Relationship Between Law of Demand and Supply and National Minimum Wage Free Essays

Introduction Supply and demand are one of the basic models of economics and they are main characters of a financial system. Demand means how much quantity of the service or product customer is willing to buy. At constant factors, price of the product increases or decreases as its demand increases or decreases respectively. We will write a custom essay sample on Relationship Between Law of Demand and Supply and National Minimum Wage or any similar topic only for you Order Now While supply means the quantity of services or goods, producers willing to supply to consumer at certain price. At constant factors, quantity of products supplied increases as price of the product increased. The Law of Demand According to the ‘Law of Demand’, â€Å"Higher the price of the product results in less demand as less people wants to buy it, at the constant factors.† Graphically we can present the Law of Demand as below, In figure 1, A, B and C are points on the demand curve. Every point on the curve shows a direct relationship between amounts of the products demanded (Q) and price (P). So, at point A, the quantity demand will be Q1 and the price will be P1, and so on. The demand relationship curve shows the negative relationship between price and quantity demanded. The higher the price of a good the lower the quantity demanded (A), and the lower the price, the more the good will be in demand (C). The Law of Supply According to the ‘Law of Supply’, â€Å"Higher the price of the product results in high supply of the quantity of the product.† Because higher supply of the product at high price the revenue is maximum. Graphically we can present the Law of Supply as below, Figure 2: The Law of Supply In figure 2, A, B and C are points on the supply curve. Every point on the curve shows a direct relation between quantity supplied (Q) and price (P). At point B, the quantity supplied will be Q2 and the price will be P2, and so on. Equilibrium It is the point, at which quantity demanded and supply of the goods are same or equal. At equilibrium distribution of products is more effective because amount of the product supplied is exactly the same as the quantity of the product demanded. Graphically we can present the Equilibrium condition as below, Figure 3: Equilibrium At the point of intersection of the supply and demand curve equilibrium takes place. At this point, the price of the goods will be P* and the quantity will be Q*. This figure is referred to as equilibrium price and quantity. National Minimum Wages A minimum wage is the least monthly, daily or hourly that employers should pay legally to the employees. Workers in Britain were sheltered for the first time on the last nine months of 20th century by ‘National Minimum Wages’. With the intention of the recommendation to the rate of ‘National Minimum Wages’ in 1997 the ‘Low Pay Commission’ was established. Low Pay Commission is a kind of social partnership made up of three employer representatives, three worker representatives and three independent members, whose suggestions have been always agreed and government has always executed the suggested National Minimum Wages. National Minimum Wages has been restructured seven times, since April 1999. History – UK’s Minimum Wages In 1909 wages had always been synchronized by borough, but in 1909 the ‘Liberal government’s Trade Boards Act’ formed the first national system of wage law. The act made four’ Trade Boards’ that set minimum wages which were different in different industries. In 1945 after the war, the Trade Boards, which is now well-known as ‘Wages Councils’ broaden their power. Previously only relevant to industries where communal bargaining was weak, they were now broader in scope. In 1986 the Wage Council system had grown-up during the mid 20th century, in 1980s there were 26 councils, covering 2 million workforces, primarily in low paid jobs like trade. In 1986 the Conservative government decreases the influence of the councils and prevents new ones from being starting, with the Wages Act. In 1993 wage Councils are eliminated, due to resistance from trade unions, who favoured to practice group bargaining. In 1998 ‘The Labour government’ established ‘The National Minimum Wage Act’. Trade unions, which in 1979 had characterized 55% of the employees, had been able of bargaining wages by group bargaining. But in 1999 less than one in four employees were unionised, and a national solution was projected. The policy is resisted by Conservatives. In 1999 ‘The national minimum wage’ executed. ‘The Low Pay Commission’ judges the best rate to be ?3.60 an hour for labours who are 22 and above. In 2009 Conservative backbencher Christopher puts forward a private members’ bill that suggested allowing workers to â€Å"optimum output† of the minimum wage In 2010 on 1st October 2010 the wages increased to ?5.93, and the age at which meet the criteria for the top rate becomes 21 for the first time. A minimum wage for apprentices is also established, at ?2.50 per hour. Main principles to highlight the ‘National Minimum Wages’: It must be â€Å"enough to permit labours to sustain in vigorous existence. Hence, the wage must be designed on what the employees need for physical health and competence, and not what the trade will stand†. The â€Å"law have to be national, that is it should apply to the entire country†. It is to be a â€Å"nationwide least of real wages that worked out in its cash comparable will balance all local