...Samenvatting Macro-economics - Mankiw Hoofdstuk 1: Tien principes van de economie het woord economie(oikonomos(grieks)) betekent degene iemand die het huishouden beheert. Zodra de samenleving mensen verschillende banen heeft toegewezen, verder moeten ze ook de goederen en diensten exporten die ze produceren. het beheer van de samenlevingsproducten is belangrijk omdat sommige middelen schaars zijn. Scarcity(schaarste) betekent dat de maatschappij beperkte middelen(producten) heeft(het beperkte karakter van de samenleving) en daardoor kunnen ze niet alle producten produceren die de mensen nodig wensen te hebben. De samenleving kan niet iedereen een hoge levensstandaard geven. Economics(economie) is de studie van hoe de maatschappij haar schaarste middelen beheert. Economen studeren hoe mensen beslissen nemen: hoeveel ze werken/uitgeven en sparen en waar dat sparen in wordt geïnvesteerd. Verder ook de prijs waarvoor ze goederen kopen en de hoeveelheid goederen die ze kopen. Ze kijken ook naar de mensen die geen werk hebben en naar de snelheid waarmee de prijzen stijgen. We kunnenhet over de EU of een land of dorp hebben met de economie. Economie is gewoon een groep mensen die op elkaar inwerken als het om het leven gaat. Principe 1: mensen worden geconfronteerd om afwegingen te maken (mensen moeten keuzes maken) Om iets te krijgen, zullen we iets anders op moeten geven. Bijv ik kan zaterdag gaan werken of voetballen. Meisje moet economie en Duits leren. Ze...
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...market structures may appear different; they all share a common goal. That goal is to maximize profits. The first of the three market structures I will discuss is the competitive market structure. Mankiw (2007) defines a competitive market structure as “a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker (Mankiw, 2007).” Therefore, in a competitive market, the buyers and sellers do not set the price for a product brought or sold, but the product’s market price determines the price of a product brought or sold. Since there are many buyers and sellers in a competitive market, with many of the firms selling the same or similar products, the firms do not have room to play around with the price of their products, because their competition would then take away their customer by pricing the same or similar product for a cheaper price. According to Mankiw (2007), three characteristics make up the workings of a competitive market structure, or a perfectly competitive market. The three characteristics of a competitive market, discussed by Mankiw (2007) are “[1] there are many buyers and many sellers in the market. [2] The goods offered by the various sellers are largely the same. [3] Firms can freely enter or exit the market (Mankiw, 2007).” However, the monopoly market structure works differently than the...
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... Instructor The three important market structures in economics are competitive markets, monopolies, and oligopolies. Each market plays a different role in the economy. Competitive markets are when no firm has the power to affect the market price of a good and “many buyers and sellers trading identical products so that each buyer and seller is a price taker” (Mankiw, 290). A monopolistic market is when a specific person or enterprise is the only supplier of a certain good. An oligopoly is a market in which a good has only a few “similar or identical” (Mankiw, 346) products for sale. There are three characteristics of a competitive market: “There are many buyers and many sellers in the market, the goods offered by the various sellers are largely the same, and firms can freely enter or exit the market” (Mankiw, 290). Because of this, Competitive markets determine the price in terms of “maximizing profits, which equals total revenue minus total cost” (Mankiw, 292). Total revenue is calculated by multiplying price by quantity. Output is determined in a competitive market in terms of maximizing profits by following three general rules: “If marginal revenue is greater than marginal cost, the firm should increase its output, if marginal cost is greater than marginal revenue, the firm should decrease its output, and at the profit-maximizing level of output, marginal revenue and marginal cost are exactly equal” (Mankiw, 294-295). Barriers to entry in a competitive market are non-existent...
