Malabar Gold and diamond company ECONOMICS REPORT

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Malabar Gold and diamond company ECONOMICS REPORT

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Question 1

The name of the company is Malabar Gold and diamond and the branch which the students (in a group of 5) had visited has been in operation since the last couple of years located near ruwais mall near to their college. The company has 5 branches in UAE. It is famous for its jewelry making and watches made of precious items like Gold, Platinum and other gems. The company has been operational since the last 6 years and currently has an annual turnover of $3.5 billion (Heyne, Boettke, Prychitko, 2014).The company has also established 10 additional whole sale units apart from the offices, design centers and the factories. The target customers of the company is every range and it maintains a unique collection for every individual regardless of age. The majority of the ornaments available at their restaurants ranges from 18,000 to 22,000 making it relatively easy for the average customer to have access to it hence quadrupling the sales.

Question 2

The law of demand is a very common law that prevails in every industry. It simply states that the price of the product will fall if the quantity demanded decreases and vice versa. In the context of this company, the primary products of the company are gold and diamonds but it is an interesting fact that the price of the gold ornaments are less than the diamond ornaments at present (Heyne, Boettke, Prychitko, 2014). The recent fluctuations have caused the increase in the gold price hence the demand should have been decreased. However, in the case of this company this is not the case. It is evident from their financial structure that they have introduced two schemes by the name of Malabar monthly scheme and the wedding purchase scheme. The primary reason for the introduction of such schemes is that the company allows you to invest for a period ranging from 3 months to three years with three or thirty six installments respectively. These schemes have the embedded option available which allows you to lock in the gold rate which was at the initiation of the time of installments. In a country like India, where women are highly attracted to it and follows the traditional custom of wearing it at different occasions. Gold is also considered as a good investment as majority of the people do invest in gold or companies who are in the business of mining gold in order to earn superior returns than the market.

The above mentioned facts have allowed the demand of the gold to rise even if the prices are rising. This is a violation of the law of demand but it can be termed as capturing of the niche market which has allowed the expensive metals like gold and diamonds within the grasp of a common man who would have only thought to give gold to his daughter at the time of his marriage.

Question 3

On the contrary, scarcity is the primary economic problem which implies that there are unlimited wants existing in the human world and there are very few resources to satisfy it. In other terms, the concept of scarcity can be stated as there are limited resources for the satisfaction of unlimited human wants. In the context of the above mentioned definition, it is evident that to obtain something one has to give up or trade off something. The price of the good involved in this matter reflects the scarcity of this good (Mankiw, 2007).

When we discuss the company Malabar gold and diamond, it can be seen that the element of scarcity is prevailing in the society as the people intends to purchase more and more gold, they have to quit some of their wants or have to make a sacrifice to obtain the gold. The concept of scarcity is vital to survive in the real world because it results in the arousal of competition which subsequently results in people striving with each other in order to qualify for the criteria which will be used to determine who will be able to get the most. The system of pricing in the community is responsible for allocation of the resources (Mankiw, 2007). If the society tends to make economic improvements on the monetary terms basis then people will work hard to get monetary benefits. Gold and diamond ornaments is a want which will be satisfied as people will be more oriented towards savings that will help them to earn gold. The company pricing policy has resulted in such circumstances that the price gap has been greatly reduced hence the concept of scarcity of resources is easily being met. The branch has a lot of products hence the reason at why the client prefer to do business with the main branch.

References

https://www.malabargoldanddiamonds.com

Heyne, Paul; Boettke, Peter J.; Prychitko, David L. (2014). The Economic Way of Thinking (13th ed.). Pearson.  HYPERLINK “http://en.wikipedia.org/wiki/International_Standard_Book_Number” o “International Standard Book Number” ISBN  HYPERLINK “http://en.wikipedia.org/wiki/Special:BookSources/978-0-13-299129-2” o “Special:BookSources/978-0-13-299129-2” 978-0-13-299129-2.

Mankiw, G (2007). Principles of Economics. South-Western Cengage Learning. p. 470.  HYPERLINK “http://en.wikipedia.org/wiki/International_Standard_Book_Number” o “International Standard Book Number” ISBN  HYPERLINK “http://en.wikipedia.org/wiki/Special:BookSources/978-0-324-22472-6” o “Special:BookSources/978-0-324-22472-6” 978-0-324-22472-6.