Micro Economics Question

1. I was thinking about splitting up into the duties into a. 1 person does the intro/conclusion b. 1 talks about the changes ai makes to economy c. 1 person talks about how to respond to the changes made by new tech d. 1 person talks about the changes to supply, demand, equilibrium, competitoin, etc. – Introduction (): Type your script here Changes made to the economy by AI/modern technology: This market economy has faced disruptions before but through new advancements in technology and our understanding of applying that technology, it has been heavily impacted. New technology such as Artificial Intelligence has altered the landscape of the market economy which in turn has created new economic factors for businesses to face, created a new approach for the invisible hand and supply and demand to change, and changed the way businesses react and how they should react. A large impact businesses are facing through the introduction of AI is labor. According to Kristalina Georgieva from the International Monetary Fund Blog, “In advanced economies, about 60 percent of jobs may be impacted by AI…which could lower labor demand, leading to lower wages and reduced hiring. In the most extreme cases, some of these jobs may disappear.” (Georgieva, 2024). This statistic of large scale AI impact within the job market shows the influence it’ll have on business, creating a new economic environment where the focus is shifted towards a reduced labor approach which would create a higher need to eliminate paying for labor in favor of AI generative models to handle the workload alone. This would impact the market economy especially in a way that dictates for consumers to also understand and be used to AI models handling their goods and services. The general public’s disdain for AI makes this a difficult switch for businesses to handle and integrate properly even at the benefit of cutting labor costs. Artificial Intelligence also changes the invisible hand, making it more of a puppeteered hand; as described by an article from the International Association of Business Analytics Certification “The “Invisible Hand” emerges as these algorithms collectively influence market dynamics, such as liquidity, volatility, and price movements, often in ways that were not explicitly intended by their creators.” (Alagar, 2023). This shows how the market economy can be influenced by new technology such as AI and it can directly begin to produce changes that businesses aim for such as profitability. The article does however also point out the flaws in such an integration, stating concerns of an AI model manipulating the market and exploiting possible flaws in the economy for profit (Alagar, 2023). Overall, an impact on the invisible hand is visible, and businesses within a market economy can exploit or be exploited by such a sophisticated piece of technology being let loose. Took this mainly from my essay, lmk if i gotta make any changes or make it longer or anything (Simon) How to respond to changes made : The rapid development of new technologies, particularly the rise of artificial intelligence, has brought about significant changes to the market economy. However, these changes have not only increased productivity and led to the emergence of new industries, but also raised concerns about the labor market, personal privacy, and data security. To address these changes, a series of measures need to be taken to ensure market adaptability and fairness.The following measures can be taken to address the changes brought about by new technologies, particularly artificial intelligence: First, Enhancing workforce resilience: The development of new technologies may result in the disappearance or transformation of certain job positions, particularly for workers with lower skills or education levels. Therefore, the workforce needs to continuously learn and adapt to new technologies, improving their skills and adaptability. Second, Investing in basic research and development: To support long-term innovation, governments and businesses need to increase investment in basic research and development. This will help drive the development and application of new technologies, providing more opportunities for businesses to adapt and respond to market changes. Third, Transparent and fair regulatory measures: To protect consumer interests, it is necessary to establish transparent and fair regulatory frameworks to ensure that the use of new technologies does not infringe upon personal privacy and data security. This can be achieved through the enactment of relevant laws and regulations and the supervision of regulatory agencies. Addressing the changes brought about by new technologies requires the formulation of comprehensive policy frameworks to ensure inclusivity and fairness. This includes enhancing workforce resilience, investing in basic research and development to support long-term innovation, and establishing transparent and fair regulatory measures to protect consumer interests. *This is based on the content of my essay, but if you have any other suggestions or recommendations, please feel free to share them. Thank you!!! Changes to supply, demand, equilibrium, competition, etc. : 1. So now that we know how AI, automation, and robotics can affect the market economy as a whole, we will be discussing how the individual factors will be changed. 2. As mentioned, automation can and should act as a complement to human efforts to make production and workload management more efficient. 3. In a competitive market, people will naturally seek out options that best suit their interests, changing the economic activity around them. This theory is known as an “invisible hand”, an attempt to pursue one’s interests that unintentionally promotes the interest of society 4. In the context of the continuously evolving economy, entrepreneurs rely on Artificial Intelligence and automation to minimize their costs while maximizing their revenue. 5. Because the improvements significantly reduce production costs, businesses can sell their goods and services for cheaper prices and in higher quantities. 6. As a result of the price decrease, the product becomes more desirable and accessible to everyday consumers. 7. This behavior aligns with the law of demand which states that demand will increase when the price of a good decreases, and vice versa. 