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...Choices in Society Economical Choices in Society Your Name ECO/212 Economical Choices in Society In finances there are a few values that people use while making personal choices, including: 1. “People face tradeoffs. Meaning to acquire one thing we like, we usually have to give up another.” (Mankiw, 2008). 2. “The cost of something is what you give up to get it. This principle involves comparing the cost and benefits of alternative courses of action. In many cases, the cost of some action is not as obvious as it might seem.” (Mankiw, 2008). 3. “Rational people think at margin. Rational people systematically and purposefully do the best they can to achieve their objectives, given the opportunities they have. Economists use the word marginal changes to describe small incremental adjustments to an existing plan of action. Margin means edge. Rational people often make decisions by comparing marginal benefits and marginal costs.” (Mankiw, 2008). 4. “People respond to incentives. An incentive is something that induces a person to act. Because rational people make decisions by comparing costs and benefits, they respond to incentives.” (Mankiw, 2008). I recently considered purchasing a cat. I took into consideration the marginal costs and marginal benefits before purchasing this cat. The marginal benefit is the cat would free up about 15 weekly work hours, which equals $330. This time is usually spent entertaining the family however; the cat...
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...type of the product sold in the market, (d) barriers to new firms entering the market, and (e) existence of non-price competition in the market” (Sahu, pg.1, 2010) By determining how many companies are in a specific market you can determine the amount of competition there is producing the same product. What the product is will determine if the item is being supplied in a competitive market structure or a monopoly. This will also determine the amount of profits made by the company on the item. There are a few barriers that can hinder a company from entering a market. These barriers are product availability, ownership, patents, and if the company owns the items original location. This is the case of companies such as DeBeers, and their mines (Mankiw, 2010). The last characteristic is non-price competition. This is what happens when a company does not compete with another, and tries to keep their profits. A way a business does this is by modifying the product so their competitor will not match the offer. This is how CVS does it. They use their Extra Bucks program to...
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...Checkpoint: A New House – Readiness Leonard Sugue University of Phoenix XECO 212 Economic Theory Audra Sherwood February 17, 2011 A New House – Readiness Deciding to buy a house is a lifelong goal for many people. Imagine that you are renting a studio apartment and have just discovered you are having a baby. Your present apartment is small and far from schools and local services. You have decided to move. There are many factors that come into play when making such a large and weighty purchase. Examine the decision-making process from the perspective of an economist. In your Final Project, you use these principles and other factors to make a final decision whether to buy a house. Purchasing a home for the first time can be overwhelming. A house can be the largest investment someone makes. It can provide advantages, but it can present disadvantages as well. The following principles can be used when deciding to purchase your first home: People Face Trade-offs (Mankiw, 2007) The Cost of Something Is What You Give Up to Get It (Mankiw, 2007) When deciding to purchase a home, the principle “People Face Trade-offs” can be applied to help make a final decision. Making decisions requires trading off one goal against another (Mankiw, 2007). The buyer must sacrifice a little to gain a lot. First time home buyers must realize that it takes a lot of money to purchase a home. Buyers must sacrifice things such as vacations, movies, special occasions, and...
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...How People Make Economic Decisions To understand how people make economic decisions, first, will need to acknowledge the word economic. Therefore, according to the Dictionary.com “the economic is pertaining to the production, distribution, and use of income, wealth, and commodities.” The four principles of individual decisions-making, according to Mankiw (n. d.) are the following: 1. Trade-off - making decisions: a) Efficiency – obtaining the most from resources. b) Equity – distributing economic prosperity among members of society. 2. Cost - cost of benefits and actions: Opportunity cost – whatever given up to obtain some item. 3. Thinking - analyze the marginal (small incremental adjustments to a plan of action) benefits and cost changes and how it will be affect by decisions. In another words; the effect of decisions taken. 4. Incentives – something that induce a person to act (like a reward) as a motivation. Developing the decision of returning or coming back to school to complete a degree is a genuine example of an individual decision-making and which needed to compare the marginal costs and benefits of this decision. After analyzing this decision, needed to compare: A) Marginal Costs – had to gather information on current college costs. Creating a saving account to pay all expenses without been expose (after complete the degree requirements) to limited financial credit because of study loans amount. B) Marginal Benefits – completing this degree will allow...
