...www. Wikipedia.org The economic problem, sometimes called the basic, central or fundamental economic problem, is one of the fundamental economic theories in the operation of any economy. It asserts that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how thefactors of production (such as capital and labor) are to be allocated. Economics revolves around methods and possibilities of solving the economic problem. In short, the economic problem is the choice one must make, arising out of limited means and unlimited wants. Contents [hide] * 1 Overview * 1.1 Opportunity cost and Production Possibility Frontier * 1.2 Needs * 1.3 Wants * 1.4 Choice * 2 See also | ------------------------------------------------- [edit]Overview The economic problem is most simply explained by the question "how do we satisfy unlimited wants with limited resources?" The premise of the economic problem model is that wants are constant and infinite due to constantly changing demands (often closely related to changing demographics of the population). However, resources in the world to satisfy human wants are always limited to the amount of natural or human resources available. The economic problem, and methods to curb it, revolve around the idea of choice in prioritizing which wants can be fulfilled.. and how do we know what to produce for the...
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...------------------------------------------------- Economic problem From Wikipedia, the free encyclopedia | This article does not cite any references or sources. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (October 2012) | The economic problem, sometimes called the basic, central or fundamental economic problem, is one of the fundamental economic theories in the operation of any economy. It asserts that there is scarcity, or that the finite resources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how thefactors of production (such as capital and labor) are to be allocated. Economics revolves around methods and possibilities of solving the economic problem. Economic problem arises mainly due to two reasons- (i) human wants are unlimited (ii) means to satisfy human wants are scarce. Contents [hide] * 1 Overview * 1.1 Opportunity cost and Production Possibility Frontier or Production Possibility Curve. * 1.2 Needs * 1.3 Wants * 1.4 Choice * 2 See also ------------------------------------------------- Overview[edit source | editbeta] The economic problem is most simply explained by the question "how do we satisfy unlimited wants with limited resources?" The premise of the economic problem model is that wants are constant and infinite due to constantly changing demands...
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...Also, government must strengthen the institutions that could guarantee the security of the physical aspect of all private investments in a stable political climate. There is no doubt that government alone cannot make an economy work for the betterment of all its citizens. It does need to partner with a progressive private sector (watch the emphasis put on the word progressive) to make that happen. Government must not position itself as the ultimate competitor, which, sadly, is and has long been the case in Haiti, our beloved country. When you have government, whose primary job is to guarantee a safe environment suitable for business -competing against the private sector, the market tends to become unfair, which in itself is a detriment to economic development and progress....
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...Exercises True‐False: Indicate whether each of the following statements is true (agrees with economic theory), false (contradicts economic theory) or is uncertain and explain your answer. 1. A firm earning zero economic profit is paying each factor’s owner the market value of that factor’s marginal product. 2. Input substitution increases the factor price elasticity of demand. 3. If individual workers substitute leisure for income at higher wage rates, the market supply curve of is negatively sloped. 4. Factor A is a major input in the production of commodity B. A price ceiling on A below its equilibrium price will increase the price of commodity B. 5. Industry A uses more capital per worker than does industry B. Therefore, wage rates in industry A must be higher than in industry B. 6. The marginal productivity theory of distribution implies that under universally competitive conditions, the distribution of income is fair. 7. Labor’s marginal revenue product curve in an imperfectly competitive factor market is a mutatis mutandis demand curve. 8. A competitive firm uses two inputs, labor (L) and capital (K). A decrease in the wage rate will lead to a reduction in the quantity of capital employed in the long run. 9. The ratio of wages in competitive occupation Ato wage rates in competitive occupation B is 2. After a payroll tax of 10% in both industries, the ratio of the equilibrium wage rates will increase. 10. Community A has a preferred set...
