Microeconomics: Supply and Demand and Quantity Essay

Submitted By JessicaRutley
Words: 3946
Pages: 16
Open Document
Economics 1000-C
Chapter 1
Scarcity: the limited nature of society's resources
Economics: the study of how people, firms, and society manages their resources
Marginal Benefit: What you earn
Marginal Cost: what you give up
Sunk Cost: Spending $10,000 on x does not affect whether or not I do y because x was yesterday’s problem. What happens in the past is irrelevant
Incentive: Something that induces a person to act. ie. The prospect of a reward or punishment. The point of taxes is to alter your behavior. Ex. High tax on smokes to reduce sale.
Trade:
Trade can make everyone better off
Instead of relying on me, I can focus on producing one good thing and exchange it for another
Countries also benefit from trade and specialization
Everyone does what they’re good at thus creating trade in the world. Plumber fixes pipe, dentist fixes teeth, etc…
Markets Are A Good Way to Organize Economic Activity
Market: a group of buyers and sellers (need not be in a single location)
Market Failures: when the market fails to allocate society’s resources efficiently.
Ex. Housing Cash

Causes:
Externalities
When the production or consumption of a good affects bystanders (eg. Pollution)
Positive Externalities
University, well educated people
Getting the flu shot
Market Power: a single buyer or seller has substantial influence on market price (eg. Monopoly)
Government puts extra taxes on bad things to keep the population away from them while they won’t tax good things as much to allow people to obtain them.
Equality Argument: extra taxes on rich to allow equity. Sometimes causes negative effects
Countries standard living depends on their ability to produce goods and services
Productivity depends on their skill level, coworkers, education, etc…
Inflation: increases in general level of prices
Society faces a short-run trade-off between inflation and unemployment

Chapter 2
The Invisible Hand: the market working on its own to allow an efficient outcome
Assumptions: simplify the complex world, make it easier to understand
→Unrealistic, but simple to learn and give useful insight
Efficiency: decisions based on the limited amount of resources possessed (How much can be made?)
Equity: How much I get (How do I share?)
The Production Possibility Frontier (PPF)
The PPE: a graph that shows the combinations of output that the economy can possibly produce to available factors or production technology
Why Might the PPF be Bow-Shaped?
As economy shifts resources from beer to mountain bikes:
PPF becomes steeper
It’s bowed because people aren’t as good making one product as the other. Opportunity cost becomes greater
Micro: the study of how households and firms make decisions and how they interact in markets
Macro: the study of economy-wide phenomena, including inflation, unemployment, and economic growth
Propositions About Which Most Economists Agree (In Textbook)
Positive Statements: claims that attempt to describe the world as it is
Normative Statements: claims that attempt to prescribe how the world should be

Chapter 3
Export: goods produced domestically and sold abroad
Import: goods produced abroad and sold domestically
Canadian Consumption with Trade Japanese Consumption with Trade
Produced
Imported
ExportedAmount Consumed
Produced
A
0900
Absolute Advantage: the ability to produce a good using fewer inputs than another producer
Canada has an absolute advantage in wheat; 10 in Canada vs. 25 in Japan
If Canada is better in both why trade?
Comparative Advantage: the ability to produce a good at a lower opportunity cost than another producer
Japanà 1 computer = 5 tonnes of wheat ßLower Opportunity cost
Canada à 1 computer = 10 tonnes wheat
Japan = comparative advantages in computer, not absolute advantage
Canada= absolute advantage in wheat
Trade allows the amount or product to increase. Trade allows Canada to obtain more computers.
1 computer=7.5 tonnes of
Show More

Related Documents: Microeconomics: Supply and Demand and Quantity Essay

Microeconomics And The Laws Of Supply And Demand

Microeconomics and the Laws of Supply and Demand XXXXXXXXX ECO/365 Microeconomics and the Laws of Supply and Demand In the world of business, flexibility is the key to success. Businesses must be able to change with the demands of the customer. Our economy is based off supply and demand of goods and services. As Colander states in our text, “Prices are the tool by which the market coordinates individuals’ desires and limits how much people demand. When goods become scarce, the market reduces…

