Economics for Business Margin of Productivity

Question: Discus about the Report of Economics for Business and Margin of Productivity. Answer: Introduction The changing policies of the Australian government have dramatically altered the operation and the structure of the Australian economy. In the circumference of the similar statement, Abbott (2015) suggested that the changing policies constitute micro-economic reforms that are diverse but share a mutual underpinning. The strategies attempted to change the incentives offered to the public and the private sector producers to enhance the living standards by strengthening the margin of productivity. In the similar context, Pincus (2009) mentioned that the origin of the micro-economic reform in Australia is reasonably dated to the commencement for the deregulation of the financial market. After the commencement, the government strategy has consistently been directed to attain the agricultural reform. The particular form of reform has affected a relative fraction of the Australian economy. In the opinion of Lundgren (2011), it could be inferred the particular sector has undergone a vast num ber of changes in the number and size of Australian farms. The strategy also includes the make-up of agricultural activities, the production and marketing policies employed by farmers. Therefore, the thesis statement of the study reflects that the Australian government has initiated effective regulation to reform the microstructure of the agronomy industry. Body The Australian governing authority has undertaken the reform of protection against the international trade occurring in the Australian agronomy. In the framework of the existing context, Baumol (2011) determined that the related trade reforms are primarily involved in the reductions tariffs imposed on the production and the import agricultural goods. This procedure started with 25% across-the-board tariff reduction in 1973 and was followed by the further reductions in the year 1977 1996. The government as well as introduced the phased reductions in 1988 and 1991. However, the average lucrative rate of protection in the agricultural industry has been over 35% in the late 1960s, by the mid of year 1990s the rate has fallen over by 5% (Lundgren, 2011). Moreover, Pincus (2009) signified the Australian agricultural markets is affected by the reductions in tariffs on the imported goods and similarly by the reform market structure. Tariffs on the natural goods such as sugar, dried vine fruits and citrus products have gradually decreased over the past 20 years (Abbott, 2015). However, the microeconomic reform in the Australian agricultural sector might not always create a positive impact on the productivity, das its cost adjustment is associated with the reforms (Baumol, 2011). The ultimate effect of the reform in the agrarian industry is permanent to raise the level of the productivity in the domestic staples. Conversely, the scenario forecast that the sudden the decrease in the tariffs has increased the unemployment ratio amongst the workers and similar the complexities amongst the labours have increased immediately to find the re-employment. The entrepreneurs have also demanded for a considerable time tenure to observe the profitable production in the other industries created by the tariff reduction strategy. Evaluating the above scenario, Pincus (2009) specified that the efficacy effects in the micro-economic reform allow initiating the transition period of the post-reform path, towards which the economy is shifting. The purpose of the micro-economic reform is to improve the efficacy of the operation of the economy. In the opinion of Abbott (2013), micro-economic reform has increased the agricultural productivity where the quality of the inputs is applied in the productivity. For example, Greenstein (2016) mentioned that the distortionary price regulation has needed to be imposed on the tariffs while importing the goods. It is directly helpful to raise the maximum price of the goods that can be charged by the Aitrallan producers for the same goods. In the opinion of Lyons and Smith (2007), this policy would increase the profitability of the production of the importing goods in Australia compared to the production of the other quality goods. On the other hand, Zhang (2015) argued that the Australian firms are only profitable because of the tariff are less competent than the international firms that crop the same good. Thus, the efficiency of the production could be improved by the removal of the t ariff. Although, the critics advised that the Australian firms would become unprofitable of removing the tariff plan while producing the different types of goods. Furthermore, the reform of the government activities by the privatization of the government organisations has the major objective of profit maximisation. According to the opinion of Pincus (2009), the micro-economic reform can increase the overall productivity in two ways, case for reform and case against reform. In the first case, the micro-economic reform has a positive effect on the productivity where the substantial adjustment costs related to the reform. As per the opinion of Lundgren (2011), the net benefit of reform is measured by the variation in the value of the resultant between the no reform and post-reform paths. Therefore, the ultimate effectiveness of the reform is permanent to raise the level of the productivity of the economy. Adding to this, Greenstein (2016) stated that the circumstances of the microeconomic reform require the introduction of a new regulatory administration. The reform improves the productivity depending on the effectiveness of the regulation (Abbott, 2013). As per the opinion of the economists, there are two prime objectives of the economic policy efficiency and equity. The scholars viewed that the improvement in efficiency would also improve the equity. In this present context, the Productivity Commission who supports the microeconomic reform argued with the suitable utility of the tax and welfare systems that helps to redistribute the efficiency gains for achieving the equity objectives. Conclusion The practice of appropriate use of the tax and welfare systems is an important parameter in judging the overall effects of microeconomic reform of the welfare of Australian society. The empirical analysis of the microeconomic reform depicts that it has no adverse effect on the productivity in the economy. Additionally, the microeconomic reform is also necessary to eliminate the productivity cost of the social welfare system. Furthermore, the considerable adjustment expenses in the economy have resulted from the microeconomic reform. Finally, the fact that adjustment costs are accepted by a small section of workers and recommend that reform has some argumentative effect on the equity in Australia. Reference: Abbott, M. (2013). Microeconomic reform and the Whitlam government: The case of telecommunications and post. Journal of Australian Studies, 37(4), pp. 503519. Abbott, M. (2015) Margarine and the origins and timing of microeconomic reform in Australia, Australian Journal of Agricultural and Resource Economics, 60(1), pp. 2238. Baumol, W.J. 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