs-are-rise/

References

Borbon, C. (2020, November 16). Emirates rated safest airline to travel in its response to COVID-19. Gulf News. Retrieved from https://gulfnews.com/business/aviation/emirates-rated-safest-airline-to-travel-in-its-response-to-covid-19-1.1605511389574

Drucker, J., & Tankersley, J. (2019, December 30). How big companies won new tax breaks from the Trump administration. New York Times. Retrieved from https://www.nytimes.com/2019/12/30/business/trump-tax-cuts-beat-gilti.html

Khan, S. (2019, November 8). Dubai’s non-oil trade with Africa to touch Dh1 trillion over nine years. The National News. Retrieved from https://www.thenationalnews.com/business/economy/dubai-s-non-oil-trade-with-africa-to-touch-dh1-trillion-over-nine-years-1.939195

Siddiqui, F. (2019, December 5). OK Beemer: Why European luxury sedans are becoming a relic of the past and electric SUVs are on the rise. Washington Post. Retrieved from https://www.washingtonpost.com/technology/2019/12/05/ok-beemer-why-european-luxury-sedans-are-becoming-relic-past-electric-suvs-are-rise/

Zoellner, D. (2020, April 20). Oil prices dive more than 100% during coronavirus pandemic. Independent. Retrieved from https://www.independent.co.uk/news/world/americas/oil-price-us-record-low-coronavirus-crude-stock-barrel-latest-a9475116.html