disparity in cost of livelihood† Arguments in favour of ‘National Minimum Wages’ The primary aim of National Minimum Wages is to decrease poverty and decrease the differences in pay. Another intention of National Minimum Wages is to cut the misuse of low paid labours. Potential Economic and Social Benefits Higher tax revenues Due to increase in the wages of low salaried jobs ,income tax and national insurance contribution is increased. State benefits would cost less Benefits like income support and benefits in council tax will be required less. A reasonable distribution of income across the people The primary reason of poverty contributes to increasing crimes. Argument is able to provide the employees reasonable pay for their work. Increasing productivity of labour Firms will have an inducement to lift the yield of workforce if they pay the minimum wage. This will lead to better investment in the human capital. Reduction in labour turnover Increased salary can decrease the labour turnover and rate of absence and can lead to motivate the labours to work to improve efficiency and reducing the expenses on turnover of employees. Potential earnings from the ‘National Minimum Wages’ Figure 4: Potential earnings from the ‘National Minimum Wages’ The National Minimum Wages in the figure 4 is put over the standard free market wage rate for a given job. Total employment reduced from point E1 to point E2 (expressing a loss of income for those who lost the jobs). At point E2, there is an increase in the income of those who stay in work. Arguments against of ‘National Minimum Wages’ Increase in marginal cost of employment A National Minimum Wages put higher than the free-market wage for certain groups lifts the marginal cost of employing workers. So organisations will reduce jobs, cut down the hours of work and unemployment will increase. Pay leap-frogging Other labours will demand more wages to maintain differentials in pay, which will result in cost-push inflation and adversely affect the competitiveness of UK producers in terms of price in international market. Increased unemployment Low-skilled labours and young persons will be replaced by experienced older labours resulting into increase in unemployment. Cost of training Some organisations will try to cut the cost on training of employees because of falling rate of profit. Distortionary effect A National Minimum Wages does not take into consideration local disparity in cost of living and will result in distortionary effect in the UK labour market. The impact of a minimum wage on employment Figure 5: The impact of a minimum wage on demand and supply of labours The impact of a minimum wage on employment points depends in part on the ‘elasticity of demand’ and ‘elasticity of supply’ of employment in dissimilar businesses. If workforce demand is comparatively inelastic then the narrowing in employment will be less harsh than if employers’ demand for workers is elastic with respect to changes in the income level. Effect of the National Minimum Wage in Industries According to, a report of ‘The Confederation of British Industry, (CBI) which gave the capable support to the National Minimum Wage, some key issues were as given below: There are not much evidences showing major impact on employment or unemployment. There are no visible errors upwards in typical earnings. There are some impacts of the National Minimum Wage on wage differentials directing towards the higher rates for workers. But it is only applies to thirteen percents of organisations. Exemption of under eighteen year olds from any minimum wage has been proven as useful for employers. To balance the cost of the minimum wage, some organisations have adopted work practices by making staff multi- skilled in their job. References:- http://www.britannica.com/EBchecked/topic/156920/demand-curve http://www.britannica.com/EBchecked/topic/574671/supply-curve http://wrap.warwick.ac.uk/1560/1/WRAP_Stewart_twerp630.pdf http://www.totalpolitics.com/blog/28013/history-of-the-uk-s-minimum-wage.thtml http://www.lowpay.gov.uk/lowpay/report/pdf/Revised_Report_PDF_with_April_date.PDF http://www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_10027201 http://www.investopedia.com/university/economics/economics3.asp http://www.investopedia.com/terms/d/demand.asp http://www.investopedia.com/terms/s/supply.asp http://www.hmrc.gov.uk/paye/payroll/day-to-day/nmw.htm http://tutor2u.net/economics/content/topics/poverty/minwage_for.htm http://tutor2u.net/economics/content/topics/poverty/minwage_against.htm How to cite Relationship Between Law of Demand and Supply and National Minimum Wage, Essay examples

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A major focus of the lawsuit Chevron Chemical filed against Touche Ross was the auditing professions rules regarding the subsequent discovery of facts existing at the date of the auditors report. Those rules distinguish between situations in which a client cooperates with the auditor in making all necessary disclosures and situations involving uncooperative clients. Briefly summarize the differing responsibilities that auditors have in those two sets of circumstances. Answer: International Standard of Auditing (ISA) Section 560 Subsequent Events paragraph 15 defined that Subsequent discovery of facts existing at the date of the auditors report is where the condition when after the financial statements have been issued, the auditor becomes aware of a fact which existed at the date of the auditors report and which if known at