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.
Nobody downloaded yet

Principles of Microeconomics - Essay Example

Comments (0) Cite this document
Summary to essay on topic "Principles of Microeconomics"
Answer to #1. Utility is a concept which "represents the advantage or fulfillment a person receives from consuming a good or service" which then "explains how individuals and economies aim to gain optimal satisfaction in dealing with scarcity" (Investopedia ULC)…
Download full paper
Polish This Essay
Principles of Microeconomics
Read TextPreview

Extract of essay "Principles of Microeconomics"

Download file "Principles of Microeconomics" to see previous pages... However, it is observed that the marginal utility tends to diminish as you consume more of the goods (Investopedia ULC). There are two limits observed in the determination of utility; the limit beyond which the marginal utility begins to decline and the other limit shows that beyond which the utility becomes negative.
Let us write or edit the essay on your topic "Principles of Microeconomics" with a personal 20% discount.. Try it now
The second limit works like a satiation point for the consumer so that an additional consumption of the product will bring displeasure instead. Generally, this decline in utility is called the "diminishing marginal utility".
It is through this law of diminishing marginal utility that the economists were able to understand the law of demand and the negatively sloping demand curve (Investopedia ULC). It basically equates to the understanding that the less you have of a product the higher is your marginal utility that's why the willingness to pay (the price) is also high. On the other end, as the product increases the marginal utility declines, therefore the willingness to pay also diminishes.
Answer to #3. Income is generally accepted as a determinant of demand which moves on the same direction. However, there are products which show the opposite response. We call them the inferior good, as opposed to the normal good. The demand for "normal good" increases as income increases, such as clothing and food. On the other hand, we have products in which the demand for such declines as income increases. A classic example of this is a bus ride. This is so because when people get more income, they may opt to buy their own cars.
There is also what we call "related goods". Related goods can be "substitutes" or "complements". "Substitutes" are products in which the demand for one increases as the price of the other increases. This is because consumers will shift from the product whose price increases to the product whose price remained. On the other hand, complements are those whose demand for one product decreases as the price of the other increases. This is because as complements they are consumed together. Lastly, "giffen good" is one which people consume more of as price rises, which apparently violates the law of demand (Wikimedia Foundation, Inc., 2009). This happens due to the absence of substitute, giving way to the dominance of the income effect leading more people to buy more goods even as its price arise (Wikimedia Foundation, Inc., 2009).
Answer to #4. Generally, the supply curve is observed to be upward sloping, adhering to the law of supply stating that as the price of the goods increases, more will be supplied of it. However, in some cases, we see the supply curve come to a point of downward slope rather than continuously sloping upward. There are two cases mentioned when this thing happen. First is the supply of labor with respect to the (real) wage rate. The real wage serves as a price to labor and a cost to leisure. Therefore as the law of supply suggests, an increase in the price of labor should be followed by a greater quantity supplied. This is also supported by the logic that given that the cost of leisure is now higher, the substitution effec ...Download file "Principles of Microeconomics" to see next pagesRead More
Cite this document "Principles of Microeconomics"
  • APA
  • MLA
(“Principles of Microeconomics Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1503730-principles-of-microeconomics
(Principles of Microeconomics Essay Example | Topics and Well Written Essays - 750 Words)
“Principles of Microeconomics Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/miscellaneous/1503730-principles-of-microeconomics.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
Principles of Microeconomics
Primary reason for it being, we live in a place with limited resources and to choose one over the other has an opportunity cost. If the capital produced is more than the capital that wears out, then capital goods would be more than the actual demand which will lead to reduced consumer goods in the market.
5 Pages(1250 words)Essay
Principles of Microeconomics
Resources are very significant from the human perspective. This is because economically speaking, the resources make it possible for man to achieve his goals and make available the benefits that have come about. The Christians should behave much like other people who are from varied religions.
5 Pages(1250 words)Essay
Principles of Microeconomics
Partnerships are comparatively easy and convenient to develop. Moreover, this type of organization increases the ability to raise larger sums of capital. Additionally, the profits generated by the business are directly earned by the partners after deduction of taxes.
12 Pages(3000 words)Essay
Microeconomics Principles
Name Professor Business Date Microeconomics Principles Introduction This paper will focus on establishing a discussion that can foster substantial understanding of significant ideas concerning gains from trade, opportunity cost and price elasticity of demand; In fact, this discussion is made in the context of consumer behaviors.
3 Pages(750 words)Essay
Topics in Microeconomics
Moreover, it is in order that the property rights owner is accorded the privilege to transfer the property rights to the highest bidder. The failure by the economic systems to assign property rights to resources gives rise to externality (Stern, 2006). The lack of clearly defined property rights means that externalities cause market failure and hence by allocating property rights to the use of natural resources, regardless of who holds these rights, will protect these resources better than government intervention.
3 Pages(750 words)Essay
A price floor is a legal minimum on the price of a good or service. This essay discusses two outcomes, that are probable when the government entails a price floor, gives comparative research on price floor and equilibrium price and explaines how the minimum wage affects the labor market.
2 Pages(500 words)Essay
Principles of MicroEconomics
Therefore the demand curve will shift from D0 to D1. Due to increase in demand the price of butter also will start to rise. Increase in price of milk which is a
2 Pages(500 words)Speech or Presentation
Principles of Microeconomics
The primary motive behind price fixation is to earn higher profits by charging a premium price from the customers and reduce competition that persists between the firms. Due to lack of competition,
5 Pages(1250 words)Essay
The third approach is the last dollar rule, whereby the firm should produce at a point where the last dollar it spends on an input
3 Pages(750 words)Essay
Principles of Microeconomics
Despite the manufacturing company bringing benefits to the society such as construction of roads and providing employment to locals, it has a negative impact to the society. One
1 Pages(250 words)Essay
Let us find you another Essay on topic Principles of Microeconomics for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us