8. Although the proprietors were initially utilizing technology for production efficiency, the invisible hand guides consumers to those products because it is more favorable to them as well. 9. Sellers will then analyze their sales, increase their supplies to meet the demand of the market, and cleverly take advantage of the demand by raising the price of their goods. This is known as the law of supply, a direct relationship between the quantity and price of a product. 10. Because technology increases both demand and supply for a product, the equilibrium quantity will increase but the equilibrium price will likely stay the same. Equilibrium is the point where demand and supply intersect on a graph. 11. The responses to price and quantity changes are not the only things being affected by the introduction of technology, as business relationships and competition will also experience massive changes. 12. Artificial Intelligence and technology will shape the economic environment for competition, monopoly, consumer surplus, producer surplus, and deadweight loss. 13. Using advanced equipment and software will give any struggling business a fierce edge over its competitors. Competition is defined as two or more independent rivals trying to secure business by offering the best terms possible Therefore, the use of technology could be what sets one establishment above another if they both provide similar services. a. For example, if there were two local grocery stores within the same block, the one with the self-checkout machine would likely have better performance. Humans naturally enjoy having their errands done with as minimal hassles as possible, so if they are given the chance to save time by avoiding interaction, they will take it. Similarly, manufacturers that rely on machinery work a lot faster and sell a lot more than people offering hand-made goods. Businesses that do not use technological aid will be forced to charge higher prices for their goods to make up for the smaller clientele. 14. With that being said, no amount of inventions can help small businesses compete with monopolies, as the powerful will only gain mightier in the coming years. Monopolies are markets in which a single organization is responsible for producing and providing a good or service. Using Artificial Intelligence or automation would allow monopolies to work more efficiently and at lower costs, causing their products to be more readily available to consumers. 15. Consumer surplus is the difference between the maximum amount a consumer was willing to pay versus what they actually paid. a. Because computer mechanics and automation machinery are causing prices to drop, consumers are likely expecting to pay more for goods than the price that was charged. For instance, if Sophie comes from the countryside where all ice cream is homemade, she may be surprised to learn that a fast food joint is only charging a dollar per cone because it is made inside a metal machine. 16. On the other hand, producer surplus is the difference between the minimum amount the producer is expecting to receive and the amount they truly receive. a. Using the same example as before, the fast food joint barely spends a cent on artificial ingredients and labor but expects to cover the costs at the very least. While a dollar per ice cream may seem like a good deal to Sophie, it is more than enough for the company to make a profit. 17. Deadweight loss, also known as efficiency loss, is when consumer and producer surplus are both reduced due to an under allocation or overallocation of resources to the production of a good or service a. While technology undeniably improves efficiency, it is also highly dependent on who is using it and how. If a producer overestimates the demand for their merchandise, they may end up mass producing it and be left with too much stock. This affects companies that rely on automation as it is hard to what is a reasonable amount to take without putting in the manual labor to experience it. As a result, the good or service costs more than what the consumer is willing to pay, and the product goes on discount, going for less than what the supplier expected. Conclusion Type your script here Putting my essay here for reference First essay Impact of New Technology on a Market Economy A market economy exists within a country through a consumer and seller relationship that provides an interesting dynamic on the exchange of goods. This market economy has faced disruptions before but through new advancements in technology and our understanding of applying that technology, it has been heavily impacted. New technology such as Artificial Intelligence has altered the landscape of the market economy which in turn has created new economic factors for businesses to face, created a new approach for the invisible hand and supply and demand to change, and changed the way businesses react and how they should react. Through all of this, the market economy has prevailed in a new and interesting way that is important to study and learn in order to understand its new era. Businesses have relied on technological advancements to produce a more stable market economy in its selling of goods and services to consumers for a long time. Through an article published by Herzing University, it is already seen as an advantage to apply technology to businesses due to how it can improve communication between sellers and consumers, its ability to simplify information storage, and keep that information safe as well (Neddersen, 2021). This benefit to having technology be integrated has already impacted the market economy, but through newer technology such as artificial intelligence, a large change has been seen and its role going forward will cause businesses to face new economic factors that impact the selling of goods and consuming of goods as well. A large impact businesses are facing through the introduction of AI is labor. According to Kristalina Georgieva from the International Monetary Fund Blog, “In advanced economies, about 60 percent of jobs may be impacted by AI…which could lower labor demand, leading to lower wages and reduced hiring. In the most extreme cases, some of these jobs may disappear.” (Georgieva, 2024). This statistic of large scale AI impact within the job market shows the influence it’ll have on business, creating a new economic environment where the focus is shifted towards a reduced labor approach which would create a higher need to eliminate paying for labor in favor of AI generative models to handle the workload alone. This would impact the market