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...Managerial Economics For test purpose only The economic problem is most simply explained by the question "how do we satisfy unlimited wants with limited resources?" The premise of the economic problem model is that wants are constant and infinite due to constantly changing demands (often closely related to changing demographics of the population). However, resources in the world to satisfy human wants are always limited to the amount of natural or human resources available. The economic problem, and methods to curb it, revolve around the idea of choice in prioritizing which wants can be fulfilled and how do we know what to produce for the economy. Opportunity cost and Production Possibility Frontier or Production Possibility Curve. The main theory to decipher what and how to prioritise these wants and needs is to look at the opportunity cost (looks at what good must be prioritised first according to needs and how efficiently that the good can satisfy infinite wants). A good way to look at this is the production possibility frontier (PPF) or PPC, this isolates two goods in an economy produced at any one given time to show the effect of what would happen if one changed according to the other and also the effects of new technology and new resources. For example, say that we have isolated two goods, food and clothing, and we look at what would happen if there was increased production of food (there is an opportunity cost of clothes so clothes would go down as food goes up), this...
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...In economic sense, when something is abundant, it does not necessarily mean it is not scarce. Scarcity which is “the condition of having to choose among alternatives” ( Rittenberg & Tregarthan ), simply implies that something can be abundant but a choice must be made to better utilize it. The economic definition of scarcity implies that supply of resources is bounded. Therefore something that is abundant can also be quantified and to this extent bounded. For example, a nation that possesses an excellent harvest of plantain will enjoy low prices as there is much plantain in the market. Plantain is still scarce in economic sense as it can still run out. On the other hand, emotions like love, courage, fear, and many others cannot be measured with the economic concepts of scarcity as these emotions cannot be bounded. This clearly indicates that their abundance do not affect their economic scarcity ( Prioktan, 2008 ) In economic sense, when something is abundant it means its supply exceed demand at zero price. In simplicity, if a good or service is free, there is no shortage. This indicates that there is no opportunity cost in supplying it. Free health care to the sick is still considered scarce in economic sense because the government have to incur the cost and thus the taxpayers. Air can be considered abundant since there hardly be shortage of air to most people to breathe most of the time. On the other hand, air is scarce if we want it clean or unpolluted as resources most...
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...Practice Problem Set 3 for Econ 4808: Optimization A. Unconstrained Optimization (Note: In each optimization problem, check the second-order condition.) 1. Consider the function: y = 2 x2. a. Determine the average rate of change of the function in the closed interval [1,4] of the argument. b. Determine whether the function is concave or convex, using geometric test and a specific value of ( = 0.3. c. Do the concavity/convexity test using the derivative conditions. 2. Consider the function: y = 2x. a. Determine the average rate of change of the function in the closed interval [1,4] of the argument. b. Determine whether the function is concave or convex, using geometric test and a specific value of ( = 0.3. c. Do the concavity/convexity test using the derivative conditions. 3. Use the derivative condition to test whether the function y = 8 + 10x - x2 is concave or convex over the domain [0,7]. 4. In a cross-country study of the relationship between income per-capita (Y) and pollution (S), Grossman and Krueger estimate a cubic relationship as S = 0.083Y3 - 2.2Y2 + 13.5Y + X, where X represents other factors not linked to income. For this exercise, consider X as a fixed quantity for a country. Identify and characterize the extreme values of this function. 5. In the model of perfect competition, all firms are price-takers since they treat price (P) as a market-determined constant. Assume that P = 12. A firm's total revenue (TR) function is TR(Q)...
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...------------------------------------------------- Top of Form Problem Set 4- Part A Table of Contents Part 1 of 1 - | Question 1 of 5 | 10.0 Points | Joe quits his computer programming job, where he was earning a salary of $50,000 per year, to start . He opens his own computer software business store in a building that he owns and was previously renting out for $24,000 per year. In his first year of business he has the following expenses: mortgage $18,000, salary paid to himself, $40,000; rent, $0; other expenses, $25,000. Find the economic cost associated with Joe's computer software business. | | | A. $83,000 | | | | B. $99,000 | | | | C. $81,000 | | | | D. $65,000 | | Reset Selection | Question 2 of 5 | 10.0 Points | Imagine that the total cost function is described by C(q)=64+(q^2)-12q. The marginal cost (MC) and average cost (AC) are | | | A. MC= 2q-12 AC= (64/q) + q - 12 | | | | B. MC= 64 AC= (64/q) + q - 12 | | | | C. MC= q-12 AC= 64 | | | | D. MC= 2q-12 AC= q - 12 | | Reset Selection | Question 3 of 5 | 10.0 Points | The previous technology (described by C(q)=64+(q)²-12q) exhibits diseconomies of scale whenever output is bigger than | | | A. 5 | | | | B. 6 | | | | C. 7 | | | | D. 8 | | Reset Selection | Question 4 of 5 | 5.0 Points | Last year, your firm purchased a building for $200,000 in cash. Real estate prices have been holding steady, neither...
