...viewing the issue of health insurance and how insurance rates are directly related to the amount of alcohol consumed. Here, we can consider how economists “think at the margin”. The change in health rates would have to be more than marginal to affect a change in a life style such as alcohol consumption. Similarly, if one thinks rationally, the higher the insurance rates are for alcohol consumers, the less these consumers will drink. Finally, “rational people respond to incentives”. If insurance companies offer price incentives to drink less, a rational person would respond by drinking less. Cooksey, J. A., Knapp, K. K., Walton, S. M., & Cultice, J. M. (2002). Challenges To The Pharmacist Profession From Escalating Pharmaceutical Demand. Health Affairs, 21(5), 182. Cook, P.J., & Moore, M.J. (2002). The Economics of Alcohol Abuse and Alcohol-Control Policies. Health Affairs, 21(2),...
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...Microeconomics and the Laws of Supply and Demand To purchase this visit here: http://mindsblow.us/question_des/MicroeconomicsandtheLawsofSupplyandDemand/2779 Contact us at: help@mindblows.us Complete one of the following options: Option 1: Complete the Supply and Demand Simulation. Write a 1,050- to 1,400-word paper summarizing the content of the simulation and address the following: Identify two microeconomics and two macroeconomics principles or concepts from the simulation/video. Explain why you have categorized these selected principles or concepts as microeconomics or macroeconomics. Identify at least one shift of the supply curve and one shift of the demand curve in the simulation/video. Explain what causes the shifts, and how each shift affects the price, quantity, and decision making. Include responses to the following: How might you apply what you learned about supply and demand from the simulation/video to your workplace or your understanding of a real-world product with which you are familiar? How do the concepts of microeconomics help you understand the factors that affect shifts in supply and demand on equilibrium price and quantity? How do the concepts of macroeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity? How does the price elasticity of demand affect a consumer's purchasing and the firm's pricing strategy as it relates to the simulation/video? Cite a minimum of 3 peer...
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...Use the Supply & Demand model to explain how a good’s price is determined In ordinary practice, price is the quantity of payment or reimbursement given by one party to another in return for goods and services. It is generally expressed in some form of currency. This essay will discuss how a good’s price is determined using the demand & supply model. Supply & demand is perhaps one of the most fundamental concepts of economics. It is an economic model of price determination in a market. It ascertains that in a competitive market the unit price for a specific good will fluctuate until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers, resulting in an economic equilibrium of price & quantity. DEMAND Demand refers to the want or the willingness of the consumers to buy commodities. The demand for a product may be defined as the quantity of the product that a consumer will purchase at the existing price during a particular period of time. Demand is influenced by the price of commodities. The higher the price of the commodity, the lesser will be the demand of a rational consumer; other things remaining constant. The hypothesis of – other things remaining constant – is known as the ceteris paribus. The demand curve illustrates the relationship between price & quantity demanded (as the price increases the quantity demanded decreases). Movement along...
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...Microeconomics and the Laws of Supply and Demand Rose Essor DeSouza ECO/365 September 7, 2015 Lori Geddes Microeconomics and the Laws of Supply and Demand The Khan Academy video explained how demand and/or supply changes are affected when factors in the market change, and how these changes affects market equilibrium, which is the state where the supply in the market is equal to the demand in the market, price and equilibrium quantity. Because demand and supply in the market is interdependent and are constantly changing or shifting, they play a critical role in altering market equilibrium price points and quantity available. Demand shifts of more or less of a product results in a shift of both price and quantity. An increase in demand will shift price up and quantity to the right and a decrease in demand will shift price down and quantity to the left on the demand curve. Supply shifts of more or less of a product affects the equilibrium point by shifting the supply curve to the right, indicating that more availability of a product. This results in a lower price and a higher demand for a product. A shift in the supply curve to the left, indicating there is less availability of a product, which results in a higher price and a decrease in demand of a product. Supply and Demand Curves Microeconomics places emphasis on demand and supply in the marketplace, which normally determines the change of levels in price and factors of individual choices while macroeconomics...
