Microeconomics Q&a

In: Business and Management

Submitted By casieangela
Words 341
Pages 2
Name : Casie Angela Thanos
SIN :
Subject : Microeconomics

1. Competitive market is a market in which there are many buyer and sellers so that each has a negligible impact on the market price. Perfectly competitive market: monopoly, oligopoly, monopolistic 2. Many things determine the quantity demanded at only goods but there’s one determinant plays a central role the price of the goods 3. – Substitution effect: when the price at a commodity falls, it becomes relatively cheaper than other substitute commodities. * Income effect: when the price of a commodity falls, the consumer can buy more quantity of the commodity with big given income. * Number of consumers: when price of a commodity is relatively high, only few consumers willing to buy more. 4. Yes, it does. Whether those are a change in consumers tastes or a change in price, there are many variables that can shift the demand curve 5. Spinach is an inferior good. If the demand for a good raises, when income falls, the good is called an inferior good. 6. Many things determine the quantity demanded of any good but there’s one determinant plays a central role the price of the goods. 7. Supply schedule is a table that shows the relationship between the price of a good and quantity supplied. 8. Yes, change in producer’s technology lead to a movement along the supply curve because technology reduced the firm’s cost. So the advance in technology raised the supply of ice cream. Yes, because when the price of one or more those inputs, producing goods is less profitable and firms supply less goods. 9. When the price of coffee rises, the demand of toast is decreased. The forces that can more a market toward its equilibrium, quantity supplied, quantity demand, and price 10. When the price of coffee rises * The supply of toast increases * The demand of toast…...

Similar Documents

Microeconomics

...cross-section data to estimate income elasticity as a check on the estimate obtained in (1) and to be combined with the time series data to improve our estimate of price elasticity. Note that this demand analysis deals with the quantity of health services demanded and not the health conditions as measured for example by the death rate or life expectancy of the population in relation to income or the distribution of income, a subject discussed in Deaton (2003), among others. Time series data on quantity of health services Q, GDP, a price index pr of health care, consumer price index and population are given in Table 2. Table 2 Time-Series Data on Aggregate Demand for Health Care |Year |Consumer |GDP |Price index of |Quantity of health |Population(10 | | |Price Index |Nominal (100 |healthcare |services |thousand) | | | |million) |pr |Q= exp/pr | | |1995 |3.028 |58478.1 |1.000 |2257.8 |121121 | |1996 |3.279 |67884.6 |1.124 |2542.0 |122389 | |1997 |3.371 |74462.6 |1.381 |2451.0 |123626 | |1998 |3.344 |78345.2 |1.619 |2085.5 |124761 | |1999 |3.297 ......

Words: 9017 - Pages: 37

Microeconomics

... N O W ! w .d o c u -tr a c k w o .d o c u -tr a c k .c .c PART II INTRODUCTION: MARKETS AND PRICES CHAPTER 1 PRELIMINARIES TEACHING NOTES Chapter 1 covers basic concepts students first saw in their introductory course but could bear some repeating. Since most students will not have read this chapter before the first class, it is a good time to get them talking about some of the concepts presented. You might start by asking for a definition of economics. Make sure to emphasize scarcity and trade-offs. Remind students that the objective of economics is to explain observed phenomena and predict behavior of consumers and firms as economic conditions change. Ask about the differences (and similarities) between microeconomics and macroeconomics and the difference between positive and normative analysis. Review the concept of a market and the role prices play in allocating resources. Discussions of economic theories and models may be a bit abstract at this point in the course, but you can lay the groundwork for a deeper discussion that might take place when you cover consumer behavior in Chapter 3. Section 1.3 considers real and nominal prices. Given the reliance on dollar prices in the economy, students must understand the difference between real and nominal prices and how to compute real prices. Most students know about the Consumer Price Index, so you might also mention other price indexes such as the Producer Price Index and the Personal Consumption......

