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The Concept of demand states that the lower the price of a commodity the higher the demand for the same product and the higher the price of the product, the lower will be the demand for that product. Demand is important since it affects price of products to a great level. This concept has made me realize how product prices are established in various markets. I notice that when there is high demand for a product in the market, the price of the product is bound to increase.
Price elasticity of demand refers to a state where a rise in the price of a commodity leads to a greater demand for its close substitute and low demand for the complement of the same product. As a result, those venders selling the substitute commodities will register a rise in the sales volume and profit. This concept is important in that it reveals the relationship between products and their substitutes in terms of price and demand. The concept has helped me understand how substitute prices change relative to that of a particular product. The prices of similar products, hence, are somehow related and depend on one another
It is a measure of the responsiveness to the change in the quantity supplied of a commodity to the changes in prices. In this case an increase in the price of a commodity will lead to an increase in supply of the same commodity, while a decrease in price will lead to a decrease in the quantity supplied. The concept is important given that it shows the relationship between supply and price of commodities. In the market therefore, different products have different price elasticity of supply as the supply side is subject to change in various markets.
Perfect competition is a free market where the prices of various commodities are determined by the forces of demand and supply. In a perfectly competitive market, there is free entry and exit of goods and services. Perfect competition is important in that
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c) James’ opportunity costs of producing the potatoes exclusively instead of the chickens would be 40 chickens per year. d) James’ opportunity costs of producing the chickens exclusively instead of the potatoes would be 80 pounds of potatoes per year.
What is the opportunity cost of your going to college? List components of the opportunity cost. Be sure to include all costs, including the value of what you might otherwise have done with your time (including forgone leisure time, working) as well as the price of tuition, books, et cetera.
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.
With the center conviction that single fate ought to be in the distinctive hands, legislative power and assets ought to be kept near the individuals, through their state and neighborhood pioneers, and not unified in inaccessible national government firms.
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.
Thus, what follows is a highlight of five economic concepts - opportunity cost, elasticity, comparative advantage, common resources, and public goods - integral to free trade as an (economic) activity not limited to nations but reaches far beyond to individual lives.
A company with a monopoly does not undergo any pressure from competitors as far as their pricing strategies are concerned. They can do anything at their own will and they don’t want to consider many factors about the competition. “In an
d selling stuff but also when it relates to decision making about everyday things right from dealing with others to deciding on whether to paint the house or not.
Most of the time, people are prone to understanding a concept when it applies to their everyday life and economic
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
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