The reason why economic efficiency has to be given up as a result of enhancing the equity in the society is that trade-off exists between economic efficiency and equity/equality. In economics, the status of efficiency is achieved when demand and supply of goods or services are in equilibrium without other intervention at a given price. Goods and services are supplied to anyone who has the willingness to pay. However, not everyone has the ability and willingness to pay, which is the source of inequality
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example, if a price floor is set below the market equilibrium price then the price floor is not binding. Price controls are a crude form of government intervention. When price controls are binding they prevent market clearing (i.e. they cause excess supply (surplus) or excess demand (shortage)). Price Support The government imposes a price support by offering to purchase an unlimited quantity of a good at a given price. Historically this has been implemented as a way to guarantee farmers a minimum
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Supply and Demand The economy today is driven a lot by what the customer wants and needs. It is also driven by the prices at which merchandise is offered, but only to a certain limit. You see there is a thing called supply and demand, if there is a lot of one thing then prices usually stay low because there are a number of competitors making the same product and they usually lower their prices to attract customers. On the other hand if there is too few of a product then the opposite occurs, the
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unit of account, providing a frequent quantity of the value of products and services exchanged. Calculating the value or price of a good, in terms of money, enables both the merchant and the buyer to render decisions about how much of the good to supply and how much of the good to purchase. 3. Store of Value – product, exchange, forms of resources that are tradable and stored for imminent use. It is a basic module of the monetary system as it allows exchange to transpire with substances that have
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Assignment General Instructions: 1. Your assignment should have a cover sheet with the following information: a. your name; b. the course number; c. the section number; and, d. the date, 2. You may either copy and paste the questions and the appropriate graphs into your paper, or you may insert your coversheet, your answers and your references into THIS document, renaming it as required in the instructions. 3. To any graphs, or charts, you may add
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Applied Problems Chapter 1: Applied Problem 1 At the beginning of the year, an audio engineer quit his job and gave up a salary of $175,000 per year in order to start his own business, Sound Devices, Inc. The new company builds, installs, and maintains custom audio equipment for businesses that require high-quality audio systems. A partial income statement for Sound Devices, Inc, is shown below: 2010 Revenues Revenue from sales of product and services $970,000 Operating costs
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d. Which is a better way to restrict free trade—quotas or tariffs? Is the welfare loss under this quota system larger or smaller than the loss under a tariff with identical effects on import volume? Explain your answer. Answer: a. The supply curve shifts out, horizontally, by the amount of the quota, to Sdomestic + quota. This has no impact on price, compared to the tariff. The price remains[pic]with the quota. [pic] b. We know foreign firms' average costs of production are
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Introduction 1.1 Purpose. This report was constructed to review and analyse a website article to economically evaluate the relevant aspects pertaining to current economical trends in the world. The analysis of the website article will then formulate the potential economic consequences arising from the issue highlighted by the web article. 1.2 Article Summary The website article reviewed in this report covers the situation involving the increase in price, and shortages of cotton, due to such
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will also relay the economic flows that may affect the health care market, the causes of change in supply and demand and the affects of equilibrium price and quantity, and the pricing decisions for blood donations with elasticity or inelasticity. A resource is considered scarce when its availability is not enough to meet its demand. Scarcity is based on the idea that oftentimes a limited supply of goods or services comes up against an ever increasing demand for it, and that ever effort must be
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Global Economic Crisis – Immediate Solution The turbulence we are going through is unprecedented in the world History. What started as A financial institution failure, affected not only the leading financial institutions in the world but also the major developed economic systems in the world leading to a systemic failure. Unlike in the past , when it had an impact on only a few countries and few asset classes, this time, the crisis had its effect on almost all countries in the world and all
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