Words: 176662 - Pages: 707

Microeconomics

...Microeconomics Bryan K Hairston AIU Online Abstract My task is to compare and contrast the economic system of Michelle and James who live in as isolated region. Upon further investigation, I will explain the advantages and disadvantages of raising chicken and potatoes in this region. Microeconomics What’s Michelle’s opportunity cost of producing potatoes? Michelle has the opportunity cost of producing 50/200 = ¼ of a chicken, so the opportunity cost for Michelle is ¼ of a chicken. What is Michelle’s opportunity cost of producing chickens? Michelle has the opportunity cost of producing 200/50 = 4lbs of potatoes for every one chicken, so the opportunity cost for Michelle is 4lbs of potatoes. What is James’s opportunity cost for producing potatoes? James has the opportunity cost of 40/80 = ½ chicken per pound of potatoes, so the opportunity cost for James is ½ of a chicken. What is James’s opportunity cost of producing chickens? James has the opportunity cost of producing 2lbs of potatoes for every one chicken, so the opportunity cost for James is 80/40 = 2lbs of potatoes. Which person has absolute advantage in which activities? I think Michelle has the absolute advantage in both activities. She is able to make more chickens and potatoes than James can with the same resources. Which person has the comparative advantage in potatoes? James has the comparative advantage in potatoes. Which person has the comparative advantage in chickens? Michelle has the......

Words: 406 - Pages: 2

Microeconomic

...the number of driver deaths and an increase in the number of pedestrian deaths. Peltzman’s analysis of auto safety is an example of the general principle that people respond to incentives. Many incentives that economists study are more straightforward than those of the auto-safety laws. No one is surprised that people drive smaller cars in Europe, where gasoline taxes are high, than in the United States, where gasoline taxes are low. Yet, as the seat belt example shows, policies can have effects that are not obvious in advance. When analyzing any policy, we must consider not only the direct effects but also the indirect effects that work through incentives. If the policy changes incentives, it will cause people to alter their behavior. Q U I C K Q U I Z : List and briefly explain the four principles of individual decisionmaking. HOW PEOPLE INTERACT The first four principles discussed how individuals make decisions. As we go about our lives, many of our decisions affect not only ourselves but other people as well. The next three principles concern how people interact with one another. PRINCIPLE #5: TRADE CAN MAKE EVERYONE BETTER OFF You have probably heard on the news that the Japanese are our competitors in the world economy. In some ways, this is true, for American and Japanese firms do produce many of the same goods. Ford and Toyota compete for the same customers in the market for automobiles. Compaq and Toshiba compete for the same customers in the market for......

Words: 235775 - Pages: 944

Microeconomic

...entry which may limit the number of firms in an industry and ensure only one existence of monopoly, and thus reduce competition (Arnold, 2006). For such understandings about market structures defined in the microeconomics, coffee bun belongs to monopolistic market. In this market, there are a lot of coffee bun producers such as PaPa Roti, Roti Mama, Roti Mum, Baker’s Boy, Mr. Bun and all sorts of bun shops all over the places. The price is set up differently from difference producers. For example, Roti boy is at RM 1.8; while coffee bun in Tesco is at RM 1. However, the product is homogenous and the producers compete with each other to the same amount of consumers. The ingredient to make the coffee bun can be easily accessed from every supplier. And one more, no firm in this industry has a power to prevent the entry and exit of the newcomers or existing firms from exiting or entering the market. 2. Reasons for withdrawing from Singapore RotiBoy has entered Singapore since 2004. It used to be a fad of new buns which many consumers are willing to queue up to get one bun. However, it is slowly fad away and now RotiBoy chose to withdraw from Singapore. The question rises why RotiBoy fails to operate in Singapore. Let’s go to explore the reason in terms of microeconomics. 3.1 Tastes and preferences Tastes and preferences of consumers have a direct impact on the quantity demanded (Sloman, 2003). Tastes and preferences are individual’s attitude towards goods and......

Words: 3010 - Pages: 13

Microeconomics

...PLAGIARISM POLICY”. Course: Introduction to Micro Economics (801) Semester: Autumn, 2010 Total Marks: 100 Level: M.Sc Economics Pass Marks: 40 ASSIGNMENT No. 1 (Units 1–5) Q.1 How is the Microeconomics different from macroeconomics? Discuss also the subject matter of microeconomics in detail. (20) Q.2 Compare the consumer behavior under Cardinalist and Ordinalist school of thought. (20) Q.3 What is meant by elastic demand and inelastic demand? Write the formulas for point elasticity and arc- elasticity. How can elasticity at a point along a linear demand curve can be determined by inspection? (20) Q.4 Explain long-run laws of return to scale in detail. (20) Q.5 Explain the statement “that the shape of cost curve plays an important role in decision making”. (20) ASSIGNMENT No. 2 (Units 6–9) Total Marks: 100 Pass Marks: 40 Q.1 Explain short run and long run equilibrium of a firm in a perfect competitive market? (20) Q.2 How price discrimination exists and which are the necessary conditions, must be fulfilled for its implementation? (20) Q.3 Determine the equilibrium price and output when a monopolist produces a homogenous product in different plants. (20) Q.4 Analyze the Sweezy and Chamberlin’s solution of stability in oligopoly market. (20) Q.5 Write notes on the followings. a) Collusive oligopoly b) Monopolistic Competition (10+10)...

