Exercises for Microeconomics - 17876 Words

EXERCISES FOR MICROECONOMICS TOPIC 1 Economics: An Introduction (Chapters 1 2 in the Textbook) EXPLAIN THE FOLLOWINGTERMS ââ€"Ž Average benefit ââ€"Ž Average cost ââ€"Ž Economic surplus ââ€"Ž Economics ââ€"Ž Microeconomics ââ€"Ž Macroeconomics ââ€"Ž Marginal benefit ââ€"Ž Marginal cost ââ€"Ž Normative economics ââ€"Ž Positive economics ââ€"Ž Rational person ââ€"Ž Sunk cost ââ€"Ž Opportunity cost ââ€"Ž Absolute advantage ââ€"Ž Comparative advantage ââ€"Ž Attainable point ââ€"Ž Unattainable point ââ€"Ž Efficient point ââ€"Ž Inefficient point ââ€"Ž Production possibilities curve REVIEW QUESTIONS 1. The most you would be willing to pay for having a freshly washed car before going out on a date is $6. The smallest amount for which you would be willing to wash someone else’s†¦show more content†¦How will a new law mandating an increase in required levels of automobile insurance affect the equilibrium price and quantity in the market for new automobiles? In an attempt to induce citizens to conserve energy, the government enacted regulations requiring that all air conditioners be more efficient in their use of electricity. After this regulation was implemented, government officials were then surprised to discover that people used more electricity than before. Using the concept of price elasticity, explain how this increase might have occurred. TOPIC 3 Theory Of Consumer Behavior (Chapter 5 in the Textbook) EXPLAIN THE FOLLOWINGTERMS ââ€"Ž Law of demand ââ€"Ž Law of diminishing marginal utility ââ€"Ž Marginal utility ââ€"Ž Budget constraint line ââ€"Ž Optimal combination of goods ââ€"Ž Rational spending rule ââ€"Ž Marginal rate of substitution ââ€"Ž Indifference curve ââ€"Ž Giffen goods ââ€"Ž Engel’s Law ââ€"Ž Engel’s coefficient REVIEW QUESTIONS 1. Martha’s current marginal utility from consuming orange juice is 75 utils per ounce and her marginal utility from consuming coffee is 50 utils per ounce. If orange juice costs 25 cents per ounce and coffee costs 20 cents per ounce, is Martha maximizing her total utility from the two beverages? If so, explain how you know. If not, how should she rearrange her spending? 2. Ann lives in Princeton and commutes by train each day to her hob in New York City (20 round trips per month). When the price of a roundShow MoreRelatedSupply and Demand Simulation939 Words   |  4 Pagesincreased the supply of the good increased but the demand fell. As a result, the market was no longer in a state of equilibrium (Riley, 2012). Thus, the concept of supply-demand equilibrium was identified. This is a microeconomic concept, following from the definition of microeconomics as the study of economics relating to individual decision-making (NetMBA, 2010). The simulation, when discussing the issue of supply, price and demand also touched on the issue of price elasticity of demand. The priceRead MoreApplying Supply and Demand Concepts1027 Words   |  5 Pageshow the price elasticity of demand affects a consumer’s purchasing and the firm’s pricing strategy 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. The concepts of supply and demand, as well as, scarcity are two examples of microeconomics that can be seen from the simulation. I have decided to categorize these as such because these concepts will haveRead MoreEco 354 Supply and Demand Simulation1042 Words   |  5 Pagesceiling on a specific quantity as well as the quantity supplied. According to our textbook, Microeconomics is the study of individual choice and how that choice can be influenced by economic forces. In this simulation, the city of Atlantis has a property management company by the name of Goodlife Management who is responsible for leasing two bedroom apartment homes that are in high demand. The two microeconomics principles are the supply of the two-bedroom apartments and the demand for renting them.Read MoreIntroduction to Economics Exercise 11481 Words   |  6 PagesINTRODUCTION TO ECONOMICS Exercise 1 1. What determines that a resource be scarce? Why is scarcity important in defining Economics as a science Resources are seen as being scarce, when the wants exceed the resources. The fundamental problem of economics relates to the choices made in the face of limited resources and unlimited wants. 2. Read your local newspaper and economic magazines. Explain the difference between Microeconomics and Macroeconomics. From your research, give three examplesRead MoreEc 301 midterm1167 Words   |  5 Pages The re-election of the incumbent has been synonymous with low inflation and low un-employment. There has been only a few occasions where the results did not follow this norm 2. (7 points) Discuss the difference between Microeconomics and Macroeconomics. Microeconomics deals with the individual parts in the economy and how they relate to each other. Macroeconomics deals with the totals of these parts in our economy 3. (10 points) Use the concepts of gross and net investment to distinguishRead MoreReflection on Microeconomics Class998 Words   |  4 PagesReflection on Microeconomics Class Microeconomics is the economic influences that impact at the micro, or firm, rather than macro level. The study of this subject is one that is highly valuable for any studying business with the provision of knowledge that will increase understanding of different influences and support the decision making processes. With the knowledge gained, along with the skills in applying that knowledge developed through class work and exercises for the different modules,Read MoreEconomic Terms and Healthcare History: Advent of Managed Care Theory983 Words   |  4 Pagesbasic healthcare services from the delivery of infants to annual immunizations, precluded consumers from exercising that fundamental right guaranteed by capitalism: the ability to shop for the best deal. Despite the high costs associated with the microeconomics of the PCP model, Americans largely tolerated the proverbial monopolization of healthcare delivery because they invested a tremendous amount of trust in their PCPs, who i n many small- to medium-sized towns developed lifelong relationships withRead MoreHealth Care Issues: Radiation Exposure and Acute Radiation Syndrome1647 Words   |  7 Pagesanomalies and impaired growth. Gastrointestinal disorders also occur such as diarrhea, bleeding of rectum and radiation cystitis. The effects on microeconomic perspective is of major nature as it continues to affect the lives of people frequently involved with functions in their jobs and daily routines causing exposure to radiation. Analyzing the microeconomic bases for this problem we can see how the workers at nuclear reactor, radiation equipment operators etc are directly exposed to receiving theRead MoreEcons1089 Words   |  5 Pagessociety.† Managerial Economics ï  ¶ Economics â™ ¦ Micro: individual decision maker â™ ¦ Marco: aggregate level ï  ¶ Managerial Economics â™ ¦ The study of making decisions in allocating scarce resources to achieve a managerial objective â™ ¦ The application of microeconomics on effective management â™ ¦ Managerial Economics helps managers make rational choice. â™ ¦ Manager in â€Å"narrow† sense and in â€Å"broad† sense After completing BSP1005, you will be able to: â™ ¦ Thoroughly understand the function of market mechanisms andRead MoreHow The Government Manages Macroeconomic Issues1276 Words   |  6 PagesGovernment financial arrangements. It concentrates on: 1. How the Government manages macroeconomic issues, for example, financial development, livelihood and expansion. These issues are about the economy in general. 2. How the Government manages microeconomic issues, for example, the execution of organizations and their items inside of business sectors over the UK. This likewise has a direction on the profitability of this economy overall, and Britain s aggressiveness abroad. Dealing with the economy