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...willing to buy at different prices is the A) elasticity B) market demand curve C) market supply curve D) market equilibrium 2. The law of demand states : A) that price and quantity demanded are inversely related. B) that price and quantity demanded are inversely related, holding all other factors that influence demand fixed. C) that demand for a good comes from the desire of buyers to directly consume the good itself. D) an increase in demand results in an increase in price. 3. Which of the following statements best illustrates the law of demand? A) When the price of pepperoni rises, the demand for pizza falls. B) When the weather gets hotter, the quantity demanded of ice cream rises. C) When the price of lemons falls, the demand for lemonade rises. D) When the price of eggs rises, the quantity demanded of eggs falls. 4. Which of the following is not typically a factor held constant when deriving a demand curve for clothing? A) consumer income. B) the price of clothing. C) the price of other goods. D) consumer tastes. 5. What is the difference between a derived demand curve and a direct demand curve? A) Derived demand is unknown, whereas direct demand is known. B) Derived demand is unobservable, whereas direct demand is observable. C) Derived demand is demand determined by the demand for another good, whereas direct demand is demand for a good itself. D) Derived and direct demand are both terms referring to the same thing. Page 1 6. What...
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...Demand and Supply – by Jeff Traczynski, 8/28/07 Demand Our discussion of demand begins with the definition of the Law of Demand: Law of Demand: the quantity demanded of a good or service is an inverse function of its price, holding everything else constant. So, what does this mean? There are two important things to take away from this definition. First, this means that when the price of a good goes up, people want to buy less of it. This part is pretty intuitive, and gives demand curves their general shape as shown below. Here, we see that when the price of the good (P, on the vertical axis) is high, the quantity demanded of the good (Q, on the horizontal axis) is low, and vice versa. You’ll also notice that while we’ve been calling this a demand “curve”, the picture is clearly a straight line. For simplicity, we’ll be using straight line demand curves at many times throughout the class. This assumption makes the math simpler (especially when we get to monopolies) without sacrificing too much generality. As you’ll see below, we’ll often make the same assumption about supply curves. The second important part of the Law of Demand is that last little phrase, “holding everything else constant”. Economists call “everything else” which needs to be held constant the Determinants of Demand. These determinants are a list of things which affect how much of the good in question consumers want to buy at a given price, which is exactly what the demand curve represents. Thus, changes in...
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...Practice Questions and Answers from Lesson I-4: Demand and Supply Practice Questions and Answers from Lesson I-4: Demand and Supply The following questions practice these skills: Describe when demand or supply increases (shifts right) or decreases (shifts left). Identify a competitive equilibrium of demand and supply. Describe the equilibrium shifts when demand or supply increases or decreases. Describe how prices or gross substitutes or gross complements shift demand. Describe how input costs or production costs shift supply. Aggregate individual demand into market demand. Describe how effective price ceilings cause shortages. Compute some special demand curves and some special supply curves from verbal descriptions. Question: A survey indicated that chocolate is Americans’ favorite ice cream flavor. For each of the following, indicate the possible effects on demand, supply, or both as well as equilibrium price and quantity of chocolate ice cream. a. A severe drought in the Midwest causes dairy farmers to reduce the number of milk-producing cattle in their herds by a third. These dairy farmers supply cream that is used to manufacture chocolate ice cream. b. A new report by the American Medical Association reveals that chocolate does, in fact, have significant health benefits. c. The discovery of cheaper synthetic vanilla flavoring lowers the price of vanilla ice cream. d. New technology for mixing and freezing ice cream lowers manufacturers’ costs of producing...
