effects when deciding how much to consume and produce, the equilibrium in a market can be inefficient from the standpoint of society as a whole.
2. Whathappens to consumer and producersurpluswhen the sale of a good is taxed? Howdoes the change in consumer and producersurpluscompare to the tax revenue...
occurs when there is a single buyer and seller (or small group of them) with the ability to control market prices. This can lead to failure because it keeps prices and quantity away from the equilibrium of supply and demand.
2. Whathappens to consumer and producersurpluswhen the sale of a good is...
2. Whathappens to consumer and producersurpluswhen the sale of a good is taxed? Howdoes the change in consumer and producersurpluscompare to the taxrevenue?
3. How do the elasticities of supply and demand affect the deadweight loss of a tax? Why does this effect occur?
4. Whatdoes the domestic...
on the equilibrium price and quantity.
4. LO 6.3 Calculate the effect of a tax on the equilibrium price and quantity.
5. LO 6.4 Calculate the effect of a subsidy on the equilibrium price and quantity.
6. LO 6.5 Explain how elasticity and time period influence the impact of a market intervention.
Consumersurplus: the difference between market price and whatconsumers (as individuals or the market) would be willing to pay. It is equal to the area above market price and below the demand curve
· the difference between the maximum amount the buyer was willing to pay and the actual...
economics: the study of how society manages its scarce resources.
How People Make Decisions A. Principle #1: People Face Tradeoffs 1. 2. “There is no such thing as a free lunch.” Making decisions requires trading off one goal for another. Examples include how a student spends her time, how a family decides...
MAKING GAINS BY THE BOOK
HERE IS A LIVELY MARKET IN SECOND-
analyzing a wide variety of economic issues. They let us calculate how much benefit producers and consumers receive from the existence of a market. They also allow us to calculate how the welfare...
Examine some of the tradeof fs that people face
Learn the meaning of oppor tunity cost
See how to use marginal reasoning when making decisions
Discuss how incentives af fect people’s behavior
The word economy comes from the Greek word for “one who manages...
WHAT IS ECONOMICS (Chapter 1)
DEFINITION OF ECONOMICS
* Scarcity: Limited resourcesTime, money.
* Inability to satisfy all of our wants
* Faced with scarcity we must choose among available alternatives
* Trade offs
* Incentive: Reward that encourages and action or penalty that discourages
Suppose the demand and supply curve for good X are as follows:
PD = 533 – 5Q
PS = 122 + 3Q
where P is the price of X and Q is the quantity. Suppose an excise tax of $8 per unit of X is assessed on this market. What is the new equilibrium quantity of X? Answer
that makes it illegal to charge a price higher than a specified level.
When a price ceiling is applied to a housing market it is called a rent ceiling.
(?) In real life, find some examples of price ceilings or price floors? What is the purpose that we have price ceilings or price floors?
must forego getting something else
e.g. to get food must pay (give up) money
In economics rational behavior is assumed, e.g. people want more goods for less money
Assumption: we all want to increase utility = happiness, satisfaction
Rational self-interest not same as selfishness, e.g. one reason...
Scarcity = the limited nature of society's resources
Economics = the study of how society manages its scarce resources
• “Economy” is Greek for “managing a household”
HOW PEOPLE MAKE DECISIONS
1. People Face Tradeoffs
Making decisions requires trading off one goal...
measures how responsive
a.|buyers are to a change in income.|
b.|sellers are to a change in price.|
c.|buyers are to a change in price.|
d.|sellers are to a change in buyers' incomes.|
____ 2. Demand is said to be elastic if
a.|the price of the good responds substantially to changes in demand...
reasonably good number of buyers and sellers of the products or services. So the possibility of influencing the market by a single seller or buyer is nil. Depending upon the supply and demand prices will be determined. Market price and demand is the deciding factor of the companies to estimate how much to...
was 45.7million in 2008 and 46.3 million in 2009. What was the percentage change (rate of growth) in population from 2008 to 2009? (b) The rural population of Mountainland was 18.3 million in 2008 and 17.7 million in 2009. What was the percentage change? (c) The data below show Mountainland’s real GDP...
is about $1-a-pack tax hike on cigarettes in Connecticut has made state’s government revenue to collect more than it is expected. It was predicted, $ 99.3 Million additional revenue will be get by doing this tax raising. With the tax of $ 3 per pack of cigarettes, government revenue has increased $ 5...
situation where potential buyers are in contact with potential sellers.
A market is any place, physical or virtual, where the buyer and seller (of goods and services) meet.
Market can be local, where buyers and sellers are from the surrounding area.
Markets can be national, where the participants are...
course gives students a thorough understanding of the principles of economics that apply to the function of individual decision-makers, both consumers and producers, within larger economic systems. It places primary emphasis on the nature and function of product markets. It also examines factor markets...
chapters examine the special features of labor markets, in which most people earn most of their income.
TOPICS FOR FURTHER STUDY
21 The Theory of Consumer Choice 22 Frontiers of Microeconomics Additional topics in microeconomics include household decision making, asymmetric information, political economy...