...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 Microeconomics refers to the study of economic activity from the viewpoint of an individual firm or groups of individuals. Microeconomics studies how firms...
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...Microeconomics and the Laws of Supply and Demand Rose Essor DeSouza ECO/365 September 7, 2015 Lori Geddes Microeconomics and the Laws of Supply and Demand The Khan Academy video explained how demand and/or supply changes are affected when factors in the market change, and how these changes affects market equilibrium, which is the state where the supply in the market is equal to the demand in the market, price and equilibrium quantity. Because demand and supply in the market is interdependent and are constantly changing or shifting, they play a critical role in altering market equilibrium price points and quantity available. Demand shifts of more or less of a product results in a shift of both price and quantity. An increase in demand will shift price up and quantity to the right and a decrease in demand will shift price down and quantity to the left on the demand curve. Supply shifts of more or less of a product affects the equilibrium point by shifting the supply curve to the right, indicating that more availability of a product. This results in a lower price and a higher demand for a product. A shift in the supply curve to the left, indicating there is less availability of a product, which results in a higher price and a decrease in demand of a product. Supply and Demand Curves Microeconomics places emphasis on demand and supply in the marketplace, which normally determines the change of levels in price and factors of individual choices while macroeconomics...
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...money. The issue is that everything that people need and want costs money. More often than not, people do not have the money to do both so they have to decide which things are important for them to have right now. This does not only apply to families, but businesses as well. This paper will address different types of economics and some of the factors that contribute to its changes. Economics is “a social science that studies how individuals, governments, firms, and nations make choices on allocating scarce resources to satisfy unlimited wants.” Economics is broken down into microeconomics and macroeconomics. Microeconomics analyzes how firms and households make decisions about how they should spend their money respectively. Microeconomics focuses on a smaller scale, hence the prefix micro-. It looks at the basic economic theory of supply and demand which tells businesses how much of a certain product they should produce, and how much they should be charging for it. Macroeconomics on the other hand studies the whole economy which includes things like unemployment rate, national income, rate of growth, gross domestic product, inflation, and price levels. There are also two main schools of thought in economics. The first is classical, and they thought that when there was a problem that the solution should be aimed to fix it in the long run. Keynesian economists thought that solutions should be geared towards fixing them in the short run. Classical economics also believes in the theory...
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...Current Market Conditions Competitive Analysis Principles of Microeconomics ECO 365 David Norcross April 13, 2015 Current Market Conditions Competitive Analysis In this paper, Team A is participating in a strategic planning group creating a new product at General Motors. The following is a competitive market analysis on the potential of our new 2016 Chevy Volt’s success. We will be focusing on our competitor Toyota and their Prius lineup. Additionally, we will summarize our target consumer and current market conditions. Then we will cover variables that weigh on supply, demand, and equilibrium prices. Next, we will consider the pros and cons our firm faces while identifying the effect on our competitiveness and long-term profitability. Then, we will evaluate factors that influence fixed and variable costs. Lastly, we will provide recommendations on how GM can grow their profits and increase their competiveness. The Product The Chevy Volt was a concept designed by Bob Lutz Jon Lauckner of General Motors ‘GM’ in 2006 to overcome many of the limitations of pure electric vehicles while retaining many of the beneficial elements. The purpose of this car was to leap-frog the technology of the Prius hybrid. The theory of this concept was a car that would be able to drive on electricity for the first forty miles, and then a generator would run gasoline to extend the range of the car. In 2010, the production version was able to achieve 35 miles on electric and average 37 miles...