Words: 284 - Pages: 2

Microeconomics

...Applied Topic #1 Corey Ferrell Principles of Micro-Economics Instructor: James Pirner This paper was prepared by Corey Ferrell for Principles of Microeconomics, ECON 212, on July 28, 2014 Applied Topic: Apple IPhones I have chosen to make my product of interest the Apple IPhone. Smartphones have invaded and replaced many devices, items and functions that required more than the use of these small renowned devices. Smartphones have supplanted several items: Books (Kindle, iBook), daily newspapers, digital and film cameras, dictionaries, scanners, GPS, road maps, voice recorders, grocery list, iPods, radios, etc. and this list is forecasted to continue to grow as smartphones are developed to include more. This will include items such as: loyalty cards, credit and debit cards. (MIT Technology Review) In 2012, 80% of humans own a mobile phone states Anson Alexander, creator of ansonalex.com, and 91.4 million smartphones used in the United States. Even though 5.1 billion mobile were said to be owned in the world, that 1.08 billion are Smartphones. The market share in 2012 involved 4 major competitors: IPhone, Android, Microsoft and Samsung, and all four have a large audience with the 24-30 age group. 2013 showed only an increase in the Smartphone appetite. I will be focusing on the Apple’s IPhone, due to its strong presence in the market along with a nearly market stealing uniqueness. One factor in the number of IPhones sold per year is the idea that demand was so......

Words: 821 - Pages: 4

Microeconomics

...Microeconomics (PGP – I) Answer Keys for Problem Set IV 1. In 1996, US Congress raised the minimum wage from $4.25 per hour to $5.15 per hour, and then raised it again in 2007. Some people suggested that a government subsidy could help employers finance the higher wage. Suppose the supply of low-skilled labor is given by LS = 10w, where L is the quantity of low-skilled labor (in millions of persons employed each year), and w is the wage rate (in dollars per hour). The demand for labor is given by LD = 80 – 10w. (a) What will be the free-market wage rate and employment level? Suppose the government sets a minimum wage of $5 per hour. How many people would then be employed? (b) Suppose that instead of a minimum wage, the government pays a subsidy of $1 per hour for each employee. What will the total level of employment be now? What will the equilibrium wage rate be? Answer. (a) In a free-market equilibrium, LS = LD. Solving yields w = $4 and LS = LD = 40. If the minimum wage is $5, then LS = 50 and LD = 30. The number of people employed will be given by the labor demand, so employers will hire only 30 million workers. w S 8 LS 5 4 LD 30 40 50 80 L 1 (b) Let ws denote the wage received by the sellers (i.e., the employees), and wb the wage paid by the buyers (the firms). The new equilibrium occurs where the vertical difference between the supply and demand curves is $1 (the amount of the subsidy). This point can be found where LD (wb) = LS (ws), and ws – wb...

Words: 3259 - Pages: 14

Microeconomics

...Microeconomics * Elasticity * Price Elasticity of Demand * a measure of the responsiveness of quantity demanded to changes in price * addresses the percentage change in quantity demanded for a given percentage change in price * Coefficient of price elasticity of demand (E sub d) = Percentage Change in Quantity Demanded/ Percentage change in price * From Perfectly Elastic to Perfectly Inelastic Demand * Ed > 1 = Elastic * Ed <1 = Inelastic * Ed = 1 = Unit Elastic * Ed = Infinity = Perfectly Elastic * Ed = 0 = Perfectly Inelastic * Elastic Demand and Inelastic Demand * Elastic Demand: If the numerator (percentage change in quantity demanded) is greater than the denominator (percentage change in price), the elasticity coefficient is greater than 1 and demand is elastic * Inelastic Demand: If the numerator (percentage change in quantity demanded) is less than the denominator (percentage change in price), the elasticity coefficient is less than 1 and demand is inelastic * Unit Elastic Demand and Perfectly Elastic Demand * Unit Elastic Demand: If the numerator (percentage change in quantity demanded) equals the denominator (percentage change in price), the elasticity coefficient is 1 * Perfectly Elastic Demand: If quantity demanded is extremely responsive to changes in price, the result is perfectly elastic demand * Perfectly Inelastic Demand * Perfectly......

