...the country. The effect that this will have on the demand for fuel is explained in this report, using the demand and supply model and also the priced determinants of demand. The report also explains the effect the removal of the subsidies will have on the revenue of the people supplying the fuel. The increase in fuel prices has a flow on effect increasing the prices of other goods which use fuel in their production. Question 1 The supply and demand model shows that when supply and demand quantities are balanced we have an equilibrium price. Once the price increases over this equilibrium price the demand decreases and supply increases which results in a surplus of good. When the price drops and demand increases it results in a shortage of goods. This is shown in diagram 1 below. Diagram 1 (Word Press 2011) The removal of the subsidy will mean there is an increase in the price of fuel making it too expensive for many consumers and therefore decreasing demand which may result in a surplus of fuel. Question 2 A “Elasticity of demand is a measure of how responsive consumers demand is to a change in the price of a product” (Jackson et al 2012, page 61). Inelastic demand occurs when the change in the price of a product has little impact on the quantity demanded. The price elasticity of demand for fuel in Nigeria is inelastic, as the increase in price from the removal of the subsidy would have little impact on the demand for petrol. I have reached this answer based on the...
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...Economic Supply and Demand Analysis Tammy Costello MBA 502 April 20, 2014 Hector Morales Economic Supply and Demand Analysis Novo Nordisk has offered a significant amount of data involving their manufacturing of insulin to the general public. They have estimated that as populations change and diabetes is moving more into the cities we will find that two out of three people that have diabetes will reside in the city. “By 2030, it is estimated that more than half a billion people will suffer from diabetes with nearly two-thirds of everyone with diabetes living in cities, and those who move to cities are significantly more likely to develop diabetes than those who remain in rural settings” (Novo Nordisk, 2013). Census now show that more people now reside in the city than in the rural areas of the country. Now the population is at 52% and is thought to rise to 70% by the year 2050. Because of the economic strength and higher consumption, to inactive lifestyles and the inability to obtain good health care has given rise to the higher numbers of diabetes in our country. One of the main concerns of diabetic patients remains how they will pay for the necessary medications and supplies needed. In my research I have found that without insurance it can be relatively expensive especially for those on fixed incomes. The estimated prices for a vial of novo log insulin ranges from $143.00 to 200.00, 3 flex pens of novo log $207.00 to $250.00, and 3 cartridges $203.00 to...
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...Key Assignment (2) – Economic Growth and Supply Side Policy 1. Evaluate the use of supply side policies to achieve economic growth Supply side policies are polices designed to improves an economy’s productive potential and its ability to produce, which contributes to a faster rate of growth of real national output. Governments believe achieving sustained growth without causing a rise in inflation is dependant on improving supply-side performances. The perks of supply side policies are that it helps economies to develop labour productivity, reduce unemployment, and improve trading to help achieve economic growth. A key aim for supply-side policies is to decrease the level of unemployment in an economy. The policy is designed to improve the quality and quantity of the supply of labour available to the economy. A growth in labour supply increases the productive potential of an economy. Increased quality will improve the productivity of labour. A reduction in unemployment can be achieved through cuts in Income tax, providing an incentive to work. As income tax is paid directly from an individuals earned income, a lower income tax will act as an incentive for unemployed workers to join the labour market, or for existing workers to work harder. This is as result of them being able to keep a high proportion of the money they earn. An increase in national output can be accomplished as lower corporation tax provides an incentive for entrepreneurs to start a business or organization...
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...inelastic demand Elastic and inelastic demand Task A 1. Elasticity of Demand measures sensitivity of the demand for a good to a price change. If the price of a good matters little, a change in the price of that good will have a small impact on one’s willingness to sell or buy and this would indicate an inelastic situation. However, if a small change in prices causes substantial changes in one’s willingness to buy or sell, the good is said to be elastic. McConnell, Brue, and Flynn (2012) note that when demand is elastic a decrease in price will increase total revenue because even though the price is less the additional goods sold make up the difference. Conversely, if the demand is inelastic, price decreases reduce total revenue. When the percent of increase or decrease in the price of a good is equal to the demand percentage the case is unit elastic. 2. Cross-price elasticity of demand measures the sensitivity of quantity demanded of a good when the price changes on another good. When two goods are substitutes, the price of one good increases the demand for another good. Airlines A and B have routes that are the same. As airline, A raises the price of their tickets consumers will likely change to airline B. This is a simple explanation of substitution. A good is considered a complement to another when the demand of product A is increased after the price of product B is decreased. 3. Income elasticity measures the relationship between a change in demand for a...
