...Federal Reserve Marian Holmes ECO/372 March 12, 2013 Robert D'Alessio Federal Reserve The Federal Reserve is an independent central bank, and it is the third central banking system in the United States’ history. The first banking system was The First Bank of the United States and the second banking system was the Second Bank of the United States. The Federal Reserve is unique in many ways, controlling, and over-seeing currency in the United States. To receive a better overstanding of the Federal Reserve System and how it works, the following questions will be topics of discussion: * What are the factors that would influence the Federal Reserve in adjusting the discount rate? * How does the discount rate affect the decisions of banks in setting their specific interest rates? * How does monetary policy aim to avoid inflation? * How does monetary policy control the money supply? * How does a stimulus program (through the money multiplier) affect the money supply? Currently, what indictors are evident that there is too much or too little money within the economy? How is monetary policy aiming to adjust this? The Discount Rate is the interest rate that the Federal Reserve Banks charge depository institutions on overnight loans. Factors that would influence the Federal Reserve in adjusting the discount rate are an increase or decrease in money supply, or if they foresee the economy heading to a recession or inflation. Banks decisions are affected by...
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...Economic Analysis Dexter Wilson ECO/365 2/17/2014 When we talk about the difference between a movement along and a shift of the demand curve we have to know that one works off of demand and the other works off of quantity demand. They both work off the law of demand but it states that when the quantity demand rises the price will tend to fall. On the other hand when the quantity supplied goes up the prices will go up too. What we will talk about it the following. How equilibrium price and demand is impacted by an increase in supply and demand, increase in both. Lastly I will talk about the role that supply and demand is used in making decisions in a real world scenario. There are some factors that can affect the supply and demand that are not just price and this is what is called shift factors. The shift factors in demand can include things such as, prices of other products, tastes, the expectations and also the taxes. Shift factors in supply would include the price of inputs, technologies. There is a difference in demand and quantity demand, demand is described as a good that will be bought at various prices as on the other hand quantity demand is a good that can be bought at a specific price. The movement along the demand curve is when there is a change in the price which changes the quantity demand. The shift in the demand curve is when there is a change in anything other than the price that will end up affecting the demand and will change...
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...Competitive Strategies and Government Policies ECO/365 Competitive Strategies and Government Policies Change is inevitable. With all of the changes in the automotive industry over the years and the changes yet to come the Ford Motor Company needs to position itself in the market and embrace the changes. In 2013 Ford Motor Company had an outstanding year. Retail sales were up 14 percent and Ford is expecting 2014 to be another great year around the world. Ford is expecting to introduce 23 new vehicles to customers and open three new production plants worldwide. “Our strategy in Asia Pacific is to serve our customers with even more One Ford products, and to increase our capacity to provide these great products with manufacturing hubs in China, India and ASEAN,” said Dave Schoch, group vice president and president, Ford Asia Pacific” (Ford Motor Company, 2013). With these expectations there will need to be some changes to be monitored. The changes in the automotive industry can be broken down into the following areas. There are new companies entering the market, mergers and acquisitions and globalization that affect pricing and sustainability of profits. There are government policies and regulations, currently and in the future, that will affect the industry. With global competition there will be decisions made by management that will change the way we compete in the industry in the future. New Companies Entering Market Major issues to consider with the many companies...
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...Supply and Demand Simulation ECO365 September 16th, 2013 Supply and Demand Simulation In the city of Atlantis there have been many changes over the last several years changing the supply and demand of rental property from Goodlife Management as well as the demand for permanent housing. Any change will invoke either an increase in rental charges or a decrease. Also throughout the course of Goodlife’s presence in Atlantis they have converted some of their 2 bedroom rental apartments into permanent condos that people can purchase. The text states that microeconomics is the study of the choices of individuals and how those choices can be influenced by economic forces. Goodlife Management, as previously stated rents two bedroom apartments and these apartment rental rates are based on the demand for the apartments and the actual supply of the apartments. The apartments will be in demand by individuals based on economic influences. On the other hand Macroeconomics is the study of the economy as a whole or big picture view. Macroeconomics focuses on inflation, unemployment, growth, and the cycles of business. A macroeconomic example from the simulation is the more industry that has moved to Atlantis causing more employment opportunities has caused an increase for permanent housing and the rental of apartments because the population is increasing. The simulation also touches on several instances where the supply and demand curve changed based on different factors...
