If price is used as the control variable, the forces of demand and supply will affect the quantity of commodity Y demanded and supplied hence affecting the levels of revenues which are a good determinant of profits.
This is where the consumer’s utility function is…
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This information is enough to draw the demand curve of this product because we have got three points. For example, p1=8 and q1=4; p2=6 and q2= 6; p3=4 and q3=8. This will appear on a graph as shown below
(d) Tax imposition will increase the price of good 2. This will have a negative effect on good 2 because it will reduce its demand. This means it will affect the demand equation of good 2. Suppliers will transfer the tax on good 2 to customers in form of increased price of good 2.
As per assumption ii, the good has a positive cross elasticity of demand i.e. more than one. This implies if the price of substitute goods increases, the demand of good x increases and the reverse is true.
According to assumption iii, good x has got positive income elasticity of demand. That is the good is income elastic. If the disposable income of a consumer increases its demand increases and if it reduces, the demand will also reduce.
(b) (i) Implies that the good is price elastic - if its price is reduced, there will be an increase in the quantity demanded, and if the price is increased, there will be a decrease in the quantity demanded. (ii) implies that if the customer’s disposable income increases the quantity demanded increases and vice versa. (iii Implies that if the price of substitute products increases, the quantity demanded for this product will increase and vice versa.
A monopoly firm is never a price taker as in the case of perfect competition market. It has powers to set prices at the profit maximizing level. This occurs where the marginal cost (MC) equals marginal revenue (MR). Moving vertically to the demand curve, this will dictate the price and the quantity produced. Monopolies therefore end up making abnormal profits.
Perfect competition market is price taker. This means that the forces of supply and demand dictate the price of
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(“Micro economics 300 Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
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(Micro Economics 300 Essay Example | Topics and Well Written Essays - 1250 Words)
“Micro Economics 300 Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/macro-microeconomics/1634187-micro-economics-300.
The demand curve plots the combination of both the quantity and the price of a commodity. A slight shift in the price, results in a shift along the demand curve price. A slight change in the price would certainly result to a shift of the demand curve. Technically speaking, a shift along the demand curve can be termed as a shift in the quantity demanded.
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.
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.
There are abundant signs which are pointing towards positive glimpses because there has been a little growth in the overall income of UK and the statistics are revealing that double dip depression is now being diminished from the UK’s economy(Alderman & Shelburne, 2011).
vaccinations against infectious diseases). Briefly suggest how government might intervene to correct this under-provision? 5 (C) The Consumer Price Index (CPI) is the official measure of inflation in the United Kingdom. Why might CPI not be an accurate measure of the costs of living for any given individual consumer?
Macro & Micro economics Contents Contents 2 Introduction 3 Causes and Mechanisms of the collapse of the world trade 3 Current Trade Policies in Response to the Global Recessions 7 Policy responses on negative impact on the trade balance were implemented in the UK 8 Effectiveness of the EU trade policies in the long run 9 Conclusion 11 References 12 Introduction The Great Depression was one of the most severe economic downturn that the world faced during the twentieth century in the pre-World War era.
Therefore the author has termed Google as being operating as a monopoly in the search market. The author refers that Google has been dominantly playing its role in the search market and is this dominance is favored by governments as they are not placing any restrictions on the practices adopted by Google.
Short run equilibrium of a firm can be derived based on the total revenue and total cost and marginal revenue and marginal cost and marginal revenue and marginal cost. As firms are price-takers, each firm in an industry tries to maximize its profit by adjusting the output to a level where Marginal Cost (MC) =Marginal Revenue (MR).
The economic approach to consumer behavior delves into consumer demand analysis. The Theory of consumer demand is the analysis of demand with regard to consumer behavior and rationale when changes occur in variable factors such as price, income and
Individual consumer’s focuses on maximizing their utility subject to their budget line (MagrabI, 1991). On the other hand, producer’s aims at maximizing their profits subject to their production Isoquants (Mceachern,
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