Economic Essay Example | Topics and Well Written Essays - 1000 words

Economic - Essay Example This has caused concern for a number of factors in the market to include the banking and construction industry. When a low turn-over of homes occurs, new construction stalls and peters out and older pre-existing homes may cause a short burst in refurbishment industries but inventory movement remains stale. According to the media report, trust in real estate as an investment vehicle has declined by half since 2003. As with all complex phenomenon, a number factors explain why it is happening the way it is. Over time, the housing industry will find equilibrium as housing prices drop to a level the market deems sufficient for decreased prices and buyers may start purchasing again. One can anticipate the construction trades getting hit the hardest and see lay-offs and smaller contracting companies going under. Home improvement goods and services may see an uptick in business as more homeowners seek to repair or improve present dwellings instead of buying another home. Who are the key stak eholders that are impacted by the issue outlined in the report? Include a discussion of all groups that may be impacted by the issue raised in this report Highlight what you believe the main impacts will be in outline who you believe will be impacted most The construction companies and potential homeowners are the most severely affected groups here. The bankers will suffer only in the departments directly related to issuing and maintaining mortgage notes and securities. Of course, if the loans are packaged and leave the local lenders to be securitized in bundles of investments, the effect will only be on the amount of loan traffic coming into the local lending institutions. The construction trade tends to attract both unskilled and skilled laborers whose seasons of employment will most severely affected by the downturn of sales. Entire swaths of the industry will suffer a dearth of employment especially affecting the unskilled laborer. The skilled laborers do have the opportunity to move directly to providing services to remodel and refurbish existing homes for homeowners who find the prospect of buying a new home burdensome right now. What economic theories can be drawn from this media report? List and discuss what economic theories you can find in this article Provide a brief outline of the theory you are highlighting Provide evidence from the article to support these theories. Remember there may be more than one theory to discuss The Law of Supply and Demand is the most important economic theory to be considered in this media report. In its simplest form, it demonstrates that limitations or constraints on either supply or demand will have an effect on price (Kirzner, 2000). Prices, when unfettered, are the clearest signals for how to rationally allocate scarce or abundant economic resources. Economics at its most basic is the examination of the rational (or sometimes irrational, as in bubbles) allocation of goods and services. One important note, it is rele vant in a market or mixed economy but not necessarily in central planning or socialist economies where the Law of Supply and Demand tends to be fogged by irrational price signals and gross misallocation since the end-users don’t have a vote with their feet. The Law assumes that there is a price equilibrium at which producers and