...Managerial Economics-MT445 Unit 3 Project Chapter 5 – question 2, page 117 2. (Elasticity and Total Revenue) Explain the relationship between the price elasticity of demand and total revenue. If demand is price inelastic, an increase in price will lead to increase in revenue because the percentage increase in price will cause a smaller decrease in quantity demand. If demand is elastic, an increase in price will lead to a decrease in revenue because the percentage increase in price will cause more reduction in quantity demanded. Chapter 5 – question 5, page 118 5. (Determinants of Price Elasticity) Would the price elasticity of demand for electricity be more elastic over a shorter or a longer period of time? It's inelastic in the short run and inelastic in the long run, but I guess it would more elastic in the long run than in the short run when people can find substitutes. Chapter 7 – question 2, page 166 2. (Explicit and Implicit Costs) Determine whether each of the following is an explicit cost or an implicit cost: a. Payments for labor purchased in the labor market – Explicit b. A firm’s use of a warehouse that it owns and could rent to another firm - Implicit c. Rent paid for the use of a warehouse not owned by the firm - Explicit d. The wages that owners could earn if they did not work for themselves - Implicit Chapter 7 – question 14, page 167 14. (Long-Run Average Cost Curve) Explain the shape of the long-run average cost curve. What does “minimum...
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...Sugar remains in high demand because of its purpose and what it is used for. Sugar cane and sugar beets are crops that are refined sugar. These crops grow in many areas of the world. Sugar functions in a market economy that creates several factors that can cause shifts in supply and demand. Weather is a factor that can affect the supply of sugar. Sugar (sugar cane or beets) grown throughout the world, are subject to high temperatures, flooding, drought, and even insects and bugs. When sugar is lost in large amounts due to weather, the supply curve shifts to the left, quantity supplied drops, and prices increase. Causes for shifts in supply and demand for sugar are the variables that can shift the demand curve: income, prices of related goods, taste, expectations, and the number of buyers. Shifts in supply can be the supply increase, and the change that increases any quantity supplied at every price. This would cause the curve to shift to the right. Buyers that want to change the quantity and purchase at any price will shift the demand curve to the right. Buyers that want to lower the quantity and want to purchase at any price will shift the demand curve to the left. Federal tariffs on sugar increases the price, resulting in a decrease for the demand. Rising pressure on sugar prices drives the prices to double in the long term average. Production costs that are high and the ethanol grown are used in Brazil to set the platform for higher...
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...they have pushed 44 million people into poverty. There have been many suggestions as to why the food prices have gone up by extreme amounts. The world’s population is obviously increasing so food is harder to supply for the growing population but this is not the main reason why this has happened. Many countries over the past years have started to become more and more developed and so people are demanding more and better quality food. In other words changing diets in fast-developing nations such as China and India is considered main factor of price changes. Production has failed to keep up with the growing demand coming from these developing countries, pushing prices sharply higher. Another factor is that LEDC’s many times have problems with transportation. It is hard to export your goods and very expensive in some cases. Furthermore rising oil prices have boosted demand for bio-fuels. The use of land to grow plants which can be used to make alternative fuels- and the use of food crops themselves for fuel- has reduced food supplies and helped push up prices. The main reason though for the rise in food prices is supply has decreased due to severe weather in some of the world’s biggest exporting countries. Flooding hit the planting season in Canada, and destroyed crops of wheat and sugar cane in Australia. In addition, drought and fires devastated harvests of wheat and other grains in Russia and the surrounding region during the summer. Onion prices have soared in India in the...
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...Economics Paper Deborah Robinson University of Phoenix ECO365 Brad Bennett March 2, 2009 Introduction The following paper will define economics, microeconomics, and the law of supply and demand. The paper will identify the factors leading to a change in supply and a change in demand, and will also analyze the basis for the trends in consumption patterns discussed in the article “As US Shoppers Retreat, Can World Thrive?” The author of the paper will analyze the article by considering the utility derived from the products mentioned in the mentioned article, and will describe what has occurred to change the demand for, or the supply of, the good or service. The paper will then conclude with the market prices of the products or services. Define Economics Economics is the research and study of income, production, land, investments, taxes, government spending and labor. Economics is a study of how people choose to earn and spend their resources. The choice needs to be made individually by people and countries about what goods and services they can purchase and which ones they need to delay. Resources are scarce and are pushing people and countries to make choices. Economics is studied from two perspectives. The first being governments of nations seek to maximize the production of countries. This perspective is referred to as macroeconomics. The second perspective is of individuals and firms; this perspective is known as microeconomics. Define Microeconomics ...