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...This assignment provides an economic analysis of South African Maize. The objective of the assignment is to find a non –governmental price regulated commodity and examine the determinants of demand and supply, as well as prices, and elasticities of the commodity Table of Contents Introduction: 2 The determinants causing shifts in demand and supply: 3 Price movements: 4 Price and/or income elasticities: 4 Conclusion: 5 References: 5 Introduction: In Africa, South Africa’s economy is one of the largest (one-quarter) contributor’s to the nation’s economic Gross Domestic Product. Even though the manufacturing sector is now a sizeable donor to the South African economy, commodities do still provide an ample section to the economy (Simpson, 2012). A commodity is known as a raw material this is exchanged (bought and sold) by trade partners. It can also be a primary agricultural product (Parkin et al., 2008: ). South Africa’s agricultural sector does not have a large impact on a global scale upon the world’s agricultural trade. Although does export cereal grains in large quantities as well as stocks the country with cereal grains’ seeing as it is one of South Africa’s staple foods (Simpson, 2012). In economics, questions result from people wanting more than they can get. What is available for individual’s consumption is limited by time; incomes received; and by the prices of the goods and services people must pay. The goods and services available are constrained...
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...Introduction to Economics BS1547 Introduction to Economics Macroeconomics Assignment- 1 Neo-Classical and Keynesian “The study of how society, and those in society allocate scarce and hence valuable resources between competing uses can be defined as Economics”(Jones, 2013) which was founded by Adam Smith in 1776. “The field of Economics that deals with the aggregate economy and changes in its level of unemployment, national income, growth rate, GDP, inflation and price level is called Macroeconomics.”(www.investopedia.com) As economics developed two distinct approaches were seen to immerge the Neo Classical which stated that Macroeconomics = ∑Microeconomics and the Keynesian which stated the opposite. Both these approaches are still followed in the managing of the present world Economies. Figure 1. As seen above, Neo classical approach lasted several years before the Great Depression, but was revived once again after the period of stagflation when the Keynesian approach failed to improve the economic condition. The Neo Classists approach influenced by Adam Smith and others with reference to the ‘invisible hand theory’ (Jones, 2013) stated that the “market is best left alone and that it will adjust and clear itself and hence finding its own macro-equilibrium.” (Jones, 2013) Keynes suggested that this is not realistic approach and that “government intervention is needed for the market to reach its macro-equilibrium.” (Jones, 2013) The Neo Classical approach towards Economic production...
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...Supply and demand are basic economic concepts that are usually applied in a market environment where there is a presence of a manufacturing firm and consumers. Both are also components of an economic model which is an instrument in determining the price and quantity of a particular product in a given time or place. “Supply” is defined as “the amount of goods or services that can be provided by a company to its consumers or clients in an open market” while “demand” is said to be “the willingness of the consumers or clients to buy or receive products or services from a firm in the same open market.” These concepts are always present in every economic activity – whether in business and anyplace where economic exchange is present. In economics, both concepts also adhere to their own respective laws. The law involves a particular concept and its relationship to the price and its counterpart concept. The law of supply states that the supply and price are directly related. If there is an increase in price, the same increase applies to the supply due to the owner’s increased production and expectation of profits. If the price goes down, there is no reason to increase production. On the other hand, the law of demand conveys the inverse relationship between price and demand. If the demand is high, the price goes down to make the product more available, and the reverse happens when the demand is low while the price goes up to make up for the product costs. Both laws only apply as there...
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...Running Head: Microeconomics and the Law of Supply and Demand Microeconomics and the Law of Supply and Demand ECO/365 February 12, 2012 Supply and Demand Simulation This week our facilitator assigned each student to participate in an economics simulation that allowed us to be in control over a property management company, named Good Life Management. In this simulation the student was able to use experimental economics and natural experiments. Atlantis is the city in which Good Life Management operates their seven apartment complexes. Atlantis is also a very desirable place to live, and keeps prices competitive. The simulation changed the economic, social, and political factors, and left the student to determine the correct market price to list the apartments. According to Colander, D. (2010) “Theories, models, and principles must be combined with knowledge of real-world economic institutions to arrive at specific policy recommendations”. Microeconomic and Microeconomics In this simulation there were many examples of how micro and macro economics influenced supply and demand. According to Colander, (2010) “Microeconomics is the study of how individuals choice is influenced by economic forces”. In the first simulation Good Life Management had 2,000 two-bedroom apartments with 28% vacancy rate. At this point the simulations recommendation is to lower the rent amount in order to get 15% vacancy which would maximize revenue for Good Life Management...
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...Economic Factors affecting the demand, Supply and Price of a commodity Introduction: Supply and demand are two important concepts in economics and supply and demand are considered to be the backbone of a nation’s economy. Demand is generally referred to as the quantity of product or services required by the consumers. The quantity of product or services referred to and the volume of product the consumers are ready to buy at a specific price. The demand relationship is generally referred to as the relationship between the price and quantity of products or services demanded nu the consumers. Supply generally represents the how much product or services a market can offer to the consumers. The product or services supplied refers to the amount...
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...The Academic Department Of the School of Business and Economics In Partial Fulfillment of the Requirements For the Bachelors Degree in Business Administration Atlantic International University (AIU) @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@ INTRODUCTION TO MICROECONOMICS @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @ Emmanuel Kasozi Atlantic International University (AIU) – School of Business and Economics August 15, 2012 School work, Micro economics @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ Atlantic International University (AIU) CONTENTS 1 1.0. Microeconomics and Business Markets an overview 2.0. Economics is defined 3.0. Opportunity cost 4.0. 3 Production curve 2 5.0. Microeconomics is defined 6.0. Business Markets 7.0. Market 8.0. 8 Assumptions of markets 3 Demand, Supply and market Equilibrium 9.0. 10 Demand 10.0. Factors influencing Demand 11.0. Demand curve 12.0. Ceteris Paribus 4 13.0. Supply 14 14.0. The law of supply 15.0. Supply schedule 16.0. Supply curve 17.0. Factors influencing supply Atlantic International University (AIU) 18.0. Equilibrium 19.0. Reference 21 MICROECONOMICS AND BUSINESS MARKETS An Overview Economics it is a broad word which is found almost everywhere in the...
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...Khemraj Definitions Paper Economics What is economics? “Economics is 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, page 4). Three main problems that need to be solved in the economy are what and how much to produce, how to actually produce it, and whom is it being produced for. Of course we all want more that can be produced, which causes a scarcity of the products. Microeconomics What is microeconomics? “Microeconomics is the study of individual choice, and how that choice is influenced by economic forces (Colander, page 15)”. In other words, it is the study of how companies’ price their merchandise, whether or not I should buy something, what resources are going to be needed. Opportunity cost is associated with microeconomics, and is the benefit that you can get if you choose an alternative. For example, if I spend all my time on homework then I will have less time to watch television. The invisible hand theorem is also associated with microeconomics, through price mechanism. Basically, when quantity supplied or demanded is greater than what is available, the prices will rise or fall. Law of Supply What is the law of supply? “The law of supply is based on substitution and the expectation of profits (Colander, page 90)”. Supply is the mirror image of demand, and we need demand in order to have supply. A good example of the...
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...OPEC OIL IN 2010: ECONOMIC EVENTS, TRENDS IN DEMAND AND SUPPLY AND IMPACT ON PRICES Etuwat James J.O., American University of Leadership, 2012 1.0 INTRODUCTION This submission is on an organization known by its acronym OPEC but its full name is Organization of the Petroleum Exporting Countries. The write up seeks to identify economic events related to 2010 that have influenced the trends of the supply and demand of OPEC oil and the impact of these events on oil prices. My focus will be on the period of 2010 and to an extent prior to that year. According to their website (OPEC 2012) , the Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental Organization and was created in the Iraq capital of Baghdad after endorsement of accord in 1960 by the founding members, Kuwait, Iraq, Saudi Arabia, Islamic Republic of Iran and Venezuela. Others came in later in alphabetical order: Algeria (1969), Angola (2007), Ecuador (1973), Gabon (1975), Indonesia (1962), Libya (1962), Nigeria (1971), Qatar (1961), United Arab Emirates (1967). However, Ecuador deferred its membership in the period December 1992 to October 2007, Gabon ceased its attachment in 1995. Indonesia shelved its commitment from January 2009. At the moment, OPEC has Member Nations. OPEC had its head office in Geneva, Switzerland, for five years since its creation but transferred Vienna, Austria in 1965. The governing charter of OPEC differentiates between the Founder Members and Full Members...
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...Security Supply and Demand Economics has been defined by Colander as “the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs and political realities of their society” (Colander, 2012, p. 4). To further define this definition, coordination relates to the production goods and those goods are procured and to what price and quantity. A true economists mind relates, compares, and analyzes the cost benefits with every decision. Microeconomics is now the how to or the in depth study on the individual and what affects that individual choices with regard to the economy. The main economic force or factor that affects pricing and the cost to the individual for each good or services is through supply and demand. Supply and demand curves and laws will show what the current or most optimization point of price to quantity of goods in the marketplace. For example, if the price of an object is set too high, the consumer will be less incline to purchase the good and will either hold off purchasing till that good is cheaper or will buy a substitute good, this is known as demand. The general rule in supply in demand is the higher the price the lower the demand, the lower the price the greater demand. Supply is dependent on pricing, most likely if price will increase, companies will increase the supply to match the opportunity cost of not being the market. There are many other factors that affect supply and demand...
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...Defining Economic Economic is the social science that examines how people, government, businesses, and nation make choice on dealing with limited resources to satisfy their wants and needs. Economic is broken down into many forms. First there is macroeconomic, which focus on the behaviors of the combined economy. Next there is microeconomics, which is the study on separate buyers. The central to solving economic divided into three parts. First, is what products need to be produce, and how much to produce. Second, is how the products will be produce. Last, who are the products produce for (Colander, D. C. 2008). Microeconomic is the study of the market performance of individual buyers and firms in an effort to understand the decision-making process of businesses and family. Microeconomic concentrate on the relationship between individual buyers and sellers. It also examined the influences that will affect the choice made by users and vendors. Microeconomic focus on the supply and demand and how each firms make the choice of how much of something they must produce, and how much the goods will be charge. The buyers’ demand of the goods help sellers determines the price of the goods. The term of supply refer to how much the market can offer to the buyers. The quantity supplied indicates to the volume of certain product creators agree to supply base on the certain price. With the law of supply, it proves the quantities that will be sold for a certain price. In the...
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...topic as a consumer as well as a business economics’ student on why I feel the prices of gasoline has been fluctuating in recent history. This is a very important topic because it affects a lot of people during the current economic times. The price of gas affects food costs, utility costs, and how much it cost for consumers to get from point A to point B whether it’s by car, airplane, or bus. There are many factors that play a part in gas prices –I will be focusing on are supply and demand due to economic issues and the supply of oil. One factor that affects gasoline prices are economic issues. Our current economic status plays a part because people are more cautious of their money during economic hardships than when the economy is doing well. While people will still by gas some are weary of long vacations that require driving far. Gas tend do go up during the summer months usually due to families traveling with their kids. “The more people are on the roads, the less gasoline is usually available and so the more that gasoline costs consumers. The higher the prices serve in some ways as a checks and balances system to prevent the overuse of gasoline during the summer months.” Some companies (including my job) allow employees to telecommute some days which is a great way to save on gas. When people drive less gas usually go down – which still goes back to supply and demand as a result of the economic status. Lastly, the supply of oil affects the price of gasoline prices...
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