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...because the factors of production are limited. We can use economic analysis to understand the consequences of our choices as individuals, organizations, and society as a whole. Here are the main points of the chapter: • Most of modern economics is based on positive analysis, which answers the question “What is?” or “What will be?” Economists contribute to policy debates by conducting positive analyses about the consequences of alternative actions. • Normative analysis answers the question “What ought to be?” • The choices made by individuals, firms, and governments answer three questions: What products do we produce? How do we produce the products? Who consumes the products? • To think like economists, we (a) use assumptions to simplify, (b) use the notion of ceteris paribus to focus on the relationship between two variables, (c) think in marginal terms, and (d) assume that rational people respond to incentives. • We use macroeconomics to understand why economies grow, to understand economic fluctuations, and to make informed business decisions. • We use microeconomics to understand how markets work, to make personal and managerial decisions, and to evaluate the merits of public policies. Learning Objectives 1. 2. 3. 4. 5. List the three key economic questions. Discuss the insights from economics for a real-world problem such as congestion. List the four elements of the economic way of thinking. List three ways to use macroeconomics. List three ways to use microeconomics. 1.1...
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...By and large, managerial decisions are not affected by either microeconomic or macroeconomic forces. B) Managerial decisions are affected primarily by macroeconomic forces. C) Managerial decisions are affected by both microeconomic and macroeconomic forces. D) Managerial decisions are affected primarily by microeconomic forces. 1) 2) Walmartʹs decision in 1994 to continue operating stores in specific cities in Mexico when other firms were pulling out would be best classified as: A) a microeconomic decision. B) a macroeconomic decision. C) both a microeconomic and a macroeconomic decision. D) neither a microeconomic nor a macroeconomic decision. 2) 3) Which of the following would be considered an example of a macroeconomic problem? A) Should Microsoft reduce the price of its Windows operating system? B) Should JP Morgan Chase increase the interest rate it charges its credit card customers? C) Should Mitsubishi eliminate one of its production shifts? D) Should the federal government extend the eligibility period for unemployment benefits? 3) 4) Walmartʹs entry into the market in Mexico had the effect of: A) reducing competition and raising the prices of many of the goods it sells. B) increasing competition and raising the prices of many of the goods it sells. C) increasing competition and lowering the prices of many of the goods it sells. D) reducing competition and lowering the prices of many of the goods it sells. 4) 5) Which of the following statements is false...
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...Microeconomics Chapter 1 –Introduction- Microeconomics: * The study of how individuals and firms make themselves as well of as possible in a world of scarcity(shortage) and the consequences of those individual decisions for markets and the entire economy. * Often called price theory: emphasize the important role of the price 1.1 Microeconomics: The Allocation of Scare Resources Trade-Offs: * Which goods and services to produce: limitation of production, resources ( worker, raw materials, capital and energy) * How to produce: to produce a given output a firm needs to use more of one resource and less of another * Who gets the goods and services: the more of society’s goods and services you get, the less someone else gets Who makes the Decisions: * The government * A company Price Determine Allocations: * Market: an exchange mechanism that allows buyers to trade with sellers 1.2 Models Model: * a description of the relationship between two or more economic variables * can be used to predict the effect of a change of one variable Simplifications by Assumptions: * Example: Income threshold model of China to explain car purchasing behavior in China * Only the income is important Testing Theories: * Testing theories by checking whether predictions are correct Positive vs. Normative: * Positive statement: a testable hypothesis about cause and effect * Test the truth of a statement * Normative statement:...
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...divide into two which is microeconomics and macroeconomics. According to Jeffrey Glen (2013), microeconomics is a study about the insinuation of individual human action, especially about how the decisions made affect the distribution and implementation of scare resources. Microeconomics show the concept of supply and demand, how a business establish prices, how individuals make efficient decisions and how individuals cooperate with one another. Microeconomics is not an explanation for what happen in a...
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...fuel-efficient cars, hybrid vehicles, and the increase in the use of bio-fuels. An increase in carpooling and people using mass transit contributes to a reduction in miles driven on an annual basis. People are also more conscious of the environment and global warming, which has caused them to choose fuel-efficient vehicles that have less of an environmental impact. The Obama administration has imposed higher fuel efficiency standards that will decrease consumption even further in the future. The changing consumption pattern studies falls under microeconomics. Microeconomics is a social science that deals with the scarcity of resources by examining how supply and demand affects who gets what and at what price. In a free market economy, such as ours, the forces of supply and demand are expected to act freely, such as the equilibrium price is determined by the intersection of the supply and demand curve. Various participants in the markets do interfere with free markets abilities to operate without interference, such as the government and other various parties, which causes prices to become distorted. It is microeconomics that studies the reasons for these distortions and other effects. The changing consumption patterns of consumers of gasoline, affects the supply and demand of other related goods as well. The decreasing demand of gasoline can cause an increased supply in the market. A decrease in the demand of another commodity (substitute) can contribute to an increase in the supply...