economy especially in a way that dictates for consumers to also understand and be used to AI models handling their goods and services. The general public’s disdain for AI makes this a difficult switch for businesses to handle and integrate properly even at the benefit of cutting labor costs. The invisible hand is the self interests of consumers resulting in unseen changes to the free market economy. The role this possesses is to maximize profits through generating supply and demand which causes sales of goods or services. AI changes this understood aspect of the market economy through many different ways. Through AI, an invisible hand becomes a puppeteered hand, as described by an article from the International Association of Business Analytics Certification “The “Invisible Hand” emerges as these algorithms collectively influence market dynamics, such as liquidity, volatility, and price movements, often in ways that were not explicitly intended by their creators.” (Alagar, 2023). This shows how the market economy can be influenced by new technology such as AI and it can directly begin to produce changes that businesses aim for such as profitability. The article does however also point out the flaws in such an integration, stating concerns of an AI model manipulating the market and exploiting possible flaws in the economy for profit (Alagar, 2023). Overall, an impact on the invisible hand is visible, and businesses within a market economy can exploit or be exploited by such a sophisticated piece of technology being let loose. Supply and demand are a major part of a market economy and it is something that AI can and will impact. According to an article by Dr. Shaoshan Liu from the World Economic Forum, “As AI integrates into all facets of life, AI foundation models will emerge as the predominant driving forces on the supply side of the economy.” (Liu, 2024). Things such as market supply can be easily impacted by AI models and result in large changes to goods and services provided by sellers, whether it be helpful or harmful. Furthermore with supply and demand, through the power of AI, equilibrium within a market economy would also be impacted, as AI models could learn and anticipate consumer demand helping maintain a balance. Equilibrium quantity could be perfected through AI models, by predicting changes along and in the supply curve and help businesses appropriately create an equilibrium price as well. This however could negatively play into competition. Dr. Shaoshan Liu further states “This dominance of AI foundation models is further fortified by the exclusive access these companies have to extensive and ever-expanding datasets, essential for refining and advancing AI models.” (Liu, 2024). AI’s innate learning mechanism would cause a monopoly within a market economy, as whoever possesses exclusive data would possess the more accurate and capable AI model, undercutting many businesses and creating harsh competition over the general data they can gather. This would lead into the impact of AI within consumer and producer surplus, which could also be harmful. As stated by Daron Acemoglu in an article from MIT, “companies and platforms may collect and deploy excessive amounts of information about individuals, enabling them to capture more of the consumer surplus via price discrimination or violate their privacy in processing and using their data” (Acemoglu, 2021). This direct impact would be done through AI models basic principle of data gathering. A unseen benefit however to this impact on supply and demand and equilibrium, is that deadweight loss could be handled and even prevented with AI’s learning algorithms predicting all of these different aspects within a market economy. Through the onset of new technologies, businesses have had to adapt and react properly. This has resulted in new changes for businesses to incorporate into their models and services and goods, and has also changed how consumers view these businesses as well. A large way businesses have added AI models into their services, is through the use of chatbots. According to an article published by the Wharton University of Pennsylvania, “ From a business perspective, chatbots allow companies to streamline their customer service processes and free up employees’ time for issues that require more personalized attention.” (Wharton University of Pennsylvania, 2022). This usage of an AI model within a customer service aspect is one of the many ways businesses have adapted to AI to increase productivity through a learning model that can better assist the monotonous customer complaints and questions. Businesses have also reacted to this new input of AI by using its cybersecurity features to detect fraud. Further from the Wharton University of Pennsylvania, “there are tools available that identify suspicious transactions through the use of machine learning algorithms. When a fraud risk is detected, the application stops the transaction from going through and alerts the appropriate parties.” (Wharton University of Pennsylvania, 2022). This is an extremely beneficial use of AI into any business, as fraud runs rampant in the new technology age making it easier for safe and secure transactions. Through these adaptations of AI into businesses, they have reacted in a way that allows for integration and security to thrive. However, the rate of how much businesses are applying these uses into their processes are actually much more limited. According to Cory Breaux and Emin Dinlersoz in an article from Census.gov, “Only 3.8% of businesses reported using AI to produce goods and services.” (Breaux & Dinlersoz, 2023). This late 2023 study helps make clear the currently limited use of AI for goods and services in the market economy. This limited approach to using it is what businesses need to change in order to get an edge and also procure much better equilibrium, helping both them as sellers and the consumers. In conclusion, a market economy is a relationship between consumer and seller, over the exchange of goods and services, and new technologies impacting this market economy, such as AI, have seen profound effects. AI has created new economic factors for business to approach, changing an entire sector of businesses through labor. AI has also impacted the concept of the invisible hand, providing an almost manipulative way for it to be detected and even changed. It has also affected the concept of supply and demand and can and will have a part