The following chapter summaries are mostly based on the McConnell & Brue text “Economics- 16th Ed.” Details available at http://highered.mcgraw-hill.com/sites/0072819359/information_center_view0/ note .. arrow means “leads to‚” “results in‚” “causes” Chapter 1 – The Nature and Method of Economics Economics is the study of scarcity and choice Key concept- opportunity cost: for a person to get more of one thing... he/she must forego getting something else e.g. to get food must
Premium Supply and demand Economics
Assignment 2 Price Elasticity Of Demand Price Elasticity of Demand is the quantitative measure of consumer behavior whereby there is indication of response of quantity demanded for a product or service to change in price of the good or service ( Mankiw‚2007). The Price Elasticity of Demand is calculated using either the point method or the midpoint method. The Point Method Price Elasticity of Demand = Percentage change of Quantity Demanded Percentage change of Price The Midpoint Method
Premium Supply and demand Price elasticity of demand Elasticity
Place your answer on the answer sheet. There are 50 questions‚ each worth 2 points. 1) In 1985‚ Alice paid $20‚000 for an option to purchase ten acres of land. By paying the $20‚000‚ she bought the right to buy the land for $100‚000 in 1992. When she acquired the option in 1985‚ the land was worth $120‚000. In 1992‚ it is worth $110‚000. Should Alice exercise the option and pay $100‚000 for the land? A) Yes. B) No. C) It depends on what the rate of inflation was between 1985 and 1992
Premium Costs Microeconomics Marginal cost
Economic models[edit] For more details on this topic‚ see Supply and demand. Two simple ways to understand the proposed benefits of free trade are through David Ricardo ’s theory of comparative advantage and by analyzing the impact of a tariff or import quota. An economic analysis using the law of supply and demand and the economic effects of a tax can be used to show the theoretical benefits and disadvantages of free trade.[1][2] Currently‚ the World Bank believes that‚ at most‚ rates of 20%
Premium International trade Free trade Economics
the quantity demanded of a good or service is equal to the quantity supplied. The Principle of Market Equilibrium states that perfectly competitive markets are always moving toward said equilibrium. If the price is too high or low‚ there will be a surplus or shortage‚ respectively‚ which will drive the price towards the “market-clearing” equilibrium price. When there is a shift of the demand and/or supply curves‚ the market will adjust by finding a new equilibrium price. Such is the case in the airline
Premium Supply and demand
1.Jaynet spends $30‚000 per year on painting supplies and storages pace. She recently received two job offers from a famous marketing firm—one offer was for $110‚000 per year‚ and the other was for $80‚000. However‚ she turned both jobs down to continue a painting career. If Jaynet sells 25 paintings per year at a price of $8‚000 each: a. What are her accounting profits? 25*8‚000=$200‚000 200‚000-30‚000=$170‚000 b. What are her economic profits? 25*8‚000=$200‚000 200‚000-30‚000-110‚000-80‚000=-$20
Premium Supply and demand Consumer theory
between a country’s exports and imports” (Colander‚ 2010). When a country is exporting more than they are importing a surplus is created‚ so there is more production than consumption. The opposite is true for a trade deficit. A country that imports more than it exports is running in a deficit; consumption is more than production. An example of a product in the United States with a surplus is oil. Seven years ago the U.S. imported about two-thirds of their oil consumption. By 2014 it is expected that
Premium International trade Export
they make extra profits. And while it is true that they make extra profit. A monopoly can be inefficient if it not able to perfectly price discriminate. If they can ’t price discriminate‚ some consumer surplus will be lost without a gain to producer surplus because the producer can ’t gain a surplus without selling. So‚ if
Free Economics
Africa and South America have little marketable resources. That means there are uneven distributions of resources. Sometimes suppliers have issues with shortage and surplus. A shortage is to do with the relationship between the amount the supplier are willing to supply and the given price in a specific time period. On the other hand‚ surplus is when an amount (such as an amount of goods) that is more than the amount that is needed. These concepts can be shown in a diagram: A central concept in
Premium Economics Supply and demand Mixed economy
Efficiency and surplus: illustration $/unit The demand curve measures the willingness to pay for each unit Consumer surplus is the area between the demand curve and the equilibrium price Competitive Supply The supply curve measures the marginal cost of each unit Producer surplus is the area between the supply curve and the equilibrium price PC Consumer surplus Producer surplus Equilibrium occurs where supply equals demand: price PC quantity QC Demand Aggregate surplus is the sum of
Premium Supply and demand Microeconomics Inverse demand function