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...paper is written in response to the University of Phoenix Eco365 class. In this paper I will define economics, microeconomics, the Law of supply and demand and I will also identify the factors that lead to changes in supply and demand. The business world is very susceptible to the nuances of consumer choices. The ability to anticipate the trends in consumer consumption patterns is vital any company who seeks to be a leader or major player in their field. Constant research and analysis is performed each year to determine or create the trends not only in who are the company’s current customers but future customers as well. This research is also used to determine what those customers want and why. To really understand trends in consumption patterns, you have to first understand the basic principles of economics. Economics Economics is the science that studies the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems (Colander). One example of economics is the new job tax credit that President Obama has proposed. This credit encourages businesses to expand their workforces and operations by offering $3,000 for each new job that a company creates and places someone in, thereby increasing production of products with the intent to lure consumers to spending more. Microeconomics Microeconomics is the study of the operations of the components of a national economy, such as individual firms, households,...
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...EcoNomIcs mIcroEcoNomIcs macroEcoNomIcs Course Description Effective Fall 2012 AP Course Descriptions are updated regularly. Please visit AP Central® (apcentral.collegeboard.org) to determine whether a more recent Course Description PDF is available. The College Board The College Board is a mission-driven not-for-profit organization that connects students to college success and opportunity. Founded in 1900, the College Board was created to expand access to higher education. Today, the membership association is made up of more than 5,900 of the world’s leading educational institutions and is dedicated to promoting excellence and equity in education. Each year, the College Board helps more than seven million students prepare for a successful transition to college through programs and services in college readiness and college success — including the SAT® and the Advanced Placement Program®. The organization also serves the education community through research and advocacy on behalf of students, educators, and schools. For further information, visit www.collegeboard.org. AP Equity and Access Policy The College Board strongly encourages educators to make equitable access a guiding principle for their AP programs by giving all willing and academically prepared students the opportunity to participate in AP. We encourage the elimination of barriers that restrict access to AP for students from ethnic, racial, and socioeconomic groups that have been traditionally underserved. Schools...
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...------------------------------------------------- Chapter 1—Introducing the Economic Way of Thinking MULTIPLE CHOICE 1. When economists say scarcity, they mean: a. | there are only a limited number of consumers who would be interested in purchasing goods. | b. | the human desire for goods exceeds the available supply of time, goods and resources. | c. | most people in poorer countries do not have enough goods. | d. | goods are so expensive that only the rich can afford it. | ANS: B PTS: 1 DIF: Easy REF: Full: 3 | Mic: 3 TOP: Scarcity TYP: RE 2. When economists say goods are scarce, they mean: a. | consumers are too poor to afford the goods and services available. | b. | consumers are unwilling to buy goods unless they have very low prices. | c. | goods are generally freely available from nature in most countries. | d. | the desire for goods and services exceeds our ability to produce them with the limited resources available. | ANS: D PTS: 1 DIF: Medium REF: Full: 3 | Mic: 3 TOP: Scarcity TYP: SA 3. Scarcity is a problem: a. | measured by the amount of goods available. | b. | of the poor, but not the rich. | c. | because human wants are unlimited while resources are limited. | d. | only in industrialized economies. | ANS: C PTS: 1 DIF: Easy REF: Full: 3 | Mic: 3 TOP: Scarcity TYP: RE 4. Scarcity can be eliminated if: a. | people satisfy needs rather than wants. | b. | sufficient new resources were discovered...