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...Demand is one of the most important forces that make market economics work. Modern microeconomics is about demand. We intended to estimate the actual demand for Miniket rice to identify the reasons behind the stability in the Miniket rice market. Research shows us that the availability of rice is higher than the requirement of rice over the years. Rice is usually divided into three categories, i.e. coarse, medium and fine to identify the demand pattern of each category. Miniket is in the fine category. The demand of fine category in 2011 was 54 lakh metric tons. By analyzing rice yield data of the last 40 (1971-72 to 2010-11) years, it is found that rice production rate is continuously increasing over the year. In 1971-72, the average rice yield was 1.05 metric ton per hectare, while in 2010-11, it was 2.85 metric ton per hectare. So the demand of rice is also increasing at the estimated rate. It is known from the rice traders that Miniket rice which are being sold at present in Bangladesh is generally of fine quality. Department of Agricultural Marketing (DAM) has also taken this reality into cognizance in their daily and weekly price reporting. Since 2003, DAM is also reporting wholesale price of Miniketrice in Dhaka city markets. Matrix ranking shows that Miniket is the number one rice because of its high yield and high market price. Research shows us that Miniket has a high demand in market. Middle class family used to buy Miniket rice. Sometimes lower class even higher...
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...HRM 500 • Based on the information given but in your own words, explain what approaches to recruiting might be best suited for Apple’s talent acquisition. As Apple prides itself on secrecy and having a high degree of control they would have to create an environment where the employees that they hire undergo through a series of background checks to ensure that they are ethical and moral and that once they are hired by Apple that they would not go to their competitors to disclose any of the trade secrets that make Apple one of the top technology companies in the world. Apple can use the LinkedIn networking site to study candidates past work history and their previous job performance since one of the best predictors of performance is to study the candidate’s past work history. They should look for candidate’s who have an impeccable track record. (Noe, Hollenbeck, Gerhart, Wright 2011, p. 153). • Describe the recruiter traits and behaviors that would lead to the most successful recruiting campaign for Apple. Apple can use teams instead of just using one individual recruiter. This would be a more useful approach since with a team there would be less subjective experiences and it would reduce the effect of biases. Apple should use recruiters who embody the company values and ideals. Apple prides itself on innovation, creativity and thinking outside of the box and they should hire recruiters who most closely embody...
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...Labor economics: problem 5.2 Consider the demand for and supply of risky jobs : a. Derive the algebra that leads from equations (5.4) and (5.5) to equation (5.6). (5.4) π0=pα0E*- w0 E* (5.5) π1=pα1E*- w1 E* It is given that a profit-maximizing firm offers a risky environment if π1>π0 (when the profits the firm can earn when it chooses to be a risky firm exceed the profits the firm can earn when it chooses to be a safe firm) and a profit-maximizing firm offers a safe environment if π1<π0 (when the profits the firm can earn when it chooses to be a safe firm exceed the profits the firm can earn when it chooses to be a risky firm). Offering a safe working environment: | Offering a risky working environment: | π1<π0↔pα1E*- w1 E* < pα0E*- w0 E*↔pα1- w1 < pα0- w0 ↔pα1-pα0- w1 < - w0 ↔pα1-pα0 < w1 - w0 ↔θ<w1-w0 ↔ w1-w0 > θ (5.6) | π1>π0↔pα1E*- w1 E* > pα0E*- w0 E*↔pα1- w1 > pα0- w0 ↔pα1-pα0- w1 > - w0 ↔pα1-pα0 > w1 - w0 ↔θ>w1-w0 ↔ w1-w0 < θ (5.6) | b. Describe why the supply curve in figure 5.2 is upward sloping. How does you explanation incorporates θ? Why? Figure 5.2 illustrates the supply curve to risky jobs in a particular labor market. The supply curve indicates how many workers are willing to execute a risky job as a function of the wage differential between the risky job and the safe job (also known as the reservation price or ∆w=w1-w0). When it is assumed that all workers dislike risk, no worker would be...