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...Problems of Chinese Economic Growth? Since 1978 the Chinese economy has maintained economic growth at an average of nearly 8%. By western standards this is remarkable. The UK, by contrast, has grown at an average rate of 2.5%. However, despite the impressive figures there are many serious economic problems resulting from economic growth. In particular, the growth rate combined with a population of over 1 billion has caused serious environmental problems. These are a good example of negative externalities of growth. A negative externality is a cost imposed on the rest of society as a result of receiving the benefits from growth. Problems of Chinese Economic Growth. 1.Pollution. Pollution is a major problem in many industrialised cities. Increased car ownership has led to problems of smog and worsening air quality. Pollution also occurs from China’s vast industrial sector. Often regulation of pollution is very limited with untreated sewage often been poured directly into rivers. 2. Shortage of Power. The growing demand of the Chinese economy has placed great demands on China’s creaking power infrastructure. This has led to the creation of projects like the Three Gorges Dam. This has been criticised for creating environmental and social problems. Environmentalists fear that the dam will severely impact on the natural habitats of many species. 3. Growing Income Inequality China’s economic growth has benefited the south and eastern regions more than anywhere...
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...The Barrier to China sustainable economic growth: Pollution Problem China, the world’s second largest single-country economy, has achieved economic growth over the past 30 years, however, growing the GDP at any cost has created many environmental problems. China’s facing severe pollution and environmental degradation for many reasons such as rapid industrialization, reliance on coal as an energy source and manufacturing industry. One of the environment problems for China is pollution. The current air pollution has become a threat to Chinese people health. 33 shocking photographs were posted on social media under the caption ‘Pollution in China is out of control’ catching world’s attention. This problem has thus become serious problem which call for rethinking of government policies. The Chinese Prime Minister, Li Keqiang, also responded to this problem declaring war against pollution and fighting it with the same determination China battled poverty. From my point of view, it’s the big challenge for China to improve the environment quality while achieving rapid economic growth therefore I think one of the greatest barriers to sustainable economic growth for China is the pollution problem. The impact of China's economic development on the environment has become increasingly serious, China has been facing a growing imbalance between economic achievements and the quality of the environment. At present with economic growing, China's energy consumption and environmental...
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...Can Economics Solve the Problem of Global Warming? The potential negative effects of global warming are very serious. Even by just concentrating on economic factors, global warming has the potential to cause unprecedented costs to the global economy. Yet, despite the forecasted dangers and economic costs, there seems to be a disinterest in implementing necessary policies to avert the consequences of global warming. There are many reasons why it is difficult to deal with the issue of global warming such as the problem of “free rider”, externalities, intergenerational externalities etc. Global warming is by definition a phenomena which affects every country. Pollution may be caused by a small percentage of developed countries and yet those who suffer the most may be pacific islands who contribute nothing to global warming. When it comes to reducing carbon emissions there is a classic free rider problem. Countries can benefit from lower emissions by relying on other countries to make sacrifices and reduce their pollution levels. The problem is that countries can then become reluctant to start reducing emissions until other countries start reducing emissions as well. Why should a tiny country like Sweden make sacrifices in reducing carbon emissions, if the US continues to create a large part of the world's CO2 emissions? Global warming is to a large extent caused by externalities. When you drive an SUV, the contribution to global warming is an external cost which you don't...
