come forward and therefore higher the surplus that will be for those who decide to undertake it. B. Frictional Theory of Economic Profits Economic profits or losses are frictional profit theory. It states that markets are sometimes in disequilibrium because of unanticipated changes in demand or cost conditions. Unanticipated shocks produce positive or negative economic profits for some firms. For example‚ automated teller machines (ATMs) make it possible for customers
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2011‚ and the upcoming Statutory Working Hour (SWH) will have affect on Fast Food chain industry‚ in our particular case; Fairwood (Chinese: 大快活). TABLE OF CONTENTS Executive Summary 1 Table of Contents 2 1. Introduction 3 2. Literature Review and Industrial Background 4 2.1 Literature Review 2.2 Literature Background 5 3. Methodology 6 3.1 Research Questions 3.2 Research Design 4. Discussions and Analysis
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demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in a A. B. C. D. shortage of 30 units. shortage of 15 units. surplus of 30 units. surplus of 12 units. 2. In a competitive market‚ the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. The full economic price under a price ceiling of $3 is A. B. C. D. 6. 7. 8. 9. 3. The buyer side of the market is known as the: A. B. C. D. income side. demand side. supply side. seller side. 4. The
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Cost drivers‚ as propounded by Porter (1985) are the structural causes of the cost of an activity in the value chain. They determine the behaviour and level of costs within an activity. A cost driver can be completely‚ partly or not at all under the control of a firm. It is therefore important for a manager to understand these factors because according to the Neo-classical model of the firm‚ the firm’s objective is to maximise profit by producing a given level of output at the minimum cost level
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SUPPLY supply curve - in economics‚ graphic representation of the relationship between product priceand quantity of product that a seller is willing and able to supply. Product price is measured on the vertical axis of the graph and quantity of product supplied on the horizontal axis. In most cases‚ the supply curve is drawn as a slope rising upward from left to right‚ since product price and quantity supplied are directly related (i.e.‚ as the price of a commodity increases in the market‚ the
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associated with high price causes decline in the value for money. It exists when the amount of money in the country is in excess of the physical volume of goods and services. Explain the reasons for this monetary phenomenon. Ans: Inflation: In economics‚ inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. It can be defined as too much money chasing too few goods. When the general price level rises‚ each unit of currency buys fewer
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is inelastic and a lower price is charged if the demand for the product is elastic. Thus‚ the price-increase policy is to be followed if the demand is inelastic in the market and the price-decrease policy is to be followed if the demand is elastic. 2) Poverty in the midst of plenty: Inelastic demand for agricultural products helps to explain why bumper crops or rice or wheat depress the prices and total revenues for farmers. 3) Helps in fixing the rate of taxes: Governments look at elasticity
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Major Assignment 1) a) Demand Function: Quantity Demanded (Qd) = a + b* Price (P) Supply Function: Quantity Supplied (Qs) = a + b* Price (P) Where: a = constant b = the change in quantity as a result to the change in price. Demand Function: Quantity Demanded (Qd) = a + b* Price (P) b = (420 – 350) / (20 – 25) = 70 / -5 = -14 Using: P = 25‚ Qd = 350 350 = a – 14 * (25) 350 = a – 350 Therefore a = 700 and the demand function would be: Qd = 700 – 14 * P Supply Function:
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Chapter 3 3-1. Concert Opportunity Cost You won a free ticket to see a Brice Springsteen concert ( assume the ticket has no resale value). U2 has a concert the same night‚ and this represents your next best alternative activity. Tickets to the U2 concert cost $80‚ and on any particular day‚ you would be willing to pay up to $100 to see this band. Assume that there are no additional costs of seeing either show. Based on the information presented here‚ what is the opportunity cost of seeing
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Chapter 2 ECONOMIC OPTIMIZATION QUESTIONS & ANSWERS Q2.1 In 2004‚ the second-largest U.S. long-distance telephone company eliminated about 2‚000 jobs at four call centers in Colorado‚ Iowa‚ Kansas‚ and South Carolina. "MCI must continue to revamp its cost structure to better position the company for future success‚" a company spokesperson said. Does this decision reflect an application of the global or partial optimization concept? Explain. ANSWER MCI=s decision to scale back employment at four
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