...Principles of Economics Tommy R. Session Principles of Economics-ECO 100 Professor Dr. James Butikofer 11 Nov 10 1. You own a local sub shop in a college town. You primarily serve two groups of people: local residents (both students and other local residents) and visitors to your town. Devise a price discrimination strategy that will increase your revenues compared to a single-pricing strategy. First the groups must be divided according to their willingness to pay. The first group will be the students. Must students expect to receive some type of discount just because they are students. The average student does not work a full time job so their income is usually lower than the other local residents. Any student with a current student identification card will receive 10% off their purchases. The second group will be the non-student locals, most of this group will familiar with any competitors and they will have a choice to which business they will patronize. This group will receive a 10% discount on any combination meal after their first combo meal purchased on the same visit. This special pricing will be offered occasionally and will mainly be used when the college population is usually not in town (semester breaks, holidays & normally school closings). The third group will be the town visitors, this group will have no special pricing plan because they are usually not willing to drive around to look for competitors’ establishments. 2. Suppose...
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...Joseph Niehl Baron (李健雄) College of Social Science Department of Economics B00303118 Dear Professor or whoever may concern, Due to lack of fund I was not able to buy our syllabus yet, and I was not able to complete the suggested homework. So, instead of doing nothing, I have decided to hand in my personal simplified summary. I will get my syllabus as soon as possible, I apologize for your inconvenience. Best regards, Joseph Niehl Baron *********************************************************** Chapter II: Thinking like an Economist Principle of Economics 1. Every field has it’s own language and it’s own way of thinking. 2. The Economist as Scientist a. Economists two roles: Scientists / Policy advisors b. Devise theories, collect data, analyze data to verify or refute c. Scientific method: Observation and theory 3. Assumptions and models a. Assumptions can simplify the complex world and make it easier to understand b. Use models to learn about and illustrate the world. c. First model: The circular flow diagram: is a visual model of the economy that shows how dollars flow through markets among households and firms. d. Second model: The production possibilities frontier: is a graph that shows the various combinations of output that the economy can possibly produce given the available factors of production and the available production technology 4. Microeconomics and Macroeconomics a. Microeconomics:...
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...Unit One: Introduction Chapter 1: Ten Principles of Economics Learning Objectives * Learn that economics is about the allocation of scarce resources * Examine some of the trade-offs that people face * Learn the meaning of opportunity cost * See how to use marginal reasoning when marketing decisions * Discuss how incentives affect people’s behavior * Consider why trade among people or nations can be good for everyone * Discuss why markets are good, but not perfect, way to allocate resources * Learn what determines some trends in the overall economy Ten Principles of Economy * Management of society’s resources is important because resources are scarce * Scarcity – limited nature of society’s resources * Economics – study of how society manages its scarce resources How People Make Decisions Principle #1: People Face Trade-offs * To get one thing we like, we must give up another. Making decisions requires trading off one goal against another * Classic trade-off is between “guns and butter”. The more we spend on national defense, the less we spend on consumer goods to raise our standard of living at home * Trade-off between a clean environment and a high level of income is another modern conflict. Pollution regulations raise the cost of producing goods and services, causing firms to earn smaller profits, paying lower wages, charging higher prices, ect… * Another trade off society faces is efficiency and equity. Efficiency...
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...Assignment 1: Principles of Economics Due Week 4 and worth 200 points Write a three to four (3-4) page paper in which you: 1.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. 2.Analyze how prescription drugs affect the demand and supply of other products and services in this country. 3.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. Include at least one (1) example in each scenario. 4.Provide two (2) examples of increasing-cost industries in your state and propose why they would have a positively sloped supply curve. 5.Suggest how, under certain conditions, a perfectly competitive market is economically efficient. 6.Use at least three (3) quality resources in this assignment. Your assignment must follow these formatting requirements: •Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. •Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page...
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...Business Principles of Economics Final Project- A New House Decision Lisa Joe Faculty, University of Phoenix Probably the most important decision in your live is to buy a home and certainly there are many factors that need to be considered. The first step is to figure out how much you can afford to spend on a new home. In order to figure out how much you can spend in a home is to work on a personal budget that will reflect how much you're spending on everyday things. A good budget will help guide you to the right price range of homes as well as prevent you from spending more than you should on your house. This can happen when the bank says you can afford a certain price range of homes based on your income and debt, but they haven't taken into consideration all of your expensive hobbies, your monthly child care expenses, the fact that your car may need maintenance and emergency situations also you probably don't want to have to change your lifestyle in order to buy a more expensive home. By having control of your personal budget, you can compare your own numbers with what the bank is willing to lend you to come up with a very manageable mortgage payment that will let you continue the same lifestyle you currently have and avoid to enter in a debt that you may not able to fulfill and end up losing your saving. Part of coming up with a budget will be to consider the principles of economics, especially the “People Face Trade-Offs”; this particular principle relates to...
