...|A Report on | |Elasticity and Related Problems | |A Report on | |Elasticity and Related Problems | Course Title: Microeconomics Course Code: F – 106 Submitted To: Lubna Rahman Lecturer Department of Finance University of Dhaka Submitted By: |Serial No. | | | |Name | | | |ID No. | | | | | | | |01. | | | |Md. Tanvir Ahmed Chy ...
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...impacted by various economic factors. The microeconomic concepts can be categorized as changes in supply and demand and equilibrium, because these topics only affected the small apartment market in which the company operates. Macroeconomic concepts can be categorized as price elasticity and price ceilings because they have a broad impact on the overall region beyond the local apartment market. The simulation showed that a shift in the supply curve or the demand curve could cause significant changes to the economic environment. For example, if the demand curve shifted to the left, it would show a decrease in demand from consumers and cause fewer apartments to be filled. This situation occurred in the simulation due to a widespread desire for property ownership and forced the management company to lower prices to compensate. The equilibrium price became lower because demand decreased, while supply and quantity remained consistent. Similarly, if the supply curve were to shift to the right, it would indicate an increase in available apartments to rent. This situation could occur if the management company expanded the building to accommodate more units. Assuming there was no change in demand, the solution in this case would also be to lower prices to achieve full occupancy. However, this could be a very profitable decision if there was sufficient demand to fill the new quantity being supplied. Ultimately, the company must make business decisions based on these economic factors to make...
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...David Flesh Microeconomics and the Laws of Supply and Demand Utilizing the supply and demand simulation ("University Of Phoenix", 2014), I will illustrate two macroeconomic and two microeconomic principles demonstrated in the simulation and expound on why these principles are categorized as microeconomic or macroeconomic. Also, one shift of the demand curve and one shift of the supply curve from the simulation will be identified with explanations for the shifts. Further, I will analyze the influence on decision making in correlation with quantity and the equilibrium of price and how these concepts of demand and supply can be pragmatic in everyday business or within the current work environment. Finally, I will explain how price elasticity of demand has an immense impact on products pricing strategy and its purchase from the consumer. Macroeconomic and Microeconomic Principles The first macroeconomic principle demonstrated within the Supply and demand Simulation is Price Ceilings. Price Ceilings ensue through legislation as laws are enacted establishing a lawful ceiling of how high the cost of a product can be ("Price Ceilings", n.d.). When a price ceiling is established, there is further demand than what is available at the equilibrium price. This is a result of there being a sufficient supply in quantity of demand than supplied quantity. For example, in the simulation the price ceilings was established at $1,550, therefore the Goodlife company could not rent out...
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...subscription Return books Track books Sell books Help Sign out SubmitClose Home HomeBooks STUDY Textbook SolutionsQ&ATutors NEW CAREER CENTER CareersInternships CollegesScholarships home / study / business / economics / questions and answers / the demand in japan for gasoline is inelastic and ... Question The demand in Japan for gasoline is inelastic and therefore not very sensitive to market prices. Given that, describe the effect of each of the following on the quantity demanded or the demand for gasoline in Japan. Indicate whether the effect of each is an upward or downward movement along a given demand curve or instead involves an outward or inward shift in the demand curve for gasoline. Explain your answers. a. A sharp increase in the average price of gasoline in Japan.b. A sharp rise in the price of automobiles in Japan.c. A fall in the price of public transportation in Japan.d. A fall in the price of electic powered cars in Japan. Comment Comments Expert Answer Suresh Reddy Suresh Reddy answered this 1 hour later Was this answer helpful? 1 0 2,447 answers Suresh Reddy 2,447 answers Top Subjects: Operations Management, Finance, Computer Science Solution : The price elasticity of demand is defined as the percentage change in quantity demanded divided by...