that date, may have caused the auditor to modify the auditors report, the auditor should consider whether the financial statements need revision, should discuss the matter with management, and should take the action appropriate n the circumstances. The subsequent discovery of facts requiring the recall or re- issuance of financial statements does not arise from business events occurring after the date of auditors report. While a number of situations may apply, the most common situation is where the previously financial statements contain material misstatements due to either unintentional or intentional actions by management. When facts are encountered that may affect the auditors previously issued report, the auditor should consult with his/her attorney because legal implications may be nvolved and actions taken by the auditor may involve confidential client-auditor communications. The auditor should determine whether the facts are reliable and whether they existed at the date of the audit report. The auditor should discuss the matter with an appropriate level of management and request cooperation in investigating the potential misstatement. Messier, Jr. , W. , Glover, S. M. Prawitt, D. F. 2008) If the auditor determines that the previously issued financial statements are in error and the audit report is affected, he/she should request that the client ssue an immediate revision to the financial statements and auditors report. The reasons for the revisions should be described in the footnotes to the revised financial statement. (Messier, Jr. , W. , Glover, S. M. Prawitt, D. F. 2008). ISA Section 560 paragraph 16 further explained the responsibilities of the auditors in the situation when a client cooperates with the auditor in making all necessary disclosures. It stated that when management revises the financial statements, the auditor would carry out the audit procedures necessary in the circumstances, would review the teps taken by management to ensure that anyone in receipt of the previously issued financial statements together with the auditors report thereon is informed of the situation and would issue a new report on the revised financial statements. ISA Section 560 paragraph 17 highlighted that the new auditors report should include an emphasis of a matter paragraph referring to a note to the financial statements that more extensively discusses the reason for the revision of the previously issued financial statements and to the earlier report issued by the auditor. The new financial statements. If the client refuses to cooperate and make the necessary disclosures, the auditor should notify the board of directors and take the following steps, if possible: * Notify the client that the auditors report must no longer be associated with the financial statements * Notify any regulatory agencies having jurisdiction over the client that the auditors report can no longer be relied upon. * Notify each person known to the auditor to be relying on the financial statements. Notifying a regulatory agency such as the SEC is often the only practical way of providing appropriate disclosure. (Messier, Jr. , W. Glover, S. M. Prawitt, D. F. 2008) The opinion of the above author also supported by ISA Section 560 paragraphs 18. It stated that when management does not take the necessary steps to ensure that anyone in receipt of the previously issued financial statements together with the auditors report thereon is informed of the situation and does not revise the financial statements in circumstances where the auditor believes they need to be revised, the auditor would notify those charged with governance of the entity that action will be taken by the auditor to prevent future reliance on the auditors report. The action taken will depend on the auditors legal rights and obligations and recommendations of the auditors lawyers. 2. Given your previous answer, do you believe that Touche Ross complied with the applicable professional standards after learning of the error in AESs 1985 financial statements? Explain. Answer: Based on the previous answer, I believed that Touche Ross did not comply with the applicable professional standards which are International Standard of Auditing (ISA) 560. When the personnel of Touche Ross discovered that the AFSs 1985 financial tatements contained a material misstatement, they attempted to persuade AFS to recall the companys 1985 financial statements. But, unfortunately AFS officials declined to recall those financial statements. At last, AFS and Touch Ross come out with a compromise. This compromise permitted Touch Ross to only notify AFSs sole secured creditor that the firms audit opinion on AESs 1985 financial statements had been withdrawn but could not notify AESs unsecured creditors included Chevron Chemical. The compromise that made by the Touche Ross with AFS have violated the ISA Section 560 paragraph 18. They should not only notify some of the AFS creditors. On the contrary, they should comply with the standard that required them to notify those charged with governance of the company or each person known to the auditor to be relying on the financial statement that action will be taken by the auditors to prevent future reliance on the auditors report. On top of that, Chevron Chemical Company is the largest suppliers of AFS and it will rely on the erroneous financial statement in deciding to continue extending credit to the company. So, the Touche Ross has the responsibility to inform Chevron Chemical Company of the material misstatement