We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Micro and Macroeconomics - Essay Example

Comments (0)
Name Macro and Microeconomics a) Demand of a good or service is the quantity that the potential consumers are willing and able to purchase at a particular price. Various factors affect the quantity of goods that may be demanded in the market…
Download full paper
Micro and Macroeconomics Essay
Read TextPreview

Extract of sample
Micro and Macroeconomics

Download file to see previous pages... At the same time, the increase in demand will stimulate the quantity supplied in the market. The producers will therefore increase the quantity of supply to match the increased demand and this translates in a new equilibrium quantity and price. b) There are instances in which the price might not affect the quantity of goods supplied by the producers. Where the increased demand arising from the expected future increase in prices is accompanied by commensurate increase in the quantity supplied then no changes in price will be realized. An outward shift in the supply curve will lead to maintenance of the price levels. Figure 1 From the above figure, it can be shown that the initial equilibrium quantity is Q0 and the original price is P0. Because of the expected future increases in price, the demand curve shifts from D0D0 to D1D1 making the price increases. Because of the rise in prices, suppliers will be stimulated to increase the quantity of their supplies hence lowering the prices at the market. The shift of the supply curve from S0S0 to S1S1 changes the equilibrium quantity from Q0 to Q1 without an increase in the prices of the commodity. c) The three approaches in the determination of the GDP often results in different values. Whereas the income approach to the determination of GDP focuses on the totals of the income earned by the providers of factors of production, the expenditure approach sums the amount paid for final goods and services by the households and the government (Hansen 167). There are several reasons that cause these differences. First, the problem in double entry could have significantly caused the varying values. By including intermediate goods, the GDP value could have been inflated. At the same time, the income approach to measuring the GDP might have omitted some of the income earned by the providers of factors of production. For example, the approach is prone of omitting income of the private sector due to lack of records. Some of the income of homemakers and even income from illegal activities are always omitted thereby making the total of the approach slightly lower than the expenditure approach. Nonetheless, the conflicting totals might have been caused by the calculation errors. Wrong additions and inclusion of values in the calculation of the GDP always impairs the accuracy of the GDP. Economists can correct the above causes in difference in the level of GDP using the two approaches. To begin with, only the expenditure on final goods and services should be used in the expenditure approach must be used if the problem of double of entry is to be avoided. Secondly, the income approach should also incorporate all the incomes of the suppliers’ of the factors of production if a correct value of GDP is to be arrived at. The income from illegal activities and those from the informal sectors of the economy like salaries of homemakers should be included. Moreover, the methods from the two approaches should be harmonized to reach an amicable value. d) If the GDP grows at the rate of 7%, then to determine how long the GDP will double we compound the current GDP at the growth rate, Assume the current GDP is $1000 If the GDP has to double, then the GDP should be $2000 Time for GDP to double(T), 1000 (1+0.07)^n=2000 Therefore 1.07^n=2 T= = 10.24 years The growth in the GDP can sometimes fail to lead in an improvement in the standards of living. This is one of the reasons as to why the use of GDP is criticized ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
Micro & Macroeconomics and their impact on daily life
The author states that in every economy three activities never stop: (i) production of goods and services, (ii) generation of income (in terms of wages, rent and profit), and (iii) expenditure (in terms of consumption expenditure and investment expenditure). Production of goods and services causes generation of income. Income causes expenditure.
8 Pages(2000 words)Essay
Macro and Micro Economics Essay
It also analyzes the price and output changes that will arise as a result of transition from monopolistic competition to a monopoly. This paper also proposes the best market structure to be taken by Wonks in the potato chip industry so as to benefit all the stakeholders.
5 Pages(1250 words)Essay
Micro and macroeconomics
Discussion Question-1 Economics is indeed a broad field which has its recognition in almost every aspect of life. There are basically two different types of economics which predominantly are microeconomics and macroeconomics in total (WIERENGA). Microeconomics is the field of economics that denotes with the economics of the individuals whiles the economics of the country as a whole found as macroeconomics in total.
3 Pages(750 words)Essay
Micro-economic essay
Inflation consequently reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy (Peter B. 2003, Shostak, PhD, Frank March 2, 2002). The Boskin commission states that accurate measures in the costs of living are among the most useful and important data necessary to evaluate economic performance.
7 Pages(1750 words)Essay
Macroeconomics High School Essay
Although it is true that healthy foods are expensive and fast foods are cheap, there is always the option of eating less. If the kids are gaining inappropriate weight, and you can't afford healthier food, reduce their meal portions instead. Also, there's the option of exercising more.
3 Pages(750 words)Essay
Macroeconomics Degree Essay
Where C is consumption and Y is income, further analysis of the function shows that there is an autonomous value that is not affected by income, further analysis also shows that we consider the disposable income and not the gross income, disposable income of a consumer is the income minus taxes by the government, the model therefore is stated as follows:
4 Pages(1000 words)Essay
Micro Economics College Essay
Normally, when a good has high demand with a given supply, the price for the same tends to come up and when it is demanded by a few, the price tends to come down. But, it is to be noticed that this relationship between price, demand and supply do not hold good always.
4 Pages(1000 words)Essay
Micro Economics High School Essay
However, no one is foolish and hence in the free market, price mechanism fails to provide these goods. This is a problem and cause markets to fail because despite of the fact, the good has a good demand, no one pays for it and the good is never provide by the forces of price mechanism.
2 Pages(500 words)Essay
Macroeconomics Essay
b. The expansion during 2002 and 2003 is called jobless recovery because it "leaves the Okun gap constant and creates enough new jobs to match the growing population but not enough to lower the unemployment rate." c. I believe that the jobless recovery is most probably brought about by the weak confidence of the business sector on the economic recovery.
9 Pages(2250 words)Essay
Micro Economic Essay
In simple terms, the question is about the sources of monopoly power. In the book, “Modern Economic Theory” by Mukherjee Sampat, this author tries considers the following as the most important sources: A big company can sell the product at a lower price per unit than a
3 Pages(750 words)Essay
Let us find you another Essay on topic Micro and Macroeconomics Essay for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us