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...Ten Principles of Economics and How Markets Work 365/ECO July 18, 2016 University of Phoenix Ten Principles of Economics and How Markets Work Economics is the study of how society manages its resources, and how they are allocated (Mankiw, 2015). People must understand how the markets, trade, and government can affect items like inflation, investing, and their standard of living. Frequently, the government will interfere with the natural flow of the supply and demand curve creating ripples in the economy that will take years to readjust to normalcy. Resources, interdependence and the supply and demand curve People and governments must decide what to spend money on, and that decision always comes with a tradeoff (Mankiw, 2015). The text notes that one trade off is between efficiency and equality. Efficiency is getting the most it can from the scarce resources and equality is ensuring the resources are distributed among all members of the society. Where one person may choose to pay more for a home, another person may choose a lesser home to have the ability to travel more. When government gets involved the tradeoffs are the goals of efficiency and equality often find conflict. Countries and governments are becoming increasingly interdependent, and it has tradeoffs (Mankiw, 2015). Interdependence allows for all areas of the world to maintain a standard of living, produce goods, and trade with other communities around the world. When all...
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...Profits of a Competitive Market “A firm in a competitive market, like most other firms in the economy, tries to maximize profit, which equals total revenue minus total cost” (Mankiw, 2011). So for instance say a farm makes certain quantity of milk m, and sells each at the market price y, their revenue would be m x y. If the each milk sells for three dollars a gallon and they sell 500 of them their total revenue would be $1500. The farm is small compared to the market field, so it takes the price that the market has given to them by its conditions. That means that the price of milk is not determined by how much the farmer produces. If they were to double their production of milk then their revenue would also be doubled. “As a result, total revenue is proportional to the amount of output” (Mankiw, 2011). So the main goal of a competitive market is to maximize their profit, which in turn equals their total revenue minus total cost. In the market “as long as marginal revenue exceeds marginal cost, increasing the quantity produced raises profit” (Mankiw, 2011). In the dairy field they use one of the 10 principals of economics that is that rational people think at the margin. The dairy famer can apply this principal by seeing if their “marginal revenue is greater then their marginal cost” (Mankiw, 2011). So if the farmer sees that it is revenue is greater when it sells, a number of gallons of milk, then they should increase their production of milk because it will put more...
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...will show the rate of growth of real GDP of Australia, the USA and your chosen Euro-zone economy. The second comparative line graph will show the inflation rate of the three economies and the third line graph will show the unemployment rate of the three economies. Graph 4: The Comparison of the 2006-2014 GDP annual growth rates of Australia, the United States and France Source: data. World bank.org. Graph 5: The Comparison of the 2006-2014 inflation rates of Australia, the United States and France Source: data. World bank.org. Graph 6: The Comparison of the 2006-2014 unemployment rates of Australia, the United States and France Source: data. World bank.org. What evidence do the data provide of the countries experiencing economic downturns in recent years? On the basis of the data collected,...
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...competing in that market, the factors that differentiate the firms from each other, the similarities between the firms, and any obstacles that would exist to any firm that wanted to enter the market. The level of competition exerts significant influence over the type of market structure that emerges and leads to what payoffs, if any, would result from entering that market. This paper will go into detail on the many distinctions between the different market structures, the obstacles to entering these markets, and how each type of structure maximizes profits. Markets are broken down into a few various categories. These categories are perfect competition, monopolies, monopolistic competition and oligopolies. An economist, citing economic theory, may express a preference to one type of structure based on the outcomes they can yield. The structure of each structure type is based on the traits of its business types. The attributes a business will display changes with the number of companies in that particular market. Management of prices, product types and entry barriers for new companies and market competition that do not depend on price are the attributes of a market. The capacity to control the prices of a company’s goods is price management. This is a critical element in market structure. Any company that can enjoy the benefits of a monopoly structure has ultimate price control for its goods. Those in a perfect competition have no control over their prices...