in the financial statement 1985. As a result, Chevron Chemical Company sued the Touche Ross and the court ruled that Touche Ross was negligent as a matter of law in failing to notify Chevron Chemical Company of the withdrawal of their opinion. iolated the professions client confidentiality rule by withdrawing its 1985 audit opinion and notifying all relevant third parties of the decision? Why or why not? Answer: No, I dont agree with the assertion of AFSs legal counsel that Touche Ross would ave violated the professions client confidentiality rule by withdrawing its 1985 audit opinion and notifying all relevant third parties of the decision. First of all, we look at the definition of confidentialit y. By-laws (On Professional Ethics, Conduct and Practice) of Malaysian Institute of Accountants Section 100 Fundamental Principles and Conceptual Framework stated that a professional accountant should respect the confidentiality of information acquired as a result of professional and business relationships and should not disclose any such information to third parties without roper and specific authority unless there is a legal or professional right or duty to disclose. Confidential information acquired as a result of professional and business relationships should not be used for the personal advantage of the professional accountant or third parties. MIA By-laws Section 140 Confidentiality paragraph 0. 7 further explained about the concept of legal or professional right or duty to disclose the confidential information. It highlighted that the disclosure of the confidential information may be appropriate if there is a professional duty or right to disclose hen not prohibited by law: * To comply with the quality assurance or practice review program of the Institute * To respond to an inquiry or investigation by the Institutes Investigation Committee or Disciplinary Committee or any other regulatory body * To protect the professional interests ofa professional accountant in legal proceedings * To comply with technical standards and ethics requirements As stated in the case of Fischer vs. Kletz, the responsibility to correct an audit report that was incorrect at the time of issuance is a legal as well as a professional obligation. (Cashell, J. D. Fuerman, R. D. ) In my opinion, Touche Ross has the professional duty or right to withdraw their audit opinion and notify third parties of that their opinion had been withdrawn to comply with the requirements of the professional ethics and conduct. Interests of all parties including the third parties like Chevron Chemical Company will be harmed if Touche Ross does not disclose the material misstatement of AFS to the public. It is because the third parties will continue to rely on the erroneous financial statement to make their financial decisions such as extending credits or approving the loans to AFS. On top of that, if Touche Ross resisted disclosing, then there will be a legal obligation towards the Touche Ross on negligence in failing to notify the third parties of the withdrawal of their opinion. I would like to support my opinion with a case. The case Fund of Funds Ltd vs. Arthur Andersen Co is an example of a case where the CPA was deemed to have had a duty to disclose. Arthur Andersen Co (AA) was the auditor for two clients, Fund of Funds Ltd (FF) and King Resources Corp. (KRC). KRC developed natural resource properties and agreed to be the sole vendor of such properties to FF at rices no higher than those charged KRSs industrial clients. AA learned the agreement was not being met but failed to inform FF. The court ruled AA should have disclosed this fact to FF because 1) they had knowledge of the overcharges, 2) they their engagement letter produced a contractual obligation to reveal such information. (Cashell, J. D. , Fuerman, R. D. ) This case proved that auditors got the obligation to disclose fraud or any misstatement to the outsiders. 4. Suppose that Touche Ross had resigned as AESs auditor following the completion of the 1985 audit but prior to the discovery of the error in the 1985 financial tatements. What responsibility, if any, would Touche Ross have had when it learned of the error in AESs 1985 financial statements? Answer: According to the AU section 9561 Subsequent Discovery of Facts Existing at the Date of the Auditors Report: Auditing Interpretations of Section 561, it required that the auditor to undertake to determine whether the information is reliable and whether the facts existed at the date of his report. This undertaking must be performed even when the auditor has resigned or been discharged. Hence, when Touche Ross had learned of the error in AFSs 1985 financial tatements, it still has its own responsibility to investigate its reliability and whether it existed at the date of the report although it had resigned as AFSs auditor following the completion of the 1985 audit. If the investigation finds the financial statements or report would have been affected by the error if known earlier and it is believed there are persons currently relying or likely to rely on the financial statements who would attach importance to the information, the auditor who have resigned should also advise the client to make appropriate disclosure of the newly discovered facts. The responsibilities of the resigned auditors in the situations in which a client cooperates with the auditors in making all necessary disclosures and situations involving uncooperative clients are totally the same with the continuing auditor.

