Free

Assignment in Micro economics - Essay Example

Comments (0) Cite this document
Summary
Micro economics Name: Institution: Course: Tutor: Date Microeconomics Introduction The concept of microeconomics relates to the demand and supply and the market forces that are determined through interaction at the micro-level. Unlike macro-economics, microeconomics focuses on the decisions made by individuals and firms in deciding on the expenditure and supply capacity…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.8% of users find it useful
Assignment in Micro economics
Read TextPreview

Extract of sample "Assignment in Micro economics"

Micro economics Microeconomics Introduction The concept of microeconomics relates to the demand and supply and the market forces that are determined through interaction at the micro-level. Unlike macro-economics, microeconomics focuses on the decisions made by individuals and firms in deciding on the expenditure and supply capacity. Microeconomics is therefore the study of how firms, individual, and households allocate the resources at their disposal to satisfy their limitless and recurrent need. Since resources are limited, it is important for the consumers to rank their demands and wants in the order of preferences. Macroeconomics concept is also important in the market structure as it determines the price at which each market structure trades. In the labor market, macroeconomics is essential in the determination of the trade-off between labor and wage rates. In summary, microeconomics is all about studying the behaviour of firms and individual with respect to demand, supply, and market forces. Question One Answers The firm produces at average and marginal cost of AC=MC=10 and a market demand of Q=60-P (a)Profit maximizing price and quantity as well as profits may be determined as follows; MR=MC =10 P=60-Q Profits maximizing price= ? Q=60-P MR=60-2Q=10 P=60-25 P=$35 Profit maximizing quantity=Q 60-2Q=10 2Q=50 60-10=2Q Q=50/2 Q=25 units Firm profits= ? ?=TR-TC TC=P?MC TR=P?Q TC=25?10 TC=$250 TR=25?35 TR=$875 ?=TR-TC ?=$875-$250 ?=$625 (b) Given that by Q=45-5P, and that market demand curve become steeper, price, quantity and price may be as follows. Profits maximizing price= P Q=45-5P Profit maximizing quantity=Q 5P=45-Q MR=45-2Q=10 P= (45-17.5) ?5 45-2Q=10 P=5.5 45-10=2Q Q=17.5 Firm profits= ? TC=5.5?10 TR=P?Q TC=$50 TR=5.5?17.5 ?=TR-TC TR=$96.25 ?=TR-TC ?=96.25-50 ?=$46.25 (c)If market demand curve become flatter and is given by Q=100-2P.The firm maximizing price and quantity may be as follows Price=P Quantity=Q MR=MC=10 MR=50-Q=10 2P=100-Q P=50-Q/2 50-Q=10 Q=40Unit P=50-Q/2 P=50-20=3 P=50-40/2 P=$30 MR=50-2 Q/2=10 MR=50-Q=10 Firms profits= ? ?=TR-TC TR=30?40=$1200 TR=P?Q ?=$1200-$300 TC=30?10 ?=$900 TC TC=P?MC =$300 Revenues and Cost MC3 MC1 P3 MC2 P1 P2 AR=D O Q3 Q1 Q2 Out put Source: Author MR Graph of relationship between the three situations above, Where MR=Marginal Revenue, AR=Average Revenue and MC=Marginal Cost. The output is represented by Q while price by P. A monopoly may want to reduce out put from Q1=17.5units to Q3=25units so that he can sell at a higher price P3=$35 (Asian Development Bank, 2002). However, economies of scale substitution may arise leading to a shift in marginal cost from MC1 to MC2 (Pirayoff, 2004).This shift may cause an increase in monopolist out put from Q1=17.5 Units to Q2=40 units. Leading to a decrease in price from a competitive price to a lower price P2=$30 despite the availability of a monopoly price =$35 (Brakman and Heijdra, 2004). Reason why there is no supply curve for monopoly is because monopoly market structure, falls under control of a single supplier, Therefore, no need for supply curve (Dwivedi, 2006). Questions 2 Answers 2. Given the fact that you have two goods ice cream and Kraft Macaroni and Cheese (an inferior to most people). (a) A graph showing what would happen if the price of ice cream decreases while in come increases. Kraft Macaroni and Cheese(X) B1 B0 A1 A2 I2 A3 I1 0 B0 B1 X1 X2 X3 Ice cream(Y) Source: Author The graph above shows that a shift in income from B0, B0 to B1, B1 leading to a negative substitution effect as shown above (Mukherjee, Mukherjee and Ghose, 2003). (b)A gardener states that for only $1 in seeds, she has been able to grow over $20 produce-enormous profits. Do you agree or disagree with her/ explain. Yes I agree with her because if she was operating in a monopolistic competition, it is possible to earn enormous profits in the short run as shown in the diagram below (Garner and Short, K2009). Revenue and Cost P=$20 C A D Enormous Profits MR AR Out put 0 Q Source: Author Question 3 Answers 3. John (who decided to take bear after losing for US presidency his Utility is defined as follows; U (SA, CC) = 10LN (SA) + 2LN (CC) Whereby, SA=Pints of Adam Samuel bear and CC=bowls of Legal Seafood’s famous clam cbowder The fraction that will maximize Sam Adam bear that will maximize Kerry’s utility may be determined as shown below. U (SA, CC) = 10LN (SA) + 2LN (CC) =$100 Therefore, 10LN (5) +2LN (CC) =100 Where LN are constant 10(5) +2CC=100, 2CC=100-50, CC=50?2 , CC=$25 Based on computations, it can be scrutinized that, a fraction of 50 Sam Adam bear: 50bowls of clam chowder will maximize Kerry’s Utility which occurs as a result of consumption between Pints of Adam Samuel bear and bowls of Legal Seafood’s famous clam cbowder (Frank, and Bernanke, 2003). CC=bowls of Legal Seafood’s famous clam cbowder(Y) Income Consumption Curve y3 I2 y2 I2 y1 I1 X1 x2 x3 SA=Pints of Adam Samuel Reference List Colander, David C. Microeconomics. 5th ed. Boston: McGraw-Hill/Irwin, 2004. Mankiw, N. Gregory. Principles of Microeconomics. 3d ed. Mason, Ohio: Thomson/South-Western, 2004. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Assignment in Micro economics Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Assignment in Micro economics Essay Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/macro-microeconomics/1463852-assignment-in-micro-economics
(Assignment in Micro Economics Essay Example | Topics and Well Written Essays - 750 Words)
Assignment in Micro Economics Essay Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/macro-microeconomics/1463852-assignment-in-micro-economics.
“Assignment in Micro Economics Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/macro-microeconomics/1463852-assignment-in-micro-economics.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Assignment in Micro economics