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...#793634.34 Principals of Economics Unit 3 Student’s Name Institution #793634.34 Principals of Economics Unit 3 The Perfectly competitive market is a market structure in which the competition level is very high (Mankiw, 2007). In this market structure, the knowledge is freely available to all buyers and sellers. The availability knowledge enables the consumers and producers to make rational decisions to maximize their profits. Market price is the particular price that buyers and sellers agree to use in the market at a given time. I formal markets, there are two types of prices. These are the selling price and the buying price. The price of the goods in the market determines the market structures (Economics Online, 2015). The increase market products depend on demand and supply. In a perfectly competitive market firm, the price of goods determines the profit. The average revenue is the revenue a firm generates by selling one unit of output. The market structure determines the relationship between the quantity of output and average revenue. In a perfectly competitive market, the average revenue equals both marginal revenue and the price. Both marginal revenue and the prices are constant. A business experiences marginal revenue when it sells one or more extra units of its output. Marginal revenue plays a crucial role in profit maximization decision making (Mankiw, 2007). Therefore, a perfectly competitive market increases its profit...
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...same, and there are a lot of buyers and sellers. “Each firm is so small to the market that it cannot influence the price of its product, and ends up taking the price as given by the market.’ Therefore the goal of any competitive firm is to find a good strategy for profit maximization, which is usually producing as much product as they believe will bring them more profit. A perfect example of a competitive business is the Dollar Store, or Dollar General, there are so many of them offering the same merchandise that the prices for things that cost more than the one dollar, generally have the same price from store to store.’ Buyers and sellers in competitive markets must accept the price the market determines, and are considered price takers’ (Mankiw, N. G. (2007), which is a barrier to being able to generate more profit. However there is a third condition in characterizing competitive markets and that is they are able enter and exit the market freely. Competitive markets do not fall into the categories of Monopoly or Oligopoly because they are neither the largest offering a single product, nor one of a few offering the same product. There are a number of companies that have a monopoly, meaning it is the single producer of a product of which there is no close substitute. One such company is Monsanto which controls 98 percent of the soybean market, and also owns 79 percent of the corn...
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...Maximizing Profits in Market Structures XECO212 October 9, 2011 Dale Schwieterman Maximizing Profits in Market Structures Competitive Market A competitive market is a market with many buyers and sellers trading identical products so each buyer and seller is a price taker (Mankiw, 2007). There are two characteristics o f a competitive market: (1) There are many buyers and sellers in the market, (2) the goods offered by the various sellers are largely the same. In addition to the previous two characteristics, there is a third condition that is sometimes thought to characterize competitive markets; firms can freely enter or exit the market. For example if someone decides to start an egg farm, and another existing egg farm decided to leave the market, this condition would be satisfied. Any firm in a competitive market, just like any other firm in the economy, tries to maximize profit (which equals total revenue minus total cost). Because marginal revenue for a competitive firm chooses quantity so that price equals marginal cost (Mankiw, 2007). In short, the firm’s marginal-cost curve is a supply curve. When a firm cannot recover its fixed cost, the firm will choose to shut down temporarily if the price of the good is less than the average variable cost. However, in the long run when the firm is able to recover both fixed and variable costs it will choose to exit if the price is less than average total cost. In a competitive market the free entry and exit...
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...Government Policies for Economic Growth and Productivity Michael Pintar ECN400 – Managerial Economics Colorado State University Global Campus Dr. John Speir November 11, 2012 Government Policies for Economic Growth and Productivity Michael Pintar ECN400 – Managerial Economics Colorado State University Global Campus Dr. John Speir November 11, 2012 Government Policies for Economic Growth and Productivity Government policy for promoting economic growth and productivity has tremendous bearing on our standards of living today and our future. Our policymakers’ ability to exercise proper fundamentals of economic growth determine the livelihood of our next generations (Mankiw, 2012). Whether policies encourage savings and investment, fund R&D, practice free trade, or promote education, the government has many tools and options for controlling our quality of life. Savings and Investment One method of boosting growth and raising standards of living is by government encouragement of savings and investment in an effort to raise capital. Unfortunately, the economic trade-off to achieve more capital requires reduced present day spending on goods and services in exchange for higher future consumption (Mankiw, 2012). To encourage savings, the government may consider a few principal actions: 1), raising current interest rates, thereby reducing demand for loanable funds and encouraging incentive to save, and / or 2), a tax reform intended for reduction of...
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