Words: 1060 - Pages: 5

Microeconomics

...FRAMINGHAM STATE COLLEGE PRINCIPLES OF MICROECONOMICS PROBLEM SET NUMBER 2 My Name is? ________________________________________ Text Chapter 2: Page 34 3. Draw a circular-flow diagram. Identify the parts of the model that Correspond to the flow of goods and services and the flow of dollars for each of the following activities. a. Sam pays a storekeeper $1 for a quart of milk. b. Sally earns $4.50 per hour working at a fast food restaurant. c. Serena spends $7 to see a movie d. Stuart earns $10,000 from his 10 percent ownership of Acme Industrial. See Figure 1; the four transactions are shown. Figure 1 Principles of Microeconomics 1 Problem Set Number 2 5. The first principle of economics discussed in Chapter 1 is that people face tradeoffs. Use a production possibilities frontier to illustrate society's tradeoff between a clean environment and the quantity of industrial output. What do you suppose determines the shape and position of the frontier? Show what happens to the frontier if engineers develop an automobile engine with almost no emissions See Figure 2. The shape and position of the frontier depend on how costly it is to maintain a clean environment⎯the productivity of the environmental industry. Gains in environmental productivity, such as the development of a no-emission auto engine, lead to shifts of the production-possibilities frontier, like the shift from PPF1 to PPF2 shown in the figure. Figure 2 Principles of Microeconomics 2 Problem Set Number......

Words: 1787 - Pages: 8

Microeconomics

...Intermediate Microeconomics by Jinwoo Kim 1 Contents 1 The Market 4 2 Budget Constraint 8 3 Preferences 10 4 Utility 14 5 Choice 18 6 Demand 24 7 Revealed Preference 27 8 Slutsky Equation 30 9 Buying and Selling 33 10 Intertemporal Choice 37 12 Uncertainty 39 14 Consumer Surplus 43 15 Market Demand 46 18 Technology 48 19 Profit Maximization 52 20 Cost Minimization 54 21 Cost Curves 57 22 Firm Supply 59 23 Industry Supply 62 24 Monopoly 64 2 25 Monopoly Behavior 67 26 Factor Market 72 27 Oligopoly 76 28 Game Theory 80 30 Exchange 85 3 Ch. 1. The Market I. Economic model: A simplified representation of reality A. An example – Rental apartment market in Shinchon: Object of our analysis – Price of apt. in Shinchon: Endogenous variable – Price of apt. in other areas: Exogenous variable – Simplification: All (nearby) Apts are identical B. We ask – How the quantity and price are determined in a given allocation mechanism – How to compare the allocations resulting from different allocation mechanisms II. Two principles of economics – Optimization principle: Each economic agent maximizes its objective (e.g. utility, profit, etc.) – Equilibrium principle: Economic agents’ actions must be consistent with each other III. Competitive market A. Demand – Tow consumers with a single-unit demand whose WTP’s are equal......

Words: 12774 - Pages: 52

Microeconomics

... This page intentionally left blank Intermediate Microeconomics A Modern Approach Eighth Edition W. W. Norton & Company has been independent since its founding in 1923, when William Warder Norton and Mary D. Herter Norton first published lectures delivered at the People’s Institute, the adult education division of New York City’s Cooper Union. The firm soon expanded its program beyond the Institute, publishing books by celebrated academics from America and abroad. By mid-century, the two major pillars of Norton’s publishing program—trade books and college texts—were firmly established. In the 1950s, the Norton family transferred control of the company to its employees, and today—with a staff of four hundred and a comparable number of trade, college, and professional titles published each year—W. W. Norton & Company stands as the largest and oldest publishing house owned wholly by its employees. Copyright c 2010, 2006, 2003, 1999, 1996, 1993, 1990, 1987 by Hal R. Varian All rights reserved Printed in the United States of America EIGHTH EDITION Editor: Jack Repcheck Production Manager: Eric Pier–Hocking Editorial Assistant: Jason Spears TEXnician: Hal Varian ISBN 978-0-393-93424-3 W. W. Norton & Company, Inc., 500 Fifth Avenue, New York, N.Y. 10110 W. W. Norton & Company, Ltd., Castle House, 75/76 Wells Street, London W1T 3QT www.wwnorton.com 1234567890 Intermediate Microeconomics A Modern Approach Eighth Edition Hal R. Varian ...