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...about 10-12%. (Rex, 2010) Another factor is the clean air act in metro areas due to the congestion so prices in these areas are a bit more as refineries are forced to upgrade their operations to sell a blend that includes ingredients to support cleaner fuel as required. Natural disasters do not help like hurricane Katrina ripped through the Gulf of Mexico and the southern states wiping out refineries and drilling operations making it fewer outfits for gasoline and with the demand remaining constant gas prices soared during that time. I have noticed that during the summer time gasoline prices rises nearly due to the demand increasing around 5% due to more people traveling on vacations (increase in demand). (Forbes, 2012) Raw material price is a major contributing factor to increasing of gas prices as (Oil Producing and Exporting Countries) OPEC sets the price for the crude oil making domestic oil suppliers keep less inventories so the refineries are not ready and are in short supply (shortage) when demand peaks. (Chevron, 2011) While the United States have seen gas prices double and triple in the last 5-10 years we pay the lowest prices in gas compared to other countries in which gas prices are at least double if not a little bit more. Many European countries do have higher emission standards some even have fees attached as an incentive resulting in some of the...
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...when; demand and supply are balanced. The below graph illustrate the state of market equilibrium by showing the demand and supply curves with the point at which they are intersect one another – at the point of intersection of the two curves is when and where market equilibrium happens. The illustration of the graph, at the point where demand and supply curves intersect, depicts the situation where the supplied goods at the market are equal with the existed demand at the market – in terms of prices and quantity. Market disequilibrium is the opposite of market equilibrium – the unbalance of demand and supply at the market. That is when; the supplied good are equal to the demanded good at the market. However, when in the market there is a high level of supply and as the result prices start at very low what happen is surplus of supplied good in the market. Or if the situation is other way round; there is very low level of supply and as the result prices start at very high what happen is shortage of supplied good in the market. Further, surplus means there is too much of a product more than what consumers need in the market. While in another hand, shortage means there is less of a product for fulfilling the consumers need in the market. ANSWER FOR QUESTION 4 Giffen goods are those consumer goods that, in a simple description, go against the basic nature of relationship between demand and price. Meaning; Giffen goods are consumer goods that their demand increases...
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...Question 1 [10 marks] Suppose the expected market demand for tickets to the Australian Open golf tournament to be held in Queensland in November is given by D = 40,000 -1,000P and the supply of tickets is S = 20,000. Tickets for a golfing tournament have negligible Marginal cost. Hence supply will be Perfectly Elastic. This means that 20 000 tickets will be supplied regardless of demand Demand = (40,000 – 1,000 * Ticket Price) tickets Supply = (20,000 + 0*Ticket Price) tickets a. What is the equilibrium price of a ticket to the tournament? How many tickets will be sold? [2 marks] At equilibrium price: Supply = Demand 20,000 = 40,000 – 1,000P 1,000P = 20,000 P = 20 Equilibrium Price is $20 At price = $20: Supply = 20000 + 0*price = 20000 The Number of tickets sold is 20,000 b. Draw a diagram illustrating the demand and supply curves and the equilibrium price and quantity. [1 mark] [pic] The rising incomes of mine workers in Queensland, who happen to be big golf fans planning to attend the tournament, has resulted in a new demand curve given by D = 70,000 – 2,000P. Supply of tickets to the tournament remains at S = 20,000 Demand = (70,000 – 2,000 * Ticket Price) tickets Supply = (20,000 + 0*Ticket Price) tickets c. What is the new equilibrium price of a ticket to the tournament? How many tickets...
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...Axia College Material Appendix A Answer the following questions. 1. If the price of a good increases, what happens to demand? The demand decreases because people are not willing to buy as much when the price rises. 2. If the price of a good decreases, what happens to supply? The supply will increase because people are now willing to buy more at a lower price. 3. Does a change in price create curve shifts? Explain. Yes because a change in price results in a change in demand and we know that demand determines the price and vice versa. Complete the following matrix. An example is provided. |Event |Market affected by event |Shift in supply, demand, or |Change in equilibrium (P&Q) | | | |both. Explain your answer. | | |Frozen orange crops in California |Orange juice |Supply (left)—Not as many |Price will increase and | | | |available oranges to offer |quantity will decrease. | | | |consumers. | | |Hurricanes in the Gulf Coast |Gulf Coast tourism |Demand will decrease because no|Price will decrease and | | | |one wants to go...