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...Week Four Assignment: Ch.8 & Ch.9 Keidra Conner BUS 640 Managerial Economics October 15, 2012 Ch.8 Applied Problem 2 2. At a management luncheon, two managers were overheard arguing about the following statement: “A manager should never hire another worker if the new person causes diminishing returns.” Is this statement correct? If so why? If not, explain why not. Yes, this statement is correct because in some cases hiring new workers can become negative and cause the marginal product to fall. The text states the managers beyond the point of diminishing returns but not to the point of negative marginal product (Thomas & Maurice, 2011, pp. 296-297). Ch.9 Applied Problems 2 & 4 2. The largo Publishing House uses 400 printers and 200 printing presses to produce books. A printer’s wage rate is $20, and the price of a printing press is $5,000. The last printer added 20 books to total output, while the last press added 1,000 books to total output. Is the publishing house making the optimal input choice? Why or Why not? If not, how should the manager of Largo Publishing House adjust input usage? No, the publishing house is not making the optimal input choice because this is not the least-cost combination of inputs. The manager should hire another printer to maximize the output at a lesser cost. This will balance the amount of inputs for maximizing production of the given output. 4. The MorTex Company assembles garments entirely by hand even though a textile...
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...Describe the three basic/core economic problems facing all economies. Economic problems emerge because our desire for goods and services to consume is greater than our ability to produce those goods and services. As humans, we have unlimited wants and limited resources. This is referred to as scarcity, which exists because there are insufficient resources to produce the goods and services to fully satisfy all wants. Another part of the problem is the fact that resources are not distributed evenly between countries and societies. As a result we are forced to choose among alternative options. For example, you might go into a shop and see two great-looking pairs of jeans but you only have enough money (resources) to buy one of them. Another example is that, a business might have received a major order for its products and wants to increase production but does not have the staff or the equipment and raw materials to meet the order in full. The above mentioned examples highlight the problem of scarce resources in relation to wants and needs. Because no economy can produce enough goods and services to satisfy all its citizens’ wants, choices must be made. The decision to have one thing over another involves a cost. Not a monetary cost, but what is known in economics as an opportunity cost, that is the next best alternative foregone. In other words, the cost of any choice that you make is the value of the best opportunity that you give up in order to make that choice. In an economy...
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...Economics 4220 Problem Set 1 Solution Click Link Below To Buy: http://hwaid.com/shop/economics-4220-problem-set-1-solution/ Instructions: This problem set consists of two parts. The first part is comprised of 10 multiple choice questions that will be worth 2 points each. The second part is comprised of four short answer questions. You are to answer all four of the questions. Each question will be worth up to five points. Part I: Multiple Choice – You are to answer all ten of the following multiple choice questions. Each question is worth two points. Question #1: Flu vaccines provide both private benefits to individuals and positive external benefits to other members of society. Without government intervention, we would expect: A) Question #2: Steve purchase pizza which costs $3 a slice and Diet Coke which costs $0.75 a can. At his current consumption level, the marginal rate of substitution between pizza and Diet Coke is 6. Given this information, we know that Steve is: a) Question #3: Many economists have documented a strong correlation between income and environmental quality across countries – as nations (individuals) become wealthier, they are willing to spend more to protect the environment. Based on this information, environmental quality is a: a) Normal good b) Inferior good c) A private good Use the following figure to answer Questions #4 and #5 Figure: Marginal Private Benefits and Marginal Social Benefits ...
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...* About Us * Samples * FAQ * Our Prices * Order now * Writers * Contact Us We write: * Essays * Research Papers * Coursework * Thesis * Dissertations * Term Papers * UK Essays ------------------------------------------------- Top of Form Bottom of Form ------------------------------------------------- Top of Form Count of pages: Number of words: Choose your academic level: Term: Discount Code (optional): Discount: 0% Price: $0 Bottom of Form The page includes: Essay Paper on Economics Essay Paper on Economics Social polarization grows as the poor become worse off, but as the wealthy become better off. One of the reasons for that is the shocking fact that the poor often pay more taxes, relatively, than do the rich. In Britain, for example, “the tax burden of the top fifth of earners has fallen from 37 percent to 35 percent in the last twenty years. In contrast, the tax burden of the bottom fifth has risen from 31 percent to 38 percent.” The other reason for social inequality nationally is imperfect income distribution. Thus, whereas 23.5 percent of all American workers received only poverty level wages in 1973, this had risen to 28.6 percent by 1997. Looked at another way, real wages for relatively low-paid workers fell by 22 percent between 1973 and 1995, and 10 percent for middle-range workers. Low-paid jobs grew by 22 percent in New York City between 1993 and 2000—four...
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