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...Economic Terms and Health Care History Shonda Menezes HCS/440 John Gaze January 16, 2011 Economic Terms and Health Care History Health care economics has gone through many changes over the years. With all of the changes health care organizations have had to adjust their financial strategies as well as their organizational strategies. The economy has had a lot to do with all of these changes. Healthcare organizations have so many demands put on them. Some of the changes that have occurred are due to the advances in medicine such as diagnostic, procedures and pharmaceutical. Insurance Payments over the years have changed. It used to be that you had health insurance and your bills would get paid over the years the payment system has changed and more and more is coming from the patient’s pocket. In this paper the focus will be these key terms supply and demand, microeconomics, microeconomics and elasticity. The issue is not how to fill or reuse empty beds. In this changing environment, hospitals and health systems must focus on streamlining and simplifying operational processes, facilitating case management, promoting the least costly setting for care delivery, and optimizing resource sharing among departments. When hospitals have addressed these issues, then solutions to the “bed problem” will be obvious.Cynthia Hayward, 1996(Marcinko, 2007). Division of economics focused on evaluating scarcity in health care systems in different economies. ("Health Economics"...
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...Economic Way of Thinking Economic Way of Thinking SW Economics 100 Professor E 11-06-2012 Abstract In this paper, I am going to review an economist approach to alcohol abuse and include the 4 elements of the economic way of thinking. I will be discussing supply and demand and how it affects prescription drugs and also how it is an important. I will be discussing increasing-cost industries as well as reviewing a perfectively competitive market. Impact of Economics An economics perspective of alcohol abuse would be that, even with significant harm is caused; they feel it should not be restricted. Economics assume that people, usually, are the best judges of themselves. Economist have also come to the conclusion that consumers tend to drink less alcohol, and have fewer alcohol-related problems, when alcoholic beverage prices are increased or alcohol availability is restricted. A possible solution to the alcohol abuse problem could be limiting which stores are able to sell the alcohol products. It is very easy to obtain alcohol and if it was not as easy to access, the sales would go down, causing the number of alcoholics to decrease. Another possible solution to alcohol abuse could be to enforce tougher penalties for alcohol related crimes and or alcohol related traffic violations. By doing this, the consumer might...
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...vehicles. In light of theese events two main challenges occours. The pollution created by the queues and the non-effective transportation system. We’re to discuss solutions regarding the pollution and the negative impact the queues have on the productivity of the society. The city of bergen is faced upon two different strategies for solving theese problemes. i) Introduce higher taxes during the rush hour or ii) driving by plate numbers. Elasticity When discussing the following solutions we need to understand the concept of elasticity. How much will the quantity supplied and demanded change due to a change in the price/cost ? To decide which strategy to choose one needs to know about the elasticity of the, in this case, demand. A situation where the demand is elastic is when the demand changes with a changing in the price. An example is: * Driving a car to work. Driving your own car is, if met with alternative ways of transportation, price elastic because the demand will be affected by a change in price. An inelastic situation is when the demand for a product does not increase or decrease correspondingly with a fall or rise in its price. For example: * Getting to work. Given the need of income, people will get to work almost regardless of the cost of getting there. Short-run vs long-run elasticity Looking at the strategies one should distinguish between the short run and the long run. How much does the demand change in respons to a change in price, regarding...
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...ECO 100 – Principles of Economics COURSE DESCRIPTION Presents a survey of basic macro- and microeconomic principles and concepts. Reviews the economic dynamics of market forces affecting competition, different economic systems, the role of government in the economy, and economic aspects of international trade. Discusses the labor market, interest rates and the supply of money, and performance of a national economy. Examines the use of economics in business decisions, considering such principles as opportunity costs, diminishing returns, and the marginal principle. INSTRUCTIONAL MATERIALS Required Resources O'Sullivan, A., Sheffrin, S., & Perez, S. (2012). Survey of economics: Principles, applications, and tools (5th ed.). Upper Saddle River, NJ: Pearson-Prentice Hall. MyEconLab book key Note: This book key comes with the purchase of a new textbook and is needed in order to access MyEconLab. Supplemental Resources Aaronson, D., Mazumder, B., & Schechter, S. (2010). What is behind the rise in long-term unemployment? Economic Perspectives, 34(3/4), 28-51. Andreyeva, T., Long, M. W., & Brownell, K. D. (2010). The Impact of Food Prices on Consumption: A Systematic Review of Research on the Price Elasticity of Demand for Food. American Journal of Public Health, 100(2), 216-22 Heyne, P., Boettke, P. J., & Prychitko, D. L. (2010). The economic way of thinking. (12th ed.). Upper Saddle River: Pearson-Prentice Hall. High, J. (2011). Economic Theory and the Rise of Big Business in...
