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Macroeconomics - Assignment Example

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This paper, Macroeconomics, stresses that with respect to the increase in smartphone prices from $200 to$222, there was a need to increase the supply from 10,000 units to 12,000 units. In that regard, the elasticity of supply becomes an important case to consider…
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Macroeconomics
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Problem A
With respect to the increase in smartphone prices from $200 to$222, there was a need to increase the supply from 10,000 units to 12,000 units. In that regard, the elasticity of supply becomes an important case to consider. After application of the case into the model for finding elasticity and in this case from the calculation of elasticity and using the prices and quantities provided, the result is that the Elasticity of supply is 1.7. It is an indication of that the stretch is by 1.7 hence a positive indicator. This shows that the supply is elasticity and hence can be considered by the company as a way to increase on the revenue stream.
Problem B
Public and private goods
Human being depends on goods and services to better their lives. In that design, the consumption of goods has a two state categorization; public and private. Public goods actually are goods, which are very hard to separate those who pay, and non-payers as the goods are in plenty. On the other hand, private goods are goods that can no longer be in use after their consumption. In that regard, people are easily made to pay for them (BOOTH & KATIC, 2011). Their availability after consumption separates the two types of goods.
Characteristics of public goods
Public goods are characterized by non-rivalry, which means that after consumption, there are still in plenty for others to enjoy it. In addition, non-excludability is a characteristic that occurs when it is impossible to produce a good without the possibility of others enjoying it. On the other hand, private goods have a rivalry that after the consumption, it is unavailable to others. It is in this respect that they are possible to produce goods with the possibility of enjoyment of others (BOOTH & KATIC, 2011). The non-rivalry and non-excludability feature characterize the public and private goods. The citizenship can enjoy both the two levels of goods with satisfaction.
There is a free-rider problem in public good because of non-excludable. It refers to the ability where one cannot stop the other from consuming it. Non-rival also means that consuming the good does not lower its availability. An example for this outfit is the local police who are considered as a public good because of their non-rivalry. Local TV services are private as people usually pay for them (Davidoff, 2013). The variations based on rivalry index on goods makes them a concern for consumption and hence worth understanding.
Problem C
A price index is a consideration that a manager ought to keep a keen focus on especially in determining the best product to optimize. I take a consideration of the two products A and B and subject them to the system, which shows that the marginal utility of dollar (z) MUA is 2 while MUB is 0.53. In that regard, product A takes more in terms of expenditure than product B. From calculation, the values for expenditure are y is $0.1 while x is $19.9. In that regard, more is spent on product A than B based on higher values of utility. To increase on revenue stream and economically optimize, the product A should be given priorities by the company.



References
BOOTH, A., & KATIC, P. (2011). Estimating the Wage Elasticity of Labor Supply to a Firm: What Evidence is there for Monopsony? Economic Record, 87(278), 359-369. doi:10.1111/j.1475-4932.2011.00728.x
Davidoff, T. (2013). Supply Elasticity and the Housing Cycle of the 2000s. Real Estate Economics, 41(4), 793-813. doi:10.1111/1540-6229.12019 Read More
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