in directing and creating changes in that market. Lastly, AI has been implemented by businesses and its boosts to aspects of selling goods has been undeniably helpful, proving why businesses should react to its new capabilities by implementing it further into their processes. Overall, the impact of AI within a market economy is drastic and even harmful in some cases, but is an unstoppable change that will be seen to impact businesses and the free market economy in this new era. Second essay The Impact of Technological Advancements on the Market: Supply-Demand Dynamics and Market Challenges Introduction OpenAI has completed a deal that values the San Francisco artificial intelligence company at $80 billion or more, nearly tripling its valuation in less than 10 months, according to three people with knowledge of the deal(Cade, 2024). OpenAI’s product ChatGPT has been a hot topic of discussion for the past two years. Before you know it, AI is developing at a very fast pace. In the era of continuous development of new technologies. There have been breakthrough developments in technologies, especially artificial intelligence. The presence of these cross generational technologies has obviously changed the landscape of the market economy. As a result, the models and concepts of the traditional economy, including the “invisible hand”, equilibrium, competition and monopoly, have been tested under these new situations. In this article, we will inquire into the impact of new technologies on the market economy.Meanwhile, with a focus on the emerging economic environment that companies must deal with. In this article, we will explore how AI is changing the current market economy. From the perspective of supply and demand, the impact of emerging technologies, especially artificial intelligence, on the market economy is analyzed. For example, AI-driven efficiency gains may reduce production costs, shift the supply curve to the right, and may lower prices while increasing volumes. On the contrary, innovative products may create new demand. The demand curve may shift to the right and the equilibrium prices and volumes will increase. In order to deal with the new condition and market environment, business and policymakers need a deep understanding of the development of new technologies and the dynamics of the market. Challenges and Transformation in the AI-driven Market Economy With the development of new technologies, the fast development of artificial intelligence has had a great impact on the market economy. Also, the development of artificial intelligence has brought a new business environment to enterprises, but also brought different new challenges. First, the development of the AI industry has brought with it the challenge of increased competitive pressure. The rapid development of artificial intelligence has made many enterprises face fierce competitions.However, not all the enterprises can easily get use to the wide use of artificial intelligence. How to use artificial intelligence to increase efficiency. How to use artificial intelligence to reduce costs and improve the quality of product and service. These questions may help the company stand out from the competition. On the contrary, those companies that are unwilling to change their strategy, or are not suitable for the current large use of artificial intelligence, may be eliminated in this competition of new technology. Secondly, the AI industry has also brought about a lot of changes in terms of human resources. The demand for professional labor in the field of artificial intelligence is increasing, but the current supply is relatively insufficient. Companies need to attract and retain the best AI talent in a competitive market and invest resources in training existing employees to adapt to new technologies and market environments. The Impact of AI on Demand and Supply New technology has a significant impact on market economies, and it is particularly evident in market equilibrium. Market equilibrium is a point that refers to where supply and demand balance under the influence of price mechanisms. New technologies, especially artificial intelligence (AI), remake the supply and demand relationships in many industries. First of all, artificial intelligence has increased the supply capacity of the market by improving production efficiency and reducing costs from the supply side. New technology , especially AI, can increase the supply capacity of the market by improving production efficiency and reducing costs. AI technology has more prominent advantages than humans, AI can control costs, reduce errors and optimize supply chain management, which can help improve productivity. In the long run, with the development of technology and the expansion of application scale, production costs can be further reduced, and the supply of products and services will increase, pushing the market supply curve to the right. Second, on the demand side, AI stimulates consumer action by creating new products and services. The development of artificial intelligence has made personalized services possible, and novel products and services have attracted the interest of consumers and increased the demand for artificial intelligence in the market. For example, smart furniture and health testing are all new markets and new needs directly created by AI technology. The emergence of this new demand has pushed the market demand curve to the right. In the long run, the market can find a new equilibrium by adapting to new changes. Job Displacement and Data Privacy Concern As the impact of emerging technologies on the market continues to expand, we need to look beyond the huge benefits that emerging technologies and artificial intelligence (AI) can bring to us. The vigorous development of the artificial intelligence industry will inevitably bring some negative impacts. In addition to increasing productivity, generative AI can create job displacement in the labor market (Zarifhonarvar, 2023). The spread of artificial intelligence and automation technology may lead to the reduction of traditional jobs, such as production line recognition, customer service and other industries. Such a change could result in a large number of job losses or job changes, especially for unskilled and less educated workers, who will face the challenge of being laid off. A new division of labor between humans and algorithms is likely to reshape the labor market in the coming years. Some jobs that are