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University Degree: Microeconomics
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- Marked by Teachers essays 2
'Real GNP inevitably remains the most commonly used measure of economic activity. Although far from ideal, it is the best measure we have' Explain and discuss.3 star(s)
There are many people involved such as the farmer, miller, baker etc. Each adds value to the raw material that they started with. The total for GNP also includes the total amount of value added that has been produced, at all stages of production, in the economy in a year. Finally GNP is a comprehensive measure of national income. �1 spent on a loaf of bread will be entirely spent on providing income for the farmer, miller and baker. Every pound of spending is translated into a pound of wages, rent or profits.
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The point of this essay is to clarify and point up the different concepts of elasticity of demand passing through examples and diagrams.3 star(s)
change in quantity demanded divided by the percentage (or proportionate) change in price. Putting this formula in symbols we have: PED= %?QD %?P Where E is the Greek E and is the symbol we use for elasticity and ? is the capital Greek delta and is the symbol we use for a "change in". As it was mentioned before, elasticity of demand is measured in proportionate or percentage terms. This happens for three different reasons. To begin with, by using these measures, we are able to compare the changes in two different things, which are measured in two different types of unit.
- Word count: 2019
Australian Prime Minister Jullia Gillard announced the long awaited details of Australias carbon pricing mechanism. The goal of this scheme is to reduce emission of greenhouse gases
The purpose of this paper is to address the effect of applying carbon tax on energy consumption patterns and well-being of Australian households, as well as the effectiveness of compensation scheme on household budgets and economic well-being. 2. EFFECT OF CARBON PRICING ON ECONOMIC WELL-BEING The Carbon Pricing Mechanism is to be implemented in two phases. During the first phase, all direct emitters are subjected to a fixed price at $23 for every tonne of carbon dioxide equivalent. The carbon price will be fixed for three years from 2012 to 2015.
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What is the nature of uncertainty in a model of oligopoly, and how does the notion of conjectural variation help in modeling this. Hence, using the Cournot model of duopoly, discuss the contention that collusion is the inevitable outcome o
In some cases firms may co-operate in order to maximise profits. Groups that agree on how much each firm will sell or on a common price are known as a cartel. The locomotive production industry is an example of a cartel, there is no economic sense in producing more locomotives than the country's transport network can handle. There are legal restrictions on such collusion in most countries. In other situations firms compete aggressively, