Supplement to Unit - II BEHIND THE DEMAND CURVE: THE THEORY OF CONSUMER CHOICE Here‚ the purpose is to explain the derivation of the demand function and to provide an understanding of the consumer decision-making process. Consumer Preferences Individuals make choices based on their personal tastes and preferences. Tastes and preferences are shaped by many factors. Some of the factors are family environment‚ physical condition‚ age‚ sex‚ education‚ religion‚ and location. In the analysis that
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large number of small private enterprises. Production and management strategies are made by private capitalists according to changing in market supply and demand. Private capitalists are free to participate or exit the economic activity of any of industries. The form of price is spontaneous in market. It shows the change of supply and demand‚ it can distribute the scarce resources to producers‚ and also distributes goods and services to consumers. Consumer rights Consumers are the main part of
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are careless‚ sloppy‚ and less than professional. For the rest of your life you will be creating your brand: please think about what you are saying about yourself when you do any work for someone else! 1. Consider a monopolist where the market demand curve for the produce is given by P = 520 – 2Q. This monopolist has marginal costs that can be expressed as MC = 100 + 2Q and total costs that can be expressed as TC = 100Q + Q2 + 50. a. Given the above information‚ what is this monopolist’s profit
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Introduction to Economic Written Report 6.1 a) Consider a monopoly facing the following demand and MC curves: Demand: P = 12 – 0.002 Q MC: MC = 3 + 0.001 Q (i) Calculate the profit maximizing output of this monopoly. Ans: The output level of monopoly to maximize profit is MR=MC. As‚ P=a-bQ‚ the MR curve will be MR=a-2bQ‚ So‚ 12-2(0.002Q) = 3+0.001Q 12-0.004Q = 3+0.001Q 9 = 0.005Q Q = 1800 Monopoly
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6.1a) A monopoly is facing the demand and marginal cost curves which is P = 12 - 0.002Q and MC = 3 + 0.001Q. When the demand curve is P = a- bQ‚ the marginal revenue curve will be MR = a- 2bQ ‚ therefore‚ MR = 12 - 0.004Q.(Refer to figure1) Figure 1 To maximize the profits‚ the company should produce at the output level where marginal revenue is equal to marginal cost. If the marginal revenue is higher than marginal cost‚ the firm can increase profit by producing more. If
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Part 1 : Demand For Goods and Services Definition of demand Classification of Goods and Services Law of demand Factors That Influence Demand (Determinants of demand) Definition of demand One of the definition of demand is known as the desire to buy goods and services with the ability to pay at a given time period. Classification of Goods and Services From conventional Economic Perspective: i) Free goods – zero production cost. i.e. rain water and air ii) Public
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International Trade Homework #2 (Chapter 5) Plus the Articles from the online Packet Article: “End of Bumpy Road” 1. Based on what we have read in Ch 5‚ discuss the effects of Korea’s agricultural policies on trade. 2. The very last sentence mentions “real market prices”. What is meant by this? 3. How much impact do Korean agricultural policies have on the prices in question 2? Explain. Chapter 5 1. Assume that Norway and Sweden trade with each other‚ with Norway exporting fish to
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booms‚ the demand for bonds increases. The public’s income and wealth rises while the supply of bonds also increases‚ because firms have more attractive investment opportunities. Both the supply and demand curves (Bd and Bs) shift to the right‚ but as is indicated in the text‚ the demand curve probably shifts less than the supply curve so the equilibrium interest rate rises. Similarly‚ when the economy enters a recession‚ both the supply and demand curves shift to the left‚ but the demand curve shifts
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creams are always marked at $1.50 each. However‚ you notice that there are days when ice creams remain unsold but other days when there are not enough ice creams for the number of customers. Use your knowledge of the factors that cause shifts in demand‚ and in a multi-paragraph essay‚ provide at least three reasons why ice cream sales fluctuate in this manner. (Apply only the factors you think are applicable to explaining this scenario.) Now assume that a month later‚ the school allows a competing
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respond with a change in quantity supplied. * Suppliers cannot be picky with the price they sell their goods for * Some goods do not even have a market period (time is too short for any response) * It has a Vertical Supply Curve (meaning it is inelastic) * Price Elasticity of Supply: the Short Run (fixed-plant period): supply is more elastic‚ but not terribly so‚ as the time period is short * The period of time is not enough to change the output significantly;
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