originally carried out by humans may become redundant, and hence, workers may lose their jobs and be replaced by algorithms (Pavlik, 2023). There are also significant security risks in terms of data privacy. AI systems require large amounts of data to train and learn, which may involve the collection and use of personal privacy. If this data is not properly handled and used, then there is a high risk of information leakage. Take ChatGPT as an example, In the development stage of ChatGPT, a huge amount of personal and private data was used to train it, which threatens privacy (Siau & Wang,2020). New Technology and Market Monopolies There is a strong link between the development of emerging industries, especially in the field of artificial intelligence, and monopolies. Monopoly refers to the monopoly position of an enterprise or a small number of enterprises in a specific market, which can affect the operation of the market and the competitive pattern by means of price control, production and market access. In the field of artificial intelligence, technical barriers are often the reason for the formation of monopolies. Companies with advanced technology can often maintain a long-term competitive advantage in the market. Monopolies typically invest more resources in English R&D and innovation to maintain a competitive edge. Of course, the rise of the artificial intelligence industry still has some positive effects on anti-monopoly. The rapid development of artificial intelligence has injected new competitive forces into the market, prompting traditional monopolies to continuously innovate and optimize technology to maintain a competitive advantage. Emerging enterprises, like Open AI and Figure, will also continue to update their technology rapidly, increasing the competitive pressure on traditional monopolies, thus helping to break the monopoly situation in the market system. Conclusion As new technologies, especially artificial intelligence, is continuously developing, Adam Smith’s concept of the “invisible hand” shows the possibility and the powerful ability of the market it’s modulating. But it also points out the importance of the active participation and adaptation of policymakers and all sectors of society. With the rapid development of artificial intelligence, big data and automation technology, the market economy is facing unpredictable challenges and opportunities. These changes have not only boosted productivity and the presence of new industries, but also raised deep concerns about the labor market, personal privacy, and data security. It is particularly important to strengthen the understanding of market mechanisms and appropriate policy interventions. The governments and regulators should not only play a role in regulators but also to take a role of facilitators. The goal is to create a market environment that stimulates innovation and competition while ensuring inclusiveness and fairness. This requires a comprehensive policy framework which includes improving the resilience of the workforce, investing in basic research and development to support long-term innovation, and transparent and fair regulatory measures to protect the interests of consumers. All in all, although the “invisible hand” plays a fundamental role in guiding the effective allocation of market resources, in today’s rapid technological progress and changing economic environment, its role needs to be further optimized under a broader social, political and the “skeleton” of economics. New technologies, especially artificial intelligence, need to make the most of their role in the market. Third essay Paper Assignment (Topic #1) People often attribute the discovery of fire to being the beginning of rapid human development. Since then, mankind has evolved past inventing and innovating for survival, and are now focusing on ways to make life more efficient. As proven in the past few decades, many businesses use enhanced technology to achieve maximum productivity. Whereas people had to work long, monotonous hours repeating the same motions before, there are now devices that allow them to focus on more complex tasks instead. With technological advancements, such as Artificial intelligence (AI) and automation, a lot more can be accomplished with a lot less effort, time, and money. For that same reason, this can act as a double-edged sword to the economy as laborers are laid off and a lack of job opportunities is generated. As people begin to be affected by the new economic conditions, business operations, management, and consumerism will similarly experience drastic changes. Technology will have both beneficial and detrimental effects on the market economy, as well as change the status of various key features that are fundamental to the business world. Although technology is still relatively new, economists believe that there are many advantages businesses will gain from implementing it wisely. Jessica Elliot, a journalist and business consultant, wrote an article detailing how organizations will be able to achieve optimal outcomes through the use of Artificial intelligence. Beyond automating repetitive tasks, technology also has the capabilities of “Communicating with customers, managing accounting and budgets, scheduling and data entry, and converting leads to sales” (Elliot, 2024). Thus, technology can adequately assist in areas in which business owners may fall short, either through flawed technicalities or inexperience. Proprietors who choose to utilize modern software often find that they can manage their time more efficiently and work on things that require a human mind. As such, tasks around the company or organization are often completed faster and with fewer manual issues than they would have normally been. For instance, if a general physician opened up an independent clinic, they may not have the time to balance treating their patients, examining the medical results, scheduling appointments, and fulfilling other necessary tasks to keep the operation running. With so much to do in such a limited amount of time, the doctor should sort out their priorities and rely on technology that takes a portion of the workload off them. They could use a program that automates responses and presents available time slots, saving time and energy for both the doctor and their patients. Additionally, human error is natural and expected, but technology is less likely to malfunction by keeping organized records of data. With fewer duties to