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...certainty that the market price for steel will fall? Why? Solution: The increase in the cost of production of steel will shift the supply curve to the left. This effect alone on the market will influence the market price to rise while the market quantity will fall. This is shown above by a movement from the original supply curve S0 to a new supply curve such as S1. The decrease in demand will cause the demand curve to shift to the left. This effect alone on the market will influence the market price and quantity of steel to fall. Note that the supply and demand effects on price work in opposite directions. If the supply effect dominates the demand effect, the equilibrium prices will rise. This is exhibited by the decrease in demand to D1’. On this demand curve, the net effect is for prices to rise from P0 to P1’. On the other hand if the demand effect dominates, equilibrium prices will rise. This is exhibited by the decrease in demand to D1’’. On this demand curve, the net effect is for prices to fall from P0 to P1’’. As we don’t know given the current information which effect dominates, we can’t perfectly predict the change in price. The change in quantity is unambiguously decreased. 2. Midcontinent Plastics makes 80 fiberglass truck hoods per day for large truck manufacturers. Each hood sells for $500. Midcontinent sells all of its product to the large truck manufacturers. If the own price elasticity of demand for hoods is...
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...b) The objective of airline firms is to maximise profits. This can be achieved by maximising total sales and minimising total costs. The various demand elasticity concepts can be used to by the airline firms to maximise total revenue. Sales revenue refer to the total receipts from sales of a given quantity of goods/service. It is calculated by multiplying the quantity of good or services sold by the price of the good or services. Price elasticity of demand measures the degree of responsiveness of the quantity demanded of a commodity (market for air travel) to a change in the price of the good itself, ceteris paribus. Its formula is given by percentage change in quantity demanded of air travel over the percentage change in price of price of air travel. Ep is useful in helping the airline firms to determine the price that should be set or adopt appropriate pricing policy for its market for air travel, to maximise total revenue earned. For Ep, if the absolute value of the coefficient is greater than 1, this means that a given percentage change in price results in a larger percentage change in quantity demanded, ceteris paribus. The converse is true when demand is price inelastic. In this case, demand for air travel is price elastic. The two determinants affecting Ep for market for air travel are availability of substitutes and size of budget spent on good. The availability of substitutes of airplane is wide. For example, besides the airplane there are other alternatives as well...
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...Abstract In this assignment, Principles of Economics, I will state my answer to the following six questions: First I will suggest how an economist would approach the problem of alcohol abuse. I will provide two possible solutions to this problem, while including the four (4) elements of the economic way of thinking in my analysis. Second, I will analyze how prescription drugs affect the demand and supply of other products and services in this country. Third, I will formulate a reason why the elasticity of demand is an important consideration when analyzing the impact of a shift in supply and why the elasticity of supply is an important consideration when analyzing the impact of a shift in demand, while including at least one (1) example in each scenario. Fourth, I will provide two (2) examples of increasing-cost industries in your state and propose why they would have a positively sloped supply curve. Finally, I will suggest how, under certain conditions, a perfectly competitive market is economically efficient. Principles of Economics Alcohol Abuse Alcohol abuse is a major problem in today’s society. With a down an economy, there are more and more people turning to alcohol while actually helping the local package store to thrive. Economist may see it differently. They may see it as a way; first they will “Use Assumptions to Simplify”. (O'Sullivan, A., Sheffrin, S. M., & Perez, S. J. (2012)) Why are these people drinking? Is it because they struggle...