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...Supply and Demand ECO365 July 23, 2013 Supply and Demand Microeconomics vs. Macroeconomics The supply and demand simulation shows different aspects of economic structures. Although mostly focused on microeconomics, the simulation does show a small role of macroeconomics. The principles of microeconomics would apply to drop in rent prices to increase the supply being demanded. Another microeconomic principle shown in the simulation is the rise in demand when the cost of rent is lowered. Macroeconomics principles came into play when the rise in demand for apartment was a direct product of the establishment of a new company in town. Same principles of microeconomics apply to an excess supply created by a price ceiling enforced by the government. Supply and Demand Shifts A shift in the demand curve was created when the new company brought an increase in population to Atlantis. A greater amount of people created a greater demand for the apartments. Equilibrium is reached in the demand shift by raising the price of rent to decrease demand. A supply shift was created when 400 apartments were converted into condominiums, which in turn caused a drop in supply. The equilibrium would be fixed by raising the cost to lower the demand because of a decrease in supply. Real World Application With the nutritional corporations expanding and health awareness on the rise prices of nutritional supplements are rising to meet the demand. Especially in local areas, there aren’t too many...
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...Practice Questions and Answers from Lesson I-4: Demand and Supply Practice Questions and Answers from Lesson I-4: Demand and Supply The following questions practice these skills: Describe when demand or supply increases (shifts right) or decreases (shifts left). Identify a competitive equilibrium of demand and supply. Describe the equilibrium shifts when demand or supply increases or decreases. Describe how prices or gross substitutes or gross complements shift demand. Describe how input costs or production costs shift supply. Aggregate individual demand into market demand. Describe how effective price ceilings cause shortages. Compute some special demand curves and some special supply curves from verbal descriptions. Question: A survey indicated that chocolate is Americans’ favorite ice cream flavor. For each of the following, indicate the possible effects on demand, supply, or both as well as equilibrium price and quantity of chocolate ice cream. a. A severe drought in the Midwest causes dairy farmers to reduce the number of milk-producing cattle in their herds by a third. These dairy farmers supply cream that is used to manufacture chocolate ice cream. b. A new report by the American Medical Association reveals that chocolate does, in fact, have significant health benefits. c. The discovery of cheaper synthetic vanilla flavoring lowers the price of vanilla ice cream. d. New technology for mixing and freezing ice cream lowers manufacturers’ costs of producing...
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...Economic Factors affecting the demand, Supply and Price of a commodity Introduction: Supply and demand are two important concepts in economics and supply and demand are considered to be the backbone of a nation’s economy. Demand is generally referred to as the quantity of product or services required by the consumers. The quantity of product or services referred to and the volume of product the consumers are ready to buy at a specific price. The demand relationship is generally referred to as the relationship between the price and quantity of products or services demanded nu the consumers. Supply generally represents the how much product or services a market can offer to the consumers. The product or services supplied refers to the amount...
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...Question One: If the demand for and supply of DVD players increased simultaneously, we could confidently predict an increase in the price of DVD players: | True | | | False | | Price will become indeterminate but quantity sold will increase. Please refer to page 60-61 of the textbook. Question Two: 'Because of unseasonably cold weather, the supply of oranges has substantially decreased.' This statement indicates that: | consumers will be willing and able to buy fewer oranges at each possible price | | | the equilibrium quantity of oranges will rise | | | the amount of oranges that will be available at various prices has declined | | | the price of oranges will fall | | The unseasonably cold weather has resulted in fewer oranges being supplied. The main factor is the unseasonal weather resulting in a decrease in supply shown by a leftward shift in the supply of oranges. Question Three: A decrease in the quantity of Mars bars demanded due to an increase in price involves: | a. a shift of the demand curve for Mars bars to the right | | | b. a shift of the demand curve for Mars bars to the left | | | c. a movement upward and to the left along the demand curve for Mars bars | | | d. a movement downward and to the right along the demand curve for Mars bars | | Supply and Demand shows that once the price rises of an object less of that object is demanded.. but once the price is lower more of the product is demanded...