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...ECO/365– Principles of Microeconomics– Final Exam Study Guide How to Use this Study Guide – READ ME FIRST The following study guide will NOT have the same exact questions on your test! However, this study guide WILL help you ace the Final Exam. The guide covers the same topics and will help you gain a deeper understanding of the concepts. Best of all, you are still guaranteed a score of 90% or higher or your money back! Tip #1: Use CRTL+F to search a related keyword to quickly find the topic you need. Tip #2: If a topic is missing, please email us at support@accnerd.com. We can usually provide immediate custom support during normal business hours. 1) Concert ticket prices increase by 5%, while attendance decreases by 2%. What is the elasticity of demand for concert tickets? 0.4 Explanation: In this problem, elasticity of demand is calculated as 2 divided by 5. 2) How is microeconomics different from macroeconomics? Microeconomics covers the choices made by individuals. Macroeconomics covers the total economy’s performance. Explanation: Microeconomics is about individual choices, while Macroeconomics is about the overall economy. 3) What type of research contains the relationship between the money supply, interest rates, and inflation rates? Macroeconomic Explanation: Factors that affect massive groups of people are considered macroeconomic research. 4) Oil prices started rising in the 1990s. Much of the supply was met from sources that were non-OPEC...
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...Team A: Weekly Reflection In today’s business economy, every product sold within the marketplace has a substitute or complement. With a variety of products available on the market there is always a change in supply and demand. To understand why some products are complements and others are substitutes, we must first understand the difference between the two. It is said that compliment products are complementary to one another and can cause the demand to grow. On the other hand, substitute products can lower demand for the original product. Substitutes and complements are important in economy because they provide consumers with an option. The purpose of this paper is to provide an insight on why some products become substitutes and why some are complements. For a product to be considered a substitute, it must have similar features to another product. A substitute is considered the consumer’s alternative. An item becomes a substitute when the item it is most similar to influences the alternative’s demand. An example of this is coffee and tea. If the price of coffee increases, the demand for tea will increase because consumers will buy tea as the cheaper alternative. A product can also become a substitute based on its elasticity. An item with high elasticity means any changes to price influences the amount supplied and the demand of the product. An item with high elasticity has substitutes and can also be a substitute. Based on that items price, consumers will decide to buy...
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...Article Review ECO365 Article Review During this economic crisis, everything from food, clothing, and fuel has gone up. The most puzzling thing about the economy is the price increases. With job unemployment being at such a high rate, one would not expect the prices of consumer products to be so high. One would certainly think that there would be some relief at the gas pumps. Gasoline prices have soared to an all time and record breaking high this year. People have gone to alternative forms of transportations. Many people are hoping for some kind of break in the prices of gasoline. Memphis may be the only city getting some sort of relief at the pumps. Since gas price have almost double since the last year, many people have found new ways to offset the cost of the high prices. Considering new cars with better miles per gallon (MPG) has been an outlet for people. Riding motorcycles of scooters also save on gasoline use. Some people have even resorted to car pooling and ride bicycles. No one can truly say what is best for people, but there are some alternatives out there. Demand One was asked to describe what has occurred to change the demand for the product or service and its market and equilibrium prices. Assuming that the demand remains the same for the product much has changed. The product of gasoline has remained the same far as people having the need for it. People still drive their vehicles everywhere they go. This has not changed the demand for...
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...( Answers to Textbook Problems 1. At an exchange rate of 1.05 $ per euro, a 5 euro bratwurst costs 1.05$/euro ( 5 euros ’ $5.25. Thus, the bratwurst in Munich is $1.25 more expensive than the hot dog in Boston. The relative price is $5.25/$4 ’ 1.31. A bratwurst costs 1.31 hot dogs. If the dollar depreciates to 1.25$/euro, the bratwurst now costs 1.25$/euro ( 5 euros ’ $6.25, for a relative price of $6.25/$4 ’ 1.56. You have to give up 1.56 hot dogs to buy a bratwurst. Hot dogs have become relatively cheaper than bratwurst after the depreciation of the dollar. 2. E(NOK/CHF) ’ E(NOK/USD)/E(CHF/USD) ’ 7.5/1.25 ’ 6 NOK/CHF 3. When the yen depreciates vs. the dollar, its costs go up. This depresses its profits. On the other hand, if it exports products to the United States, it can increase the yen price (without changing the dollar price) so there may be some offsetting effects. But, by and large, a firm that has substantial imported input costs does not relish a depreciating home currency. 4. The dollar rates of return are as follows: a. ($250,000 − $200,000)/$200,000 ’ 0.25. b. ($275 − $255)/$255 ’ 0.08. c. There are two parts to this return. One is the loss involved due to the appreciation of the dollar; the dollar appreciation is ($1.38 − $1.50)/$1.50 ’ −0.08. The other part of the return is the interest paid by the London bank on the deposit, 10 percent. (The size of the deposit is immaterial to the calculation of the rate of...
