...Supply and Demand One of the most critical concepts in the study of economy and the way our world works is: supply and demand. This essentially helps use understand markets and the way we consume the things we need and want on a daily basis. Supply and demand concepts have application in everyday life and in business. Essentially supply and demand are determined separately, the sellers determine the supply and the buyers determine the demand. The price of the product or service offered is never really fixed until equilibrium is reached. Another words the product or service offered must equal the amount demanded. This concept has a direct impact on consumers in the daily decisions he or she will make. However many variables within supply and demand still exists. With all the variations of products and services offered what makes consumers pick one product or service over another? In the following paragraphs you should have a better understanding of what drives decisions that are vital to the market in an economy. In economics, elasticity is the measurement of how changing one economic variable affects others. Elasticity extends our understanding of markets by letting us know the degree to which changes in price and income affect supply and demand. Sometimes the responses are substantial, other times minimal or even non-existent. But by knowing what to expect, businesses and government can do a better job deciding what to produce, how much to charge, and, surprisingly...
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...EGT1 – Task 1 6/5/14 In this essay I will define terms of economics and explain their relationships. How a profit maximizing firm determines the level of output & the reaction to the level of marginal revenue will also be explained. Profit maximization is the process which determines the price & output level which the most profit will be made. The total revenue – total cost approach is based on the profit equals the revenue minus the total cost. The total revenue is the sum of the company’s sales of the item in question where the total cost is the cost the company pays to produce the product. Marginal Revenue – Marginal cost should also be considered. Marginal revenue is defined as the extra revenue made when one additional product is sold. Where total cost is the cost paid to produce the product, the marginal cost is the cost paid to produce one more unit. As stated above the marginal revenue is the extra revenue made when one additional product is sold. The calculation used to determine this is total revenue divided by total quantity sold. In the scenario provided, the marginal revenue consistently decreases when more are sold, as you can see in the table & graph provided below. Also stated above marginal cost is the cost paid to produce one more unit of product. The calculation used to determine this is total cost divided by total output. In the scenario provided, the marginal cost increases when more are produced as you can see in the table...
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...EGT1 Economics and Global Business Applications Introduction: The study of government regulation and the competitive environment for business is relevant to all those who study business. All business candidates need to understand how the competitive environment will impact their employers and businesses. Task: Write an essay (suggested length of 2–3 pages) that describes the relationship between regulation and market structures and how regulation affects the market. A. Define industrial (i.e., economic) regulation. Industrial Regulation happens when government commissions regulate the rates or prices of natural monopolies. 1. Explain why industrial regulation exists. In a market structure of perfect competition industrial regulation is not required because there is a lot of competition and this encourages competing industries to make good use of resources, also the price of their goods are determined by the price the market will bear and consumers benefit. Whereas in a monopolistic competition there exists a market structure that could allow competitive monopolies, duopolies, oligopolies, and monopolies to charge higher than competitive prices or the use inefficient use of resources and limited supplies, creating an environment that is not conducive to the benefit of the consumer. . (McConnell, Brue & Flynn, 2012) 2. Explain how industrial regulation affects the market. Industrial regulation affects the market by keeping prices for natural monopolies...
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...WGU| Elasticity of Demand| Discussing the Main Points| | Carla McJunkin| 12/20/2013| | Part A Elasticity of demand is a measure of variables reaction to change given in certain other variables. It may describe the extent of which goods or services change with supply or demand as well as possible consumer income (Investopedia). There are several different categories of elasticity of demand. There are products that are defined as elastic, inelastic and unitary. In order to find the curves of supply and demand of elasticity the following equation is used: Elasticity = (% change in quantity demanded / % change in price) There are also a few rules I should mention that are to be followed when figuring the elasticity of demand; the threshold number is always one, there are no negative numbers (absolute values only) and categories of elasticity only. An elastic product is one that has a price of elasticity demand of more than one (1+). An inelastic product is defined when the elasticity of demand is less than one (-1). An inelastic product is a product where in spite of price changes, consumers continue to purchase. A unitary product occurs when the price elasticity of demand[->0] is one (1). Let us assume a demand is unitary (elastic), and that there is a sudden decrease in price of 5% and we can assume that the percentage of change in quantity will increase by 5%., by reason of getting to the unitary number of one. .In other words, the change in quantity...
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