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...RATIONALE ........................................................................................................................................... 1 AIMS ....................................................................................................................................................... 2 SKILLS AND ABILITIES TO BE ASSESSED ....................................................................................... 2 PRE-REQUISITES OF THE SYLLABUS .............................................................................................. 3 STRUCTURE OF THE SYLLABUS ..................................................................................................... 3 UNIT 1: MICROECONOMICS MODULE 1: METHODOLOGY: DEMAND AND SUPPLY ......................................................... 4 MODULE 2: MARKET STRUCTURE, MARKET FAILURE AND INTERVENTION……...12 MODULE 3: DISTRIBUTION THEORY ........................................................................................ 17...
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...Fundamental Economic Concepts • • • • • • • • • Demand, Supply, and Equilibrium Total, Average, and Marginal Analysis Finding the Optimum Point Present Value, Discounting & Net Present Value Risk and Expected Value Probability Distributions Standard Deviation & Coefficient of Variation Normal Distributions and the Standard Unit Relationship Between Risk & Return Slide 1 Demand Curves PRICE/Q $5 • A demand curve shows the greatest quantity of a good demanded at each price the consumers are willing to buy, holding other influences constant (ceteris paribus). 20 Quantity / time unit Slide 2 Sam + Diane = Market • The market demand curve is the horizontal SUM of the individual demand curves. • The demand function includes all variables that influence demand. 4 3 7 Q = f( P, Ps, Pc, I, N, Pe) + ? + + P is price of the good PS is the price of substitute goods PC is the price of complementary goods I is income, N is population, Pe is the expected future price Slide 3 Determinants of Demand i. ii. iii. Pc iv. v. vi. vii. viii. xi. x. price, P price of substitute goods, Ps price of complementary goods, income, I advertising, A advertising by competitors, Ac size of population, N, expected future prices, Pe adjustment time period, Ta taxes or subsidies, T/S • The list of variables that could likely affect demand varies for different industries and products. • The ones on the left tend to be significant. Slide 4 Supply...
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...the parameters of what the consumer demand was. The strategy implemented was one to have high quality products, at a high price point. The strategy was implemented to give the consumer a high quality, high priced product just above the asking price they demanded, however a rebate was offered to make the products priced just below the demanded high price point. The strategy itself should have worked in the real world, however the outside of price points, the following items seemed to be the deciding factors to the eventual pitfall of the 2nd Quarter i. Advertising – Too many articles were placed in an array of magazines. The amount spent on advertising was the maximum, however not enough was spent in the correct placing of magazines. Due to the spreading out in to multiple magazines the products received little penetration, but lacked brand awareness. ii. Salesforce – The plan was to start slowly, build up brand recognition and then hire more sales personal, however due to the high production forecast, and high sales forecast the overall results were never ever going to be attained with a small workforce. Without enough sales people to sell the product, the overall goal was never attained. iii. Production – I produced too much product for the demand, and due to lackluster advertising and the wrong price points, I was hit with a high excess capacity expense, which could have been avoided with proper demand forecast, proper advertising, and proper...
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...be seen in the rate at which hybrid cars are popping up on the market. Natural gas, which is abundant in America, may very well be the answer to both. The law of demand states that as the price of the good increases the quantity demanded of the good decreases. The law of supply states that as the price of the good increases, the quantity supplied of the good increases. Energy however is one of the exceptions to both of these rules. Oil and fossil fuels have a relatively high demand worldwide yet the prices are still at all-time highs. Natural gas on the other hand is at a low is cost with a high supply. While the amount of oil produced has had a slight increase recently, thanks to new technologies, it has only been enough to keep up with the rise in demand. The fact that the oil market is a global one, along with the political control over most of the world’s oil pockets continues to have the price of oil at a fairly high price. Unfortunately it will most likely stay this way. A gain made in improving the supply production of oil takes years of research. Just like oil, natural gas shows itself to be an exception to the laws of supply and demand. Unlike oil, natural gas is a continental only market due to the difficulty of transporting it. Currently in North America the supply far exceeds the demand. The cost however is about one-eighth of that of oil. This trend is expected to continue into the near future, causing many energy consumers to switch from coal...
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