Economics may be defined as the allocation of resources including time, mental energy, or even capital resources to a business venture to solve a problem. As a discipline, economics incorporate other disciplines that are related and affect human life in one way or the other.
Economics interacts with human behavior in solving different problems that exist in the society. This includes the forces of demand and supply. The economy is a term used to mean the regulation and management of scarce resources in a given organization, community, or a country. Economics differs from other disciplines due to its integration with social sciences where most human factors are found.
An economic approach to the role played by human behavior influence market forces through the decision making on what commodity to use and which one to avoid. The forces of demand and supply influence market strength in any country’s economy and they play a major role in trying to dictate the production and supply of goods in the economy. The economic approach recognizes the wealth function of different stakeholders in the economy.
These include producers, suppliers and consumers (Wessels, 61). There are two categories of economics to help understand the role played by this discipline in the lives of people. There is the macro economic aspect, which is the analysis of how individuals and firms seek to allocate scarce resources as they seek to achieve their economic goals. On the other hand, the macro economic aspect seeks to understand how large economy players like the government allocates and utilizes scarce resource (Jespersen, 45).
Micro-economic phenomenon in Egypt
Some of the micro-economic features in Egypt is the presence of an oligopoly market where there is little or no control of prices by the government. Most prices in the country are controlled by forces of demand and supply and thus the country experiences a free market with less government control. In Egyptian market, within a micro economic system, there are different forces that determine the price of goods and services.
The force of demand and supply influence how production and consumption take place. In the Egyptian micro economic system, there are several factors that affect demand for a certain good or service. If the income of a consumer is high, then his or her purchasing power will be high. Thus, the consumers can have a range of different products to purchase. If the income is low, the purchasing power is lowered.
Individuals with high income are satisfied when they purchase products that are of high price. In this case, rationality to them does not apply. Taste and preference is another factor that influences demand for a given product in Egypt. If a consumer has a unique taste, then he or she can only purchase a commodity of his or her choice over the other. (Schumpeter, Swedberg and Augello, 57).
In Egypt, many economic decisions are made by management in a given business where the stakeholders gear towards maximizing profits for the organizations. The supply for any given good or service in the micro economic system is influenced by the price of the commodity in the market.
Producers are willing to supply more goods and services in the Egyptian market if the price is high and favorable (Schumpeter, Swedberg and Augello, 68). Prices of related products affect the supply of the product. In this case, the consumers purchase the product with a competitive price.
Thus, the prices of related product are dictated by prices on the market. Consumers’ purchasing power is influenced by market forces and economic conditions. Therefore, producers should keep changing their production process to suit the best production process that is cost effective. The price of inputs influences the quantity supplied in the Egyptian market because any increase in input prices will be reflected in the price of the product (Brown and Oxenfeldt, 89).
Macro economic phenomenon in Egypt
In the Egyptian macro economic system, government forces control the force of demand and supply for economic factors like money and product demand and supply. The government raises money from taxes that are charged on commodities supplied to the market. Some of the macro-economic features in Egypt are the presence of external debt management to repay the international debt mainly from Europe between 1982 – 1990.
The government has over the years initiated a good economic boom due to the political stability, but the economy almost had a crisis in 2011. A second republic was reborn with improved productivity after electing a new president in 2012. The government also issues trade licenses and permits where business people are required to pay a considerable amount of money to acquire them.
The government controls money demand and supply by issuing and controlling factors like fiscal and monetary policies in the economy (Oman, 44). Fiscal policy refers to the control of products and services demand and prices by controlling the prices of these commodities in the economy. Monetary policy refers to the action of government to control demand and supply of money in the economy. Money demand can be controlled by raising or lowering interest rates for various financial institutions in an economy.
The government offer sale of government bonds to its citizen in order to control the circulation of money within the economy. Money printing is done to increase the money supply in the economy. In this respect, the central bank of Egypt may withdraw old currency notes and provide new ones in circulation (Wessels, 56).
Works Cited
Brown, Francis E. And A.R. Oxenfeldt. Misperceptions of Economic Phenomena. New York/N.Y: Sperr & Douth, 1972. Print.
Jespersen, Jesper. Macroeconomics Methodology: A Post-Keynesian Perspective. Cheltenham: Edgar Elgar, 2008. Print.
Oman, Charles. Globalization and Regionalisation: The Challenge for Developing Countries. Paris: OECD, 1994. Print.
Schumpeter, Joseph A., R. Swedberg, and M.M. Augello. The Economics and Sociology of Capitalism. Princeton, N.J: Princeton univ. Press, 1991. Print.
Wessels, Walter J. Economics. Hauppauge, N.Y: Barron’s, 2006. Print.