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...Week One Article Analysis ECO/365 January 16, 2012 Week One Article Analysis David Colander defines economics as "the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society” (Colander, 2010, p. 4). Coordination in this definition refers to production content, method, recipients, and even quantity. To think like an economist one must analyze every situation by comparing the costs and benefits and make any decisions based on those findings (Colander, 2010). The study of microeconomics zeroes in on the individual and analyzes how economic forces affect the choices he or she makes. Economic forces will ensure that what people want and will pay to get will match what is available. This is the concept of supply and demand. If the prices are such that people are not willing to pay it to obtain an item or service, they will choose to buy less of it, not buy it, or buy a substitute. This is the working of the law of demand. The price affects both supply and demand. When prices increase, the demand decreases, and when prices decrease, the demand increases. In the law of supply, however, if prices increase, individuals and companies will increase the supply because the opportunity cost of not producing the product rises with the price (Colander, 2010). There are factors other than price that can lead to changes in supply as well as changes in demand. These could be government...
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...Microeconomics and the Laws of Supply and Demand ECO/365 Microeconomics and the Laws of Supply and Demand Introduction Supply and demand dictates business and determines if a business is going to be successful or not. It is also a key part of the microeconomic and macroeconomic settings in a company. This week’s simulation showed how an apartment company in the city of Atlantis is affected by the business decisions of the company and the economic factors that are going on around them. The microeconomic concepts that can be pulled from the simulation are the changes in the supply and demand of their two bedroom apartments which the company is trying to adjust. The macroeconomic concepts that can be pulled from the simulation are the price elasticity and the price ceiling that the government has set because this has an effect on the area as a whole. Both of these economic factors play a key role in business and how a business has to adapt to the changes in the economic structures around them. The Simulation The simulation brought to the light and showed that a shift in the supply curve or the demand curve or both curves could cause major changes in the economic environment of the economy around them and the company as a whole. The simulation showed that there was a demand for property, especially when Lintech Inc. moved into the area. There was a huge demand for the apartments and this caused Good life management to adjust prices to compensate for the demand...
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...Chapter Two The Production Possibility Model, Trade, and Globalization Learning Objectives After you teach the material in this chapter, your students should be able to do the following: 1. Demonstrate opportunity cost with a production possibility curve. 2. State the principle of increasing marginal opportunity cost. 3. Relate the concept of comparative advantage to the production possibility cure. 4. State how, through comparative advantage and trade, countries can consume beyond their production possibilities. 5. Explain how globalization and outsourcing are part of a global process guided by the law of one price. Chapter Outline This is meant to be an outline and summary of what your students read in this chapter in the text, both in terms of concepts and examples. Headings and subheadings are tagged with the number of the learning objective (LO) to which the material in that section most closely relates and the associated PowerPoint slide numbers, so you may also use this to help you outline your lecture. Material followed by a ( is new to the 8th edition. • The Production Possibility Model, Trade, and Globalization • The three main coordination problems are reviewed, and students are reminded about the concept of opportunity cost, which will be central in this chapter to understand production possibilities. • The Production Possibilities Model (LO1) [PPT Slides 3 & 4] • Production...