worry about, the doctor can get more done in the day, such as going from two patients a day to three or four. Relying on machinery has also boosted the economy from a sales and revenue standpoint. Ethan Ilzetzki and Suryaansh Jain, researchers at the London School Of Economics And Political Science, wrote an article describing how Artificial Intelligence will impact global economic growth and unemployment. The authors refer to a survey conducted by CfM-CEPR in which panel members were asked “to forecast the impact of AI on global economic growth over the upcoming decade” (Ilzetzki & Jain, 2023). The following graph depicts the experts’ responses based on their self-assed confidence: As shown in the figure, a majority of the panelists believed that modern technology would increase the output and activity of the economic world. With Artificial Intelligence and automation taking over tasks that previously required human labor and knowledge, companies can produce greater results in less time and in a more cost-efficient manner. Thus, proprietors should rely on technology when they can because it would reduce the number of responsibilities while the employees focus on more significant matters. Although employing technology seems to be efficient in theory, it is more problematic than it seems when it is put into practice. While technological advancements were designed with the idea of improvement in mind, some unintentional drawbacks must be dealt with. Author Rebecca Stropoli addresses prominent criticisms regarding advanced computer science and the subsequent potential loss of career opportunities. The writer shares that the World Economic Forum predicts “that by 2025, 85 million jobs across the globe could be displaced due to a division of labor between humans and machines” (Stropoli, 2023). Automation and other technological machines are so beneficial to the economy that employers do not even have to search for human laborers anymore. While this could easily throw the entire world into disarray, the fact is that technology is still a new concept and cannot be fully relied upon quite yet. Instead of firing workers and replacing them with soulless machines, managers could have the employees work alongside the advanced technology. Both the humans and the devices can learn from one another, as neither are entirely flawless. The technology may come across situations it was not programmed to deal with and humans can rely on machines to refine their work. Not only does embracing technology prevent job losses, but it also opens up new positions that involve working with and honing the equipment. Everyone has a different stance on the benefits and drawbacks of Artificial Intelligence, however, it is undeniable that differences will be made in the state of the economy. The role of the invisible hand as well as the status of supply, demand, and equilibrium will change under the new conditions of technology. As mentioned previously, automation can and should act as a complement to human efforts to make production and workload management more efficient. In a competitive market, people will naturally seek out options that best suit their interests, changing the economic activity around them. This theory is known as an “invisible hand”, or as the Microeconomics textbook phrases it, an attempt to pursue one’s interests that unintentionally promotes the interest of society (McConnell et al., 2021, p. 34). In the context of the continuously evolving economy, entrepreneurs rely on Artificial Intelligence and automation to minimize their costs while maximizing their revenue. Because the improvements significantly reduce production costs, businesses can sell their goods and services for cheaper prices and in higher quantities. As a result of the price decrease, the product becomes more desirable and accessible to everyday consumers. This behavior aligns with the law of demand which states that demand will increase when the price of a good decreases, and vice versa. Although the proprietors were initially utilizing technology for production efficiency, the invisible hand guides consumers to those products because it is more favorable to them as well. Sellers will then analyze their sales, increase their supplies to meet the demand of the market, and cleverly take advantage of the demand by raising the price of their goods. This is known as the law of supply, a direct relationship between the quantity and price of a product. Because technology increases both demand and supply for a product, the equilibrium quantity will increase but the equilibrium price will likely stay the same. Equilibrium is the point where demand and supply intersect on a graph. The responses to price and quantity changes are not the only things being affected by the introduction of technology, as business relationships and competition will also experience massive changes. Artificial Intelligence and technology will shape the economic environment for competition, monopoly, consumer surplus, producer surplus, and deadweight loss. Using advanced equipment and software will give any struggling business a fierce edge over its competitors. Competition is defined as two or more independent rivals trying to secure business by offering the best terms possible (McConnell et al., 2021, p. 28). Therefore, the use of technology could be what sets one establishment above another if they both provide similar services. For example, if there were two local grocery stores within the same block, the one with the self-checkout machine would likely have better performance. Humans naturally enjoy having their errands done with as minimal hassles as possible, so if they are given the chance to save time by avoiding interaction, they will take it. Similarly, manufacturers that rely on machinery work a lot faster and sell a lot more than people offering hand-made goods. Businesses that do not use technological aid will be forced to charge higher prices for their goods to make up for the smaller clientele. With that being said, no amount of inventions can help small businesses compete with monopolies, as the powerful will only gain mightier in the coming years. Monopolies are markets in which a single organization is responsible for producing and providing a good or service. Using Artificial Intelligence or automation would allow monopolies to work more efficiently and at lower costs, causing their products to be more readily available to consumers. Consumer surplus