Words 1195 - Pages 5

Essay about Supply And Demand

Savage Supply and Demand August 12, 2013 Eco/365 Chris Foster Introduction There were two microeconomics and two macroeconomics concepts in the simulation. Atlantis is a microeconomics apartment company which manage apartment complexes and homes in the city. Atlantis had one shift supply curve and one shift in the demand curve when business started moving into the city. These shifts affected the equilibrium price, quantity, and decision making with the demand needed to supply to consumers…

Words 741 - Pages 3

Supply and Demand Summary Essay

Supply and Demand Summary ECO 365 January 14, 2013 Supply and Demand Summary The town of Atlantis is a nice town to live in. This summary is about the economics involved in being able to rent two-bedroom apartments including the principles of microeconomics, macroeconomics, the supply and demand curves, price elasticity, and the principles in the simulation related to a real-world work environment. The first microeconomic principle introduced in the simulation involves the setting of the rental…

Words 833 - Pages 4

Supply and Demand Essay

factors and influences that come into play, all dealing with macro and microeconomics. In the case of the week two supply and demand situation, there were many things to be learned. In this scenario, one acts as the property manager for GoodLife Management, setting the rates and filling vacancies in apartments in the city of Atlantis. There were principles and concepts involving macro and microeconomics, shifts in the supply and demand curve, and effects that influence the equilibrium price and decision…

Words 896 - Pages 4

Essay about Supply and Demand Curves

Supply and Demand Curves John Doe ECO/365 June 5, 2014 I.M. Professor Supply and Demand Curves Answer the following questions Write the definition for each of the following: 1. Law of Demand - A microeconomic law that states, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa. The law of demand says that the higher the price, the lower the quantity demanded, because consumers’ opportunity cost to acquire…

Words 295 - Pages 2

Essay about Microeconomics and the laws of supply d

Microeconomics and the laws of supply demand ECO/365 Supply and Demand Simulation Since the early years of commerce, supply and demand have been a huge factor in the capitalist business system. For this assignment I was asked to take part in a simulation as a source for my paper. In the simulation I had to take part of a series of important financial decisions for a fictitious apartment management company named GoodLife and see how each decision would be impacted by different economic factors…

Words 589 - Pages 3

Essay about ECO365 Week 2 Assignment

Microeconomics and the Laws of Supply and Demand ECO/365 March 16, 2015 Sandy Bishop Microeconomics and the Laws of Supply and Demand In this paper, we will summarize the content of the Supply and Demand Simulation located on the University of Phoenix student website. The simulation takes place in a small city called Atlantis that has wide-open spaces, adequate parks and green areas, and easy access to the highway. There is plenty of outdoor activities and dotes beautiful wildlife. Housing…

Words 816 - Pages 4

The New Market Of Medicinal Marijuana In The State Of Colorado

Colorado since 2000 but the state has recently eliminated a quantity control that was placed on the amount of patients one business can supply. The article explains that the demand for medicinal marijuana has always been strong but the supply has never been able to fit the amount of consumers. Now that there is no more quantity control by the government, the industry is booming and the supply is now living up to the expectations of demand. The government taxes this new good and the immense amount…

Words 1532 - Pages 7

Supply and Demand and Vacancy Rate Essay

Supply and Demand Simulation ECO/365 October 10, 2013 Supply and Demand Simulation The Supply and Demand Simulation was okay. I was still lost but doing on hands is good practice for me. The simulation discussed the microeconomics and macroeconomics concepts. The simulation tried to explained the concepts to me and what the principle of microeconomics and macroeconomics works. From what I could understand about the simulations was that they showed the shifts in the supply and demand curve…

Words 794 - Pages 4

Marketing: Supply and Demand and Price Elasticity Essays

Economic Analysis Report Microeconomics can be justified as the analysis of decisions made by individuals or groups of people and the study of economic behavior in industries and consumers. Some of the concepts that microeconomics focuses on are market prices and how the supply and demand curve initiates change. Microeconomics also examines mergers and price elasticity which are vital notions important to microeconomic excellence. As decisions are made through microeconomics, both firms and individuals…

Words 957 - Pages 4