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...of Pakistan (SBP); “Price and income Elasticity of Imports” gives some intriguing insight into the country’s Balance of Payment (BoP) accounts and its relation to growth. The relevance of the study cannot be ignored in the current economic context when country is experiencing large current account deficits monthly. The study highlights that many developing countries rely extensively on running external deficits in order to spur medium to long term growth. Import price elasticity The report points out that these large deficits can sometimes have a hard landing in the shape of BoP crisis, which can make a country, go bankrupt. Thus BoP has become an increasingly important indicator over the period as a measure of judging a country’s long term growth prospects. In Pakistan, major components driving the BoP deficit are its rising imports relative to exports. Hence the moot point of the study is what drives the demand for imports in Pakistan and as to what income level affects the demand for import. Depreciating your way out of trade deficits… So, what interests us is the policy implication suggested in the study conducted. The study lays out its recommendations on the findings of Heien (1968). It states that if the import price elasticity relative to income falls between -0.5 and-0.1, then exchange rate and import tariff polices can be equipped to tackle the problem of widening trade deficits. In Pakistan’s case, this price elasticity fall under the given range, such that...
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...This work of HIS 204 New Ver Week 1 Quiz shows the solutions to the following problems: 1. In what year did the United States reach a milestone in which more people lived in urban areas than farms? 2. The Dawes Act was significant because it demanded what from Native Americans? 3. One of the most significant examples of corrupt business practices during the Gilded Age occurred in which industry? 4. Gilded is a term that means something that is golden or beautiful on the outside, but often has nothing of value on the inside. Which literary figure termed late-19th-century America the Economics - General Economics Circular Flow Diagram . Explain how the circular flow diagram relates to the current economic situation. Using the circular flow diagram, explain a way that your family interacts in the factor market and a way that it interacts in the products market. Supply and Demand . Analyze how the law of demand applies to a recent purchase that you made. Describe how the product has changed in price and explain whether the price change is due to supply or demand. Did the change in price affect your decision to purchase the item? Elasticity . Analyze the determinants of the price elasticity of demand and determine if each of the following products are elastic or inelastic: a. bottled water b. toothpaste c. cookie dough ice cream d. fresh green beans e. gasoline In your analysis, please make sure to explain your reasoning...
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...Supply and Demand Simulation Supply and demand is an important concept for both macroeconomic and microeconomic. The week two assignment reveals how an apartment company in the city of Atlantis is changed by many different economic points. The microeconomics ideas can be shown as the changes in the supply and demand and even the equilibrium, since the topics are only having affects on the small apartment. The macroeconomic ideas can then put into the category as price elasticity and/or the price ceilings since they have a bigger impact on the overall region beyond the local markets. This simulation had a shift in the supply curve and the demand curve which would cause bigger changes in the economic area. If the demand curve moves at all to the left, it would then show a decrease in demand and then cause less apartments to be rented. The other situation that would occur in this simulation was due to a large want for more property ownership instead of just renting, which then made the management company lower their prices to then be able to compete with the market. The equilibrium price was then lowered because the demand was decreased, while everything else remained the same. If the supply curve is to move to the right it would show more of an increase in the availability of apartments to rent in the area. This situation would happen if the management company were to look into expanding the building to have more apartments for rent. This would work only if there wasn’t any...
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...Principles of Economics Sharonda Thorpe, RN, BSN Professor Sarah Uhimchuk Principles of Economics-ECO 100 January 29, 2012 Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis. To suggest how an economist would approach the problem of alcohol abuse, one needs to understand the elements of the economic way of thinking. Four elements are: principle of opportunity cost, which means what you sacrifice to get something. Marginal principle is another element, which includes marginal benefits that result from a small increase in activity and marginal cost, which is the additional cost resulting from a small increase in activity. The principle of voluntary exchange is another element of the economic way of thinking, which is based on the notion that people act in their own self-interest. People won’t exchange one thing for another unless the trade off makes them better off. A forth element would be the principle of diminishing returns which means at a certain point (called the point of diminishing returns), additional input to a system of production will produce less and less output. O”Sullivan (2012). In other words, Scarcity: where economists study situations where needs or wants exceed means. Therefore, people have to make choices. Rationality is assumed to guide people's choices...
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