is the difference between the maximum amount a consumer was willing to pay versus what they actually paid (McConnell et al., 2021, p. 75). Because computer mechanics and automation machinery are causing prices to drop, consumers are likely expecting to pay more for goods than the price that was charged. For instance, if Sophie comes from the countryside where all ice cream is homemade, she may be surprised to learn that a fast food joint is only charging a dollar per cone because it is made inside a metal machine. On the other hand, producer surplus is the difference between the minimum amount the producer is expecting to receive and the amount they truly receive (McConnell et al., 2021, p. 76-77). Using the same example as before, the fast food joint barely spends a cent on artificial ingredients and labor but expects to cover the costs at the very least. While a dollar per ice cream may seem like a good deal to Sophie, it is more than enough for the company to make a profit. Deadweight loss, also known as efficiency loss, is when consumer and producer surplus are both reduced due to an underallocation or overallocation of resources to the production of a good or service (McConnell et al., 2021, p. 76-77). While technology undeniably improves efficiency, it is also highly dependent on who is using it and how. If a producer overestimates the demand for their merchandise, they may end up mass producing it and be left with too much stock. This affects companies that rely on automation as it is hard to what is a reasonable amount to take without putting in the manual labor to experience it. As a result, the good or service costs more than what the consumer is willing to pay, and the product goes on discount, going for less than what the supplier expected. In conclusion, new technology will impact the the business world in both positive and negative ways, and change the complexities within the economic environment. Artificial intelligence and automation can be crucial to an organization as they can reduce responsibilities and allow the user to focus on meaningful work. Businesses should use technology in areas that would improve their quality of work and allow them to manage their time more efficiently. Despite this, people still worry that technology may be too effective and there will not be any open positions left for them. However, they fail to consider that they can work alongside machines rather than against them, as both humans and programs have a lot to learn from one another. The invisible hand will shift the tides of the economy as producers employing technology will produce more at a lower cost, causing consumer demand to increase. To meet the demands, the seller will increase the supply and the price of the good or service. This in turn leads to the equilibrium quantity increasing but the price staying relatively the same. Companies that utilize machinery and programs efficiently will notice a competitive edge other establishments and monopolies will be able to produce more. The consumer surplus would increase because goods are becoming more readily available at cheaper prices. Producer surplus would also increase because they are charging more than the automation costs them. However, if sellers are not wise about their financial decisions and resource allocation, it could easily result in a deadweight loss. In this case, the customer is not willing to pay for the price being offered, nor is the producer receiving the profits they hoped for despite the technology usage. Technology is a multifaceted work in progress that has tremendous capabilities to turn the economic world on its head, for better or for worse. Just as when humans discovered fire for the first time, humankind will only be seeing References Elliott, J. (2024, January 19). Benefits of Artificial Intelligence (AI) in business. US Chamber. https://www.uschamber.com/co/run/technology/how-ai-benefits-businesses#:~:text=AI% 20and%20ML%20make%20business%20software%20smarter%20and%20quicker&text =The%20most%20common%20use%20cases,efficiency%20while%20improving%20clie nt%20experiences. Ilzetzki, E., & Jain, S. (2023, June 20). The impact of artificial intelligence on Growth and employment. CEPR. https://cepr.org/voxeu/columns/impact-artificial-intelligencegrowth-and-employment McConnell, C., Brue, S., & Flynn, S. (2021). Microeconomics (21st ed.). New York: McGraw-Hill Education. Stropoli, R. (2023, November 14). A.I. is going to disrupt the labor market. it doesn’t have to destroy it. The University of Chicago Booth School of Business. https://www.chicago booth.edu/review/ai-is-going-disrupt-labor-market-it-doesnt-have-destroy-it Forth essay Micro Economic Question Modern businesses have transitioned from monetary transactions to complex entities that are founded on detailed and futuristic strategic plans, which include business sustainability initiatives. The transition is occasioned by the ever-evolving business environment, especially in response to technological advancements and innovation. The following discussion assesses the role of new technology AI, on the market economy and the resultant business environment and the influence of the invisible hand. Impacts of Technology on the Market Economy Artificial intelligence (AI) implies a diverse collection of technologies related to computer software that can complete human-like activities such as planning, problem-solving, and learning. They mimic human intelligence but tap into complex databases and data analysis algorithms to complete specific tasks. AI is founded on deep learning, machine learning, and algorithms for processing data to generate responses to the issued commands by humans or other computer systems (Perifanis & Kitsios, 2023). AI has been a disruptive technology that continues to shape many business environments. One of the ways that AI disrupts the business environment is through data analysis and decision-making. This milestone is possible through the support of systems like decision support systems that allow businesses to make evidence- based decisions through the processing of complex and huge databases (Green, 2024). AI can help identify patterns, and trends in such databases within a short time to give simple and furnished conclusions, an achievement that would otherwise be impossible with only human analytics capabilities. This application has widely been applicable in many industries, particularly in the financial sector. For example, companies