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...PRINCIPLES OF ECONOMICS SUBMITTED TO: Prof. Michael Horvath SUBMITTED BY: MEHWISH AAMIR Price discrimination strategy is when a product/good is sold at different prices to different consumers, whereas single pricing strategy is one in which same price is charged to all consumers. An owner of a sub shop in a college town can adopt the price discrimination strategy in order to maximize its profit. The owner categorizes its customers in 3 types: 1) Students, who are not willing to pay high prices, and their demand elasticity is high. 2) Senior citizens, who have lower income and will not pay high price for a sub, their demand elasticity is high too. 3) Other people, who are not students or senior citizens, they do not have any issue with the price hence there demand elasticity is mild. The owner decides to charge students, senior citizens and other people differently. He decides that for his senior citizens, he’ll give them a deal, that is when they buy one sub they get another one for the half price. Most of the senior citizens usually come in a group of two or more people so this offer will attract them. This will bring good news and a bad news, Good news: Demand is highly elastic, so total revenue increases by larger amount. Bad News: More subs are served, so total cost increases. In result, as demand for sub is highly elastic for senior citizens, the increase in revenue will offset the increase in cost. Second, for students, he decided to...
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...person is more likely to apply for insurance than a low-risk person is. Moral hazard occurs because people have less incentive to be careful about their risky behavior after they purchase insurance. Gregory, M. (2012). The Basic Tools of Finance. Principles of Economics (7 ed., pp. 573-574). Stanford: Cengage Learning. 2. What is diversification? Does a stockholder get a greater benefit from diversification going from 1 to 10 stocks or going from 100 to 120 stocks? Diversification is the reduction of risk achieved by replacing a single risk with a large number of smaller unrelated risks. A stockholder will get more diversification going from 1 to 10 stocks than from 100 to 120 stocks. Gregory, M. (2012). The Basic Tools of Finance. Principles of Economics (7 ed., pp. 574-575). Stanford: Cengage Learning. 3. Comparing stocks and government bonds, which type of asset has more risk? Which pays a higher average return? Stocks have more risk because their value depends on the future value of the firm. So in return it will always have a higher risk; Stocks will have a higher return with the average of 8 percent a year and bond an average of 3 percent a year. Gregory, M. (2012). The Basic Tools of Finance. Principles of Economics (7 ed., pp. 575-576). Stanford: Cengage Learning 4. Is unemployment typically short term or long term? Explain. Unemployment is typically short term. Most Individuals who become unemployed are able to find them new jobs pretty quickly. Gregory...
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...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. The economist would approach the problem of alcohol abuse as cost, and how they could put it in real numbers. When measuring the cost of alcohol abuse in any city in the U.S. we must understand what make the assumptions of alcohol abuse comprehensible and to focus on the relevant alcohol abuse. We have to think about such things as health services and medical expenses, premature death, loss of productivity, and alcohol related crimes. In total, the U.S. economy loses an estimated $185 billion each year to alcohol-related problems, according to the National Institute of Alcohol Abuse and Alcoholism. We use the assumptions to help explain, Economics is a discipline, but it is not an exact discipline. Economic theory simplifies situations because it would be nearly impossible to predict and include every relevant variable and factor. Just look at the cost of drunk driving. Drunk driving is a insightful subject to many people because so many lives have been affected by this crime. The National Highway Traffic Safety Administration reports that alcohol-related motor vehicle crashes kill someone every 31 minutes and nonfatal injure someone every two minutes. During 2005, 16,885 people in the U.S. died in alcohol-related motor vehicle crashes, comprising 39% of all traffic-related deaths...
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...Principles of Economics Kenneth Price Professor Sergio A. Hernandez Strayer University ECO 100, 113PA037-1132-001 January 26th, 2013 How would an economist approach the problem of alcohol abuse? According to David H. Jernigan, PhD of the Johns Hopkins Bloomberg School of Public Health, alcohol abuse presents a significant public health problem and raising the tax on alcohol would have the most significant impact to decrease alcohol consumption. Excessive alcohol use causes 79,000 deaths per year and it is the number one leading cause of drug problems among youths. Jernigan writes “People increase their drinking when prices are lowered and increase their consumption when prices rise”. He further states “Alcohol demand is elastic: In the U.S., a 10% increase in the price of alcohol would lead to a 7.4% drop in beer consumption, a 4.9% drop in wine consumption and a 14.7% drop in distilled spirits consumption (Jernigan, D.H. nd). Operating on the assumption that people use their disposable income to consume alcohol, Jernigan concludes that the more expensive the price of alcohol, the less people will be able to afford and this includes people addicted to it and young people. He is most likely correct in his assumption as it conforms to the principles of supply and demand. When prices rise, demand drops. It is interesting to note that Jernigan predicts only a 4.9% decrease in the consumption of wine. One can surmise that the typical wine aficionado has more disposable income...