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...What are the conditions for a perfectly competitive market? A perfectly competitive market is a market in which economic forces operate unimpeded. For a market to be perfectly competitive, six conditions must be met: 1. Both buyers and sellers are price takers – a price taker is a firm or individual who takes the price determined by market supply and demand as given 2. The number of firms is large – any one firm’s output compared to the market output is imperceptible and what one firm does has no influence on other firms 3. There are no barriers to entry – barriers to entry are social, political, or economic impediments that prevent firms from entering a market 4. Firms’ products are identical – this requirement means that each firm’s output is indistinguishable from any other firm’s output 5. There is complete information – all consumers know all about the market such as prices, products, and available technology 6. Selling firms are profit-maximizing entrepreneurial firms – firms must seek maximum profit and only profit What are the conditions for a monopolistic market? • Monopoly is a market structure in which one firm makes up the entire market • Barriers to entry into the market prevent competition, they can be; Legal, Sociological, Natural, Technological • There are no close substitutes for the monopolist’s product What are the conditions for a monopolistic competitive market? A monopolistically competitive market is a market in which there are many...
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...Competitive Strategies and Government Policies Competition and policy changes are something that every company likely has to face in their existence. Finding the balance between staying profitable while constantly adapting to the changing economic and customer driven demand environment will be the key to the expansion of the craft brew business. New Companies and Mergers The idea of new competition is the boost to get the current company to step their game up. DogHead Fish Brewery is successful and growing steadily. The rapid emergence of nano-breweries has redefined the standards of craft beer. Good just doesn’t cut it anymore. It has to be bold, smoky, spicy, “hoppy,” citrusy, sour, fruity, one-of-a kind and more. If you just want to drink good beer, you are in for a treat. Are these many breweries sustainable in the long run? The research has shown that craft breweries are growing in record numbers. The market is ripe for it. The consumer base is also expanded beyond the college student to the beer drinking connoisseur. In recent years, craft brewers have sounded an alarm over the clout of Anheuser-Busch Inbev and MillerCoors, who today control 90 percent of the beer market. Craft brewers hold just 6 percent, but the market share is growing (Hieronymus, 2010). "Their preferred business model is an oligopoly," says Koch of the company that was once interwoven with his family. "I don't see them as trying to deliberately set out to destroy us. But we are very potentially...
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...Differentiating Between Market Structures ECO/365 June 2013 John Ilokwu Barnes and Noble Market Structure Barnes and Noble (B&N) is the ultimate destination for consumers to expand their knowledge or enjoy a quiet getaway with their favorite author or connect with a new author. “Leonard Riggio, the company's chairman, began his bookselling career while attending New York University in the early 1960s, and specializes in books, magazines, video, DVD, and music. As a publically traded company with almost 700 bookstores in the 50 United States,” (Barnes) the largest retail bookstore in shopping malls, colleges and universities, and major strip centers plus on the web provides a strong market structure for B&N. In economic theory there are “four different markets; perfect competition, monopoly, monopolistic competition, and oligopoly” (Colander, 2010). Without different markets there would not be any structure. Therefore, it is important to understand and determine the different market structure, the effect of externalities on market outcomes, the barriers new firms have when entering the market, the effect of government interventions, taxation, and regulation on economic behavior. Also this paper will identify three competitive strategies to maximize profits in the long run, the efficacy of strategies on the organization of B&N, and the three types of merger; horizontal, vertical, and conglomerate. B&N made a vertical merger when they became part of the Waldenbook...
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...ECO365 November 24, 2014 Microeconomics and the Law of Supply and Demand The Supply and Demand simulation concept is essential to understand the effects of pricing and availability to consumers on real world commodities. This simulation captures the impact of different scenarios and situation of the property management company, Goodlife Management in the city of Atlantis. In the scenarios and based on the situations that occurred, these factors influences the equilibrium such as adjusting the rental rate of the apartments to maximize revenue. An attempt to increase the price to ensure a sufficient number of apartments to be rented to satisfy the demands, and making modification to the firm's trend from rental apartments to homeownership in order to meet the needs of a growing population due to Lintech Inc (University of Phoenix, 2014). Macroeconomics VS. Microeconomics In the simulation, the concepts of both, study of Microeconomics and Macroeconomics, are examined. Macroeconomics focuses on factors that affect the economy as a whole (Colander, 2013). In the scenario where Lintech company was introduced, the changes led to the whole economy of the city of Atlantis, not just the financial situation of Goodlife Management firm. The firm perceived the increase of residential demands due to the company workers that relocated in the area. However, in the scenario, when the firm increased the rental price due to the foreseen increase of demand of more apartments need to be...
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