like Schroders and JP Morgan are already using AI to complete activities like market data analysis and monitoring trades. JP Morgan continues to integrate AI as part of its strategic plan in the development of new products, supporting customer engagement (using Chatbots), risk management, and improvement of productivity. Since this institution is among the market leaders in financial services, it is expected that other industry players might follow this direction and craft their competitive advantages around AI. The increased artificial intelligence is creating a business environment of smaller and highly specialized workforces since its ability to mimic human intelligence phases out repetitive and non-routine cognitive tasks (Gonzales, 2023). For example, making evidence-based decisions for a business would traditionally require the support of data collectors, data analysts, various division managers, or heads of departments and consultants, and the entire process would take significant time and company resources. With AI technologies like a decision support system, a single manager can analyze the information and come up with actionable decisions that are based on evidence within a short time. For example, United Parcel Services Inc. recently laid off an undisclosed number of staff largely after integrating AI into its operations. One of the areas cited was in sales and marketing since staff could use machine learning to write proposals without the support of consultants and experts (Constantz, 2024). BlackRoch Inc. also announced early in January this year that laying off about 600 employees was complete partly due to automation as a cost-cutting strategy and it is estimated that about U.S. companies alone have laid off about 4600 job cuts since May last year purposely to free up resources for hiring and retaining staff whose duties would otherwise be completed through AI (Constantz, 2024). These trends place AI as a blessing in disguise in business due to the risks of the technology replacing human labor in some tasks. New Business Environment Increased adoption of technology is creating new business environments characterized by increased productivity and lower production and operational costs. For example, many AI technologies facilitate increased productivity and efficiency by streamlining workflows, automating repetitive jobs, reducing lead time, and minimizing human resource costs. As evidenced by ongoing downsizing in many businesses, automation is also creating a new business environment with a small highly specialized workforce (Desjardine et al., 2023) The process speeds up the tasks that need the collection, analysis, and processing of information such as customer services, payroll, recruitment, management of employees’ records and overall administrative duties. This disruptive business environment calls for businesses to embrace digital strategy as part of their future strategic plan. Such a plan should be anchored on business core values and operations as part of their competitive advantages to remain afloat in the business (Gonzales, 2023). The strategies should include elaborate plans for integrating necessary infrastructure, capacity building on existing staff to bridge skill gaps and data collection plans, analysis, management and utilization to support business goals. The Invisible Hand The law of the invisible hand is founded on the assumption that the free market is a selfregulating system, where the market forces (demand and supply) interact to influence quantities and prices. This implies that markets can optimally allocate resources and produce optimal results for society at large through competition, a condition identified as a price mechanism (Huhta, 2020). The market finds equilibrium without interventions that would influence the unnatural patterns. The below graph demonstrates the invisible hand in action. At price P1 market would demand fewer goods due to the high price and firms would be encouraged to supply more quantities in Q3 to make the maximum profit from the market. With a drop in price at P2, firms would lack incentives for supplying into the market and the quantity supplied would equally drop to Q1 forming a new and a lower equilibrium P2Q1. Source (Pettinger, 2018) Based on the invisible hand theory, entities compete perfectly in the market. Each faces the pressure to produce high-quality goods and services at the least cost possible to reap the maximum profits by benefiting consumers the most (Desjardine et al., 2023). The competition that arises from pursuing self-interest for firms in the market results in better products, improved efficiency and innovations that continuously support the invisible hand. The precepts of the invisible hand are applicable in a perfectly competitive market, this means that monopoly stifles these dynamics since this market structure minimizes welfare by disrupting forces of market forces leading to destabilized or artificially influenced equilibrium. Through the invisible hand, firms can increase the prices of goods and services to realize excess consumer surplus. This condition is possible due to the existence of more consumers than producers giving firms widows for upward price adjustments and inceptive for increased supply. Similarly, it positively influences producer surplus through techniques like innovation and economies of scale that allow some firms to produce at a lower cost than competitors (Huhta, 2020). At equilibrium prices, where all firms are selling at the same price, those with lower production costs can realize higher producer surpluses. Deadweight loss implies the cost that society shoulders from market inefficiencies, arising when supply and demand are not at equilibrium. An example of a common deadweight loss is pollution, which is a negative externality. The invisible hand might result in pollution, which firms in a perfectly competitive market might not consider a significant concern as they focus on lower production costs and higher prices. Conclusion The AI is among the most disruptive technologies in business today. Many firms that have embraced this technology have been driven by cost-reduction strategies and efficiency in their operations. However, in most cases, AI integration comes with the risk of downsizing. Perfectly competitive markets are influenced by invisible hands, the market forces that interact to create natural equilibrium.

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