Words: 279837 - Pages: 1120

Microeconomics

...ECON20351: Microeconomics IIA. Lecture Three. Dr. Craig Webb. Office: 3.007 Arthur Lewis Building. Email: craig.webb@manchester.ac.uk Office Hours: Tues 12pm – 2pm. 1 The Consumer’s Problem Solved. y M/py O = (x*,y*) 0 x •  Property 1: MRSC = MRSE, or - Δ y / Δ x = p x / p y (tangency condition; slope of IC equals slope of budget line). •  Property 2: p x x * + p y y * = M (all income is spent). 2 Decomposing the Total Change in Demand. y O1 0 O2 x •  The move from O1 to O2 is the total effect of the price change. •  Hicks’ method of decomposition (compensating variation). •  Total effect = net substitution effect + net income effect. 3 The Net Substitution Effect. y O1 O3 0 O2 x •  The move O1 to O3 shows the net substitution effect. •  For strictly convex preferences… •  Net substitution effect is negative: (Δx*/Δpx)|Δwelfare=0 < 0 •  x and y are net substitutes: (Δy*/Δpx)|Δwelfare=0 > 0 4 The Net Income Effect for Normal Goods. y O1 O3 O2 0 x •  The move O3 to O2 is the net income effect. •  It isolates the effect of enhanced purchasing power, factoring out the net substitution effect, caused by the price change. •  In the example above, good x is normal, and so the net income effect reinforces the net substitution effect. 5 The Net Income Effect for Inferior Goods. y x*2b < x*1 < x*2a < x*3 O2b O2a O1 0 O3 x •  Moving from O3 to O2a or to O2a are net......

Words: 1433 - Pages: 6

Microeconomics

...COPYRIGHT NOTICE: Ariel Rubinstein: Lecture Notes in Microeconomic Theory is published by Princeton University Press and copyrighted, c 2006, by Princeton University Press. All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher, except for reading and browsing via the World Wide Web. Users are not permitted to mount this file on any network servers. Follow links for Class Use and other Permissions. For more information send email to: permissions@pupress.princeton.edu Lecture Notes in Microeconomic Theory Ariel Rubinstein Updates to the Printed Version The file you are viewing contains the printed version of the book. In relevant places throughout the text you will find small icons indicating the existence of updates to the text: A red icon indicates there is a correction for a mistake on this line. A green icon indicates an addition to the text at this point. The corrected and added text can be obtained from the author's homepage at http://arielrubinstein.tau.ac.il/ . October 21, 2005 12:18 master Sheet number 1 Page number 1 October 21, 2005 12:18 master Sheet number 2 Page number 2 October 21, 2005 12:18 master Sheet number 3 Page number i Lecture Notes in Microeconomic Theory October 21, 2005 12:18 master Sheet number 4 Page number ii October......

Words: 42501 - Pages: 171

Microeconomics

...UB18416BBU26251 INTRODUCTION TO MICROECONOMICS A Final Thesis Presented to AIU The Academic Department Of the School of Business and Economics In Partial Fulfillment of the Requirements For the Bachelors Degree in Business Administration Atlantic International University (AIU) @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@ INTRODUCTION TO MICROECONOMICS @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @ Emmanuel Kasozi Atlantic International University (AIU) – School of Business and Economics August 15, 2012 School work, Micro economics @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ Atlantic International University (AIU) CONTENTS 1 1.0. Microeconomics and Business Markets an overview 2.0. Economics is defined 3.0. Opportunity cost 4.0. 3 Production curve 2 5.0. Microeconomics is defined 6.0. Business Markets 7.0. Market 8.0. 8 Assumptions of markets 3 Demand, Supply and market Equilibrium 9.0. 10 Demand 10.0. Factors influencing Demand 11.0. Demand curve 12.0. Ceteris Paribus 4 13.0. Supply 14 14.0. The law of supply 15.0. Supply schedule 16.0. Supply curve 17.0. Factors influencing supply Atlantic International University (AIU) 18.0. Equilibrium 19.0. Reference 21 MICROECONOMICS AND BUSINESS......

Words: 4430 - Pages: 18

Lie To Me Streaming | SOLIDWORKS | You're the Worst 8.6