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...Question 1 Using supply-and-demand diagrams, show and explain the effect of the following events on the market for woollen jumpers. An outbreak of ‘foot-and-mouth’ disease hits farms in Australia. Supply curve shifts left Whenever there is an outbreak of ‘foot-and-mouth’ disease in Australian farms, the result is an increase to the input prices for producing woollen jumpers. As a consequence, the supply of woollen jumpers shifts to the left on the graph, as shown below. The new equilibrium price is higher and the new equilibrium quantity of jumpers is lower. The price of leather jackets falls Demand curve shifts left When the price of leather jackets falls, more people buy them, which in turn reduces the demand for jumpers. The result, shown on the graph below, is a decline in both the equilibrium price and quantity of woollen jumpers. Kylie Minogue, an Australian born international pop star, appears in a woollen jumper in her latest video. Demand curve shifts right As so many people have the desire to look like Kylie, the effect Kylie Minogue would have on the demand for woollen jumpers, by wearing one in her video, would be very positive. The demand for jumpers would rise. As shown below, the result is an increase in both the equilibrium price and quantity of jumpers. New knitting machines are invented Supply curve shifts right The invention of new knitting machine would have the effect of increasing the supply of woollen jumpers. As...
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...ECO/365 Version 4 Principles of Microeconomics IndividualSupply and Demand Simulation | Complete the Supply and Demand Simulation located on the student website. Write 700 - 1,050-word paper of no more than summarizing the content. Address the following: Identify two microeconomics and two macroeconomics principles or concepts from the simulation. Explain why you have categorized these principles or concepts as macroeconomic or microeconomic. Identify at least one shift of the supply curve and one shift of the demand curve in the simulation. What causes the shifts? For each shift, analyze how it would affect the equilibrium price, quantity, and decision making. How may you apply what you learned about supply and demand from the simulation to your workplace or your understanding of a real-world product with which you are familiar? How do the concepts of microeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity? Relating to the simulation, explain how the price elasticity of demand affects a consumer’s purchasing and the firm’s pricing strategy.Format your paper consistent with APA guidelines. | Supply and Demand Simulation Supply and Demand is an economic model of price determination in a market and possibly one of the most fundamental concepts of economics. It is the backbone of a market economy. According to Colander, D. (2010) “Prices are...
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...Assignment 1 Explain the difference between the law of demand and the law of supply. What does the phrase ‘other things equal” mean? Why do we need that? Answer: The difference between the law of demand and the law of supply is that they both move into opposite direction. The law of demand states that the consumers will demand more of goods or services if the price goes down. The variable of the price drop creates an incentive to increase the demand for the goods and services. The law of supply moves in the opposite direction with its main focus being the suppliers of goods or services. There will be a larger incentive for the increase of goods supplied if the price increases. Both of these laws use the “other things equal” assumption or ceteris paribus. This assumption is used when identifying the relationship between two variables like a price and quantity. By using this assumption, economists can isolate the variables so other factors will not affect the development of the theory. When we see the term other things equal we know that this assumption is made to indicate that other variables are not changing or affecting the variables of interest. Without this assumption it would be impossible to develop theories about the relationships and make a causal connection between two variables that can be identified. 2 In your own words, explain the difference between a movement along the demand curve and a shift in demand. Then, provide an example from your own personal life where...
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...SUPPLY AND DEMAND WHAT IS THIS CHAPTER ALL ABOUT? This chapter introduces market behavior and the intricacies of the market mechanism. It is helpful to continue to answer the basic questions of WHAT, HOW, and FOR WHOM and to briefly outline how the market system answers them. The chapter focuses on the allocative and distributive functions of the price system. The section on disequilibrium pricing -- price ceilings and floors -- provides an opportunity to illustrate the upside and downside of interference with market pricing mechanisms. The opening illustration of a kidney sale on eBay demonstrates the power and potential problems of markets. This introduction sets the general direction of this chapter, which is to look at how the market system answers the following questions: 1. What determines the price of a good or a service? 2. How does the price of a product affect its production and consumption? 3. Why do prices and production levels often change? NEW TO THIS EDITION • New headline on campus drinking • New headline on demand shifts for natural gas • One new question for discussion • One new problem LECTURE LAUNCHERS Where should you start? Supply and Demand analysis is the foundation of much of the analysis the student will perform during the semester. Therefore, it is important that students get a good start with this material. 1. Begin your discussion by identifying...
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