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Yasser Arafat Essays Yasser Arafat Essay Yasser Arafat Essay The interests of the people of Palestine had all along been protected by Yasser Arafat. A very important contribution of Yasser Arafat consisted in drawing the attention of the world to the interests of the Palestinians. It can be construed that he was a true messiah of the Palestinians due to the fact that his was the only voice that conveyed their plight to the rest of the world, when the status of the Palestinians was at its nadir. This represented a stage in the development of the Palestinian nation, when Palestinians were considered to be nothing better than criminals . The loss of the Fatah party at the hustings to the Hamas indicates that Arafat’s death was a serious blow to the partys popularity. This political debacle was further aided by the fact that Arafat’s successor Mahmoud Abbas was his antithesis. Political observers like Khaled Duzdar, analyst at the Israel-Palestine Center for Research and Information, had observed the success of Hamas as a result of the failures of Fatah. A number of these failures have been attributed to the failure of Arafat as an able administrator and the failure of his government to curb corruption, indolence in discharging the duties of public administration and the failure to create public good . Despite these drawbacks the fact remains that Arafat succeeded in establishing the state of Palestine and was instrumental in providing an identity to the dispersed Palestinians. The Palestine Liberation Organisation or the P. L. O. under the domination and control of Fatah, according to Arafat, was the sole and legitimate representative of the Palestinian people. The PLO was secular and did not allow Hamas, the fundamentalist Islamic party, to take part in. However, after the demise of Arafat, the successors in the party failed to maintain its integrity. This brought about divisions in the party as the internal conflicts increased. The beneficiary of these internal conflicts was the Hamas . The reasons that brought about Arafat’s death were not made public by the French doctors who attended upon him when he had been admitted for a stroke in the hospital. The doctors were unable to diagnose the health problem that hastened his death. On the 11th of November, 2004 Arafat died at the age of 75 in a French hospital. A few of Arafat’s followers still believe that their leader was poisoned by Israeli agents. However, it was reported by the New York Times that the medical reports did not establish any possibility of poisoning. Further the newspaper announced that medical experts had examined the reports on its behalf to establish that Arafat had not succumbed to AIDS. Moreover, Arafat’s personal physicians conducted exhaustive diagnoses that failed to detect the source of infection which had caused the bleeding disorder that had escalated the severity of the fatal stroke. Initially Arafat was treated for reduced platelet count in his blood and during the course of treatment his health condition worsened. He was shifted to a French military hospital near Paris where he became comatose which proved to be fatal . The actual reason for Arafat’s death was not disclosed to the public by his wife Suha and the Palestinian authorities delivered contradictory statements. Ashraf Kurdi, the personal physician of Arafat, stated that evidence of AIDS was found but this was not mentioned in the medical records. Even the test performed to detect AIDS was not described. Kurdi further added that Arafat was injected with the HIV virus to camouflage the symptoms of poisoning .

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