StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
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 paper File format: .doc, available for editing
GRAB THE BEST PAPER94.6% of users find it useful
Assignment in Micro economics
Read Text Preview

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

Financial Markets and Economics

As of the staff of the Indonesian mine, a thorough evaluation of the existing resources should be conducted regarding all levels of the working area (from the management team to the worker).
b. The acquisition should create a competitive advantage for TCC mainly for the following reasons: 1. This mine should be the first offshore production base for TCC, a fact that could help towards the reduction of the company’s dependence on domestic mines, 2. The transport of the material from the specific mine is easier due to the absence of issues like the rail or port bottleneck, 3. Currently, the mine has a positive performance with a tendency for more growth (an export authorization for 20% more tonnage was granted this year)...
12 Pages (3000 words) Assignment

International Business Economics

According to Adam Smith, the absolute advantage would be realised as long as the cost of production differed from between countries, one or both countries would gain by trading. An example to illustrate this is a situation where we have two countries A and B which produce two similar goods X and Y. The figures show labour cost in hours for producing one unit of a good

David Ricardo formulated the theory of comparative advantage and argued that even if one country is more productive in both lines of production it would be still profitable to trade. Country A is more productive in both lines of production but it will still be profitable to trade with country B, this is shown by first stating that country A is more advanta...
6 Pages (1500 words) Assignment

Business Economics: Small and Medium

The entry of small firms into the global markets has proven to be the main aspect of the creation of economies of scale. Markets are fast evolving to the needs of varied tastes and customer preferences, so necessary knowledge and technology asset has a major role to play for small firms to rise and to match up to the situation. However, small firms are characterized by “smallness of the market share (a large number of similar-sized firms) and hence lack of individual market power, corresponding to the theoretical concept of Pure Competition.” (Waite 1973. P. 154).

They need to overcome the handicap of smallness by strategic alliances and mergers with larger or technically more competent entities. Small firms...
10 Pages (2500 words) Assignment

Assumptions of Classical Economics which Do Green Critics

...What assumptions ical economics do green critics draw into question and what are the political consequences of the green approach?   Green economics is all about how economy is dependent on its natural surroundings and how it is a component of the natural world. It considers that the non-human things such as plants, the atmosphere and the earth sciences also have a direct relation to economics and are affected by economic deals and should be regarded as stakeholders. Green economics believes that everything which exists on the Earth has a connection with the rest of the species or nature. It believes that resources are limited and one can not extract uses from them unlimitedly. It also states that one cannot expand in a limited space...
8 Pages (2000 words) Assignment

Economics or Ethics

Several CEOs in America have in coalition with top managers deviated from the norms of corporate governance and caused immeasurable woes to the stakeholders. Using their power and ego they chased the wealth for personal gains without any concern for the shareholders or other stakeholders of the company. Enron, the world’s largest energy trader at one time, had to file bankruptcy under Chapter 11 when about 5000 workers lost their job (Bhattacharya, 2004). Arthur Anderson, one of the big five auditing firms was charged to have colluded with the management to misappropriate funds and project a picture different from the reality. Income was inflated and then all concerned papers were destroyed. The leadership at Enron was conce...
6 Pages (1500 words) Assignment

Real Estate Economics

...Real e economics: Introduction: The real e industry is engaged in leasing, renting, selling of real e and buying real e on behalfof others. The real estate industry comprises of the owners of the estates, the users who are the consumers, the developers who build, the renovators who refurbish buildings and the facilitators who enable sale of real estate, the facilitators comprises the financers example banks, the brokers and lawyers. According to July statistics this year the industry employs over 2125 thousand and the hourly wage rate is estimated to $16.37. This paper discusses the real estate industry on the basis of demand, supply, elasticity of demand and supply, wage rates and wage inequality, how monetary and fiscal policies affect...
7 Pages (1750 words) Assignment

Managerial Economics and Business Environment

Once the above said subject matter is clearly sorted out, the next emphasis would be on the concepts like the opportunity costing, incremental principle, marginal principle, discounting principle, the principle of time perspective, and calculation of economic profit as the guidelines to the scope of managerial economics. (Surender. V, 2008).
To start with, we consider a firm for which different processes have to be carried to achieve its objectives of profit maximization (assuming that all the organizations work with the view to maximize profits). If firms from different sectors are identified simultaneously, then the working of the economy as a whole could also be analyzed which in turn is useful in the decision-making proce...
15 Pages (3750 words) Assignment

Commercial Law: Micro-Maker and Lacey

...GUIDANCE FOR Read the scenario below and then answer each of the questions that follow. Your objective should be to demonstrate a sound understanding of the principles of contract/commercial law that apply to the situations that follow, AND, where appropriate, highlight the difference that adopting the standard form contract might make to the outcome of any dispute. Refer to the Sale of Goods Act 1979 (as amended) and the standard form contract that has been referred to throughout the module. Micro-Maker is a small company involved in the manufacture of microwave ovens. One of its main customers is a large department store called Lacey with many branches around the country. The business arrangements between buyer and seller have...
7 Pages (1750 words) Assignment

Economics in Business

...Economics in business Introduction: The purpose of this paper is to analyze the business objectives as best applicable to the Southampton Solent University. Herein, it is essential for the author to analyze the competitive landscape that the university finds itself and try and identify the forces which are governing the business decisions of the university. Further, the author aims to complete understand the simplex of competitive market forces and subsequently make recommendations for better future functionality of the university. PESTLE Analysis The author feels that it is applicable to use a PESTLE analysis due to the fact that the Political, Economic, Social, Technological, Legal and Environmental aspects of this model...
6 Pages (1500 words) Assignment

Economics of Business Strategy

.... The company also ensures that it does not abuse its dominant position in terms of controlling the market share(Rubenstein, 27). It does this by establishing a documented code of ethics that guide the behavior of its employees and its operations. As a company in the oil sector, the organization has an elaborate policy to guide itself against lawsuits emanating from environmental degradation. The ethical practice of the organization is to engage its operations in a manner that promotes the conservation of the environment, through reduction of carbonemissions (Clarke, 21). In meeting this objective, the company balances its economic goals and environmental concerns. The policy of the company is to comply with all laws that aim to protect...
8 Pages (2000 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