Macro and Micro Economics

...? Macro & Micro economics XXXXXXXXXXXXXXX XXXXXXXX XXXXXXXXXXXXXXX XXXXXX XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX Date: XXXXXXXXXXXXXXXXXXXXXXXXX Question 1 a) Explain why the natural log of the US’s per capita income relative to that in 1960 is 0. Per Capita income is the measure of living standards .It is calculated by taking the Gross Domestic Product (GDP) which is the total income and dividing it by the population. The standard deviation of GDP per capita is referred to as natural log. The United States of America has continued to maintain high per Capita income despite its huge population.1960 acts the base year in calculation of the per capita income. The United States is endowed with massive...
4 Pages(1000 words)Assignment

Micro Economics Assignment

...? Micro Economics Assignment Question a) The diagram below shows the production possibilities curve. The production possibilities curve is based onthe following assumptions: 1) Full employment 2) Resources are fixed in supply 3) The technology is fixed and there are only two goods b) It can be determined from the table that the cost of one more automobile when the economy is at point C is 9/2= 4.5 forklifts. The cost of one forklift is 2/6= .33 automobiles. The concave shape of the production possibilities curve shows the increasing opportunity costs. The shape of the curve depicts that the economy must give up larger units of rockets to gain added units of automobiles. c) If the economy is using the...
5 Pages(1250 words)Assignment

MACRO AND MICRO ECONOMICS

...?MACRO AND MICRO ECONOMICS of Introduction Copper is a substance that gives a measure of the world’s economy. The global price virtually trebled between the beginning of 2005 and the 2008 summer prior to their fall to $ 3000 in the 2008’s autumn (Geoff, 2012: 3). There has been an apparent price recovery and thus prices of copper are currently more than that of 2007-2008. During their climax, copper was very costly in the global markets to an extent some coins made of copper were more worth than their face value. The following discussion will address the trends in the global markets of copper, their distribution and demand and ways in which the government can influence the price, demand and supply of...
4 Pages(1000 words)Assignment

Important Assignment about Micro economics

...Important Assignment about Micro economics Chapter 2: Economic Models: Trade-offs and Trade Chapter 2 terms Comparative advantage: Comparative advantage refers to the production of a particular good per unit at lower costs as compared to the price of others. Absolute advantage: Absolute advantage refers to the advantage of producing more good per unit of production as compared to the production of others. Application The article talks about international business while maintaining proper markets. The comparative advantage of the United States as compared to China, Germany and France remains debatable. In international business, outdoing the production of a country remains impossible as...
8 Pages(2000 words)Assignment

Micro and Macro Economics

...Micro and Macro economics Oil boom brings scar of workers in small towns http www.nbcnews.com/business/economywatch/oil-boom-brings-scarcity-workers-small-towns-940025 Chapter 1 terms and definitions: Opportunity cost Opportunity cost is the forgone alternative cost for another action. Scarcity Scarcity is limitation in supply. Scarcity is when a commodity is hardly there. For instance, land is a scarce factor of production (Mankiw, pp.55) Relevance In this article it is found out that the government and other traditional sectors are running short of labor. The scarcity has been brought about by the natural gas and oil boom. The laborers are forgoing other business jobs and offers for the oil jobs. In...
8 Pages(2000 words)Assignment

Micro economics homework

...Airport Security question one The journalist made three critical economic comments, and the first comment is that no rational security system would discriminate passengers on the ability to pay (Lind, 1). This comment is wrong because airlines operate under the principles of demand and supply. The airport security system is guided by the notion of people getting satisfied with high level of security, and therefore willing to pay more. The rich are in need of an extra security system to serve their needs, and this comes with various costs that the organization has to meet in fixing and buying the concerned machineries and facilities resulting to higher costs on this services. Another comment the journalist made is that...
2 Pages(500 words)Assignment

Micro economics homework

...ID Number & Micro-Economics Homework Q Do you agree with the Sea Shepherd’s campaign? Please provide your argument? Established in 1977, the main purpose of Sea Shepherd’s campaign is “to end the destruction of habitat and slaughter of wildlife in the worlds oceans in order to conserve and protect ecosystems and species” (Sea Shepherd Conservation Society a, b). In line with this, the Sea Shepherd does not only investigate but also document and take actions against illegal activities with regards to marine life. I strongly agree with the Sea Shepherd’s campaign. Without an international organization that could protect and conserve the marine wildlife, countries like Iceland, Japan, and Norway may...
2 Pages(500 words)Assignment

Micro and Macro Economics

...Micro and Macro Economics Q Diagram A Diagram B In diagram A demand curve D1 and D1’are inelastic (as evident from the slope) and diagram Bhas inelastic demand curves with the same intercept. It is clear that P1’ is higher than P1 which shows that elastic demand curve leads to a higher wage and supply curve can be kept constant at QL’ through negotiation and hence it is assumed to be perfectly inelastic under an extreme situation. Q. 2 Pure Union Wage Advantage: [(New Union Wage – Old Union Wage) / Old Union Wage]*100 [(20-15)/15]*100= 33.33% Spillover Effect: Spillover effect is refers to the decrease in the wages of the non-union company. Generally after any organization increase wages then simultaneous they used to reduce... is...
4 Pages(1000 words)Assignment

Micro Economics

... of the companies. Bibliography Fung, B. (2014, April 23). What the Apple wage collusion case says about Silicon Valley’s labor economy. Retrieved from Washington Post: http://www.washingtonpost.com/blogs/the-switch/wp/2014/04/23/what-the-apple-wage-collusion-case-says-about-silicon-valleys-labor-economy/ Schiller, B., Hill, C., & Wall, S. (2013). The Micro Economy Today. McGraw Hill/Irwin.... [Due Oligopoly is a market structure which involves a few firms producing a product or a service. When such a situation occurs, there is a chance that the few firms might collude to set a price or output level in order to maximize their profits. This means that the price will be higher than the market clearing price. Such firms operate for their own...
1 Pages(250 words)Assignment

Macro and micro economics

...Macro and micro economics of the Question One a) b) Chinese. For example when the shirts produced are 90 the amount of computer forgone are less in China than in America, hence low opportunity cost. This means if there is trade China will benefit more, this is because it will import computers and export shirts since the opportunity cost for computers is low. c) Letting the price of shirts be x and that of computers be y. The two countries might trade if the price of computers is: d) There will be less trade between the two countries. The economic well-being of the citizens of the two countries improves since both can acquire the commodities locally. Question Two Brazil Peru Soya...
2 Pages(500 words)Assignment
sponsored ads
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.

Let us find you another Essay on topic Assignment in Micro economics for FREE!

Contact Us