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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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...Dr. Zomorrodian | Assignment I | Principles of Economics | | Charles Fitch | 5/6/2011 | | I want to discuss and gives some examples and graphs on price discrimination strategies, price ceiling and what happens when the government regulates prices to give them a price ceiling to protect the consumer. I also want to discuss a perfect competitive market and the short and long term effects if demand rises or falls, also, why some long-run average curves are so steep. Lastly, I will explain the rationale and implications of the new guidelines used by DOJ and FTC for evaluating mergers. Problem 1. Sub shop In my sub shop, called Subtown, after some research I have found that with the pricing structure that is currently in place it has not attracted as many college students as I believe we could serve. The average student at the nearby college eats out three to four times a week for lunch and close to five times a week for dinner with the average meal being nine to twelve dollars. The total population of the nearby college is about twelve hundred students. Since the demand for fast food for lunch and dinner for college students is relatively elastic because there is already seven other fast food establishments in the area that are in close proximity to the college as well. One of those is another sub shop, one is a sandwich shop, and there are three burger places a Chinese food place and a taco place. None of these establishments offer a price discrimination strategy...
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...“Principals of Economics” Economics deals with people and it is a reflection on how they interact with one another. When interacting with others it is based on how ones go about making decisions regarding his or her life. Some of the key points to this article is that it discussed how individuals face trade-offs, the meaning of opportunity cost, how to use marginal reasoning when making decision and how incentives affect people’s behavior. Economic goods and services are restricted, while the need to use services of these goods and services seem unlimited. There are simply not enough goods and services to please even a small portion of everyone's intake desires. Thus, societies must decide how to use these limited resources and distribute them among different people. This means, to get one thing that we like, we usually have to give up another thing that we also like. Making decision requires trading off one goal against another. Shortage of economic resources forces people to make tradeoffs. That is, people must always consider how to spend their own limited incomes or time because resources are limited to fulfill their unlimited needs and wants. Tradeoffs or choosing a one thing means giving up something else. When we give up an item, we lose the benefits of its services to us or incur costs to obtain the benefits of the thing we decided to choose. When making decisions it requires comparing the costs and benefits of different courses of action. In economics, the term used...
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...Introduction Economic principles are thought not to go hand in hand with natural science laws. These are laws or principles upon which the economy should be build. This is the discipline which economists use when applying economics. Basis, a text book written by Alfred Marshall (1890 Principles of Economics) who was born in 1842 in Bermondsey, London, England, died 13 July 1924 in Cambridge, England) who was a great economist in his days for a long time and his book dominated England for a considerably lengthy period of time. He is known to be one of the economics founders. His book brings to life the ideas mentioned below. Marshall saw the work of economics was to improve the living standards of the people and eliminate poverty. In his book Marshall had many original ideas however; he added an improved version of W.S Jevons ideas. Supply and Demand Supply and demand are thought to be some of the most primary ideas of economics and is surely the backbone of any market economy. Demand refers to the quantity (How much) of service or a product people are ready to buy at a given prize, supply refers to the quantity the market can offer. Marshall recognized that in the short run the value of the market depends on demand mainly, and that it is not possible to change supply. The relation between demand and supply, determine the forces behind the distribution of resources thus ensuring efficiency. The law of demand states that, if all other factors remain...
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...National Institute of Business Management Chennai - 020 FIRST SEMESTER EMBA/ MBA Subject : Principles of Economics Attend any 4 questions. Each question carries 25 marks (Each answer should be of minimum 2 pages / of 300 words) 1. What are the vital functions of an Economy? Explain the price mechanism. 2. Explain measurement of Price Elasticity of Demand. 3. Describe the kinds of Economic Systems. 4. Price mechanism also known as the market mechanism, that helps to solve the central problems in Capitalist Economy. Explain. 5. What are the factors governing Price Elasticity of Demand? Explain. 6. Explain economic systems and resource allocation. 25 x 4=100 marks 2.Explain measurement of Price Elasticity of Demand. Ans) Price elasticity of demand is a measure used to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (i.e. holding constant all the other determinants of demand, such as income). Price Elasticity of Demand = (% Change in Quantity Demanded)/(% Change in Price) Three popular methods for measuring price elasticity of demand are discussed below: 1. Percentage method The percentage method measures price elasticity of demand by dividing the percentage change in amount...
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...Chapter 31: Open Economy Macroeconomics: Basic Concepts Principles of Economics, 7th Edition N. Gregory Mankiw Page 1 1. Introduction a. This another important chapter because its conclusions differ from those that you often read in the newspapers. b. We are shifting from a closed to an open economy. c. Closed economy is an economy that does not interact with other economies in the world. P. 660. d. Open economy is an economy that interacts freely with other economies around the world. P. 660. 2. The International Flows of Goods and Capital a. The Flow of Goods: Exports, Imports, and Net Exports i. Exports are goods and services that are produced domestically and sold abroad. P. 660. ii. Imports are goods and services that are produced abroad and sold domestically. P. 660. iii. Net exports are the value of a nation’s exports minus the value of its imports, also called the trade balance. P. 660. iv. Trade balance is the value of a nation’s exports minus the value of its imports, also called net exports. P. 660. v. Trade surplus is an excess of exports over imports. P. 660. vi. Trade deficit is an excess of imports over exports. P. 661. vii. Balanced trade is a situation in which exports equal imports. P. 661. b. Case Study: The Increasing Openness of the U.S. Economy, P. 661. i. Over the last 50 years, both exports and imports as a share of GDP have more than doubled due to improvements in (1) transportation, (2) telecommunications, (3) technological progress and (4) the movement...
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