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...Microeconomics Practice Exam One (Chp 1 - 4) 1. The marginal benefit from consuming another unit of a good: A. must equal the marginal cost or the unit will not be consumed. B. must be less than the marginal cost or the unit will not be consumed. C. equals the increase in total benefits from consuming the unit. D. equals the total benefit obtained from the consumption of all prior units. 2. Mary buys cell-phone services from a company that charges $30 per month. For that $30 she is allowed 600 minutes of free calls and then pays 25 cents per minute for any calls above 600 minutes. Mary has used 600 minutes this month so far. What is her marginal cost per minute of making additional calls? A. 25 cents B. 10 cents C. 5 cents D. Zero 3. Suppose the marginal cost of dating Perry is $30 and the marginal benefit is worth $40 to you. Following economic reasoning, you should: A. date Perry. B. not date Perry. C. determine what your sunk costs are. D. determine what your total benefits and total costs are. 4. Alan is sitting in a bar drinking beers that cost $1 each. According to the economic decision rule, Alan will quit drinking when the marginal: A. benefit to him of an additional beer is less than $1. B. cost to him of an additional beer is less than the marginal benefit. C. cost remains at $1. D. benefit to him of an additional beer is greater than $1. 5. Opportunity cost: A. includes only monetary outlays. B. is the net benefit forgone by not undertaking...
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...respectively, and MRTS(x1,x2) is Marginal Rate of Technical Substitution of the input x1 for x2. Along an isoquant, the MRTS shows the rate at which one input (e.g. capital or labor) may be substituted for another, while maintaining the same level of output. The MRTS can also be seen as the slope of an isoquant at the point in question. [edit] References • Mas-Colell, Andreu; Whinston, Michael; & Green, Jerry (1995). Microeconomic Theory. Oxford: Oxford University Press. ISBN 0-19-507340-1 [edit] See also • Marginal rate of substitution (the same concept on consumption side) Retrieved from "http://en.wikipedia.org/wiki/Marginal_rate_of_technical_substitution" Categories: Microeconomics | Production economics • marginal rate of technical substitution (MRTS) - The rate at which one input X may be substituted for another input Y in a production process, while total output remains constant, is: a) the slope of the isoquant curve b) the marginal rate ... • Micro Economics - A firm purchases capital and labor in competitive markets at prices r=6 and w=4, respectively. With the firm's current input mix, the marginal product of capital is 12 and the marginal product of labo ... • MRTS - the problem is attached here • law of diminishing marginal returns and the law of diminishing marginal rate of technical substitution - Explain the difference between the law of diminishing...
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...• Mi Microeconomics i • Household and firm behaviour •Taught in weeks 1-5 T h i k 15 • Mid-term exams in week Mid term 7 will be based on Microeconomics topics • Macroeconomics • Aggregate economy and business cycles • Taught in weeks 9-13 • Final exams in week 15 will be based on Macroeconomics topics Lecture 1 ECON001 8 Assessment • Class Participation (10%) p ( ) • Peer evaluation • Self evaluation • Weekly quizzes kl i • Merit and demerit marks • Group Project (10%) p j ( ) • Please select your topic via the course webpage • 20 minutes presentation • Written report • Mid-term exams (40%) • On Micro topics taught weeks 1-5 • Section A: quizzes • Section B: problem solving • Final exams (40%) • On Macro topics taught weeks 9-13 • Section A: quizzes • Section B: problem solving Lecture 1 ECON001 9 What is Economics? • The Economic Problem • Th Need f Ab The N d for Abstraction i • What is Microeconomics? • What is Macroeconomics? Lecture 1 ECON001 10 The Economic Problem • People have unlimited wants • I want a house, a car, food, clothing, movies etc. • However, we have a limited amount of resources at our disposal p • e.g. land is limited: shall we use a given plot of land to build b ild more flats or more offices? • Because of scarcity of resources, we have to make choices • Tradeoffs: more of one thing means less of another Lecture 1 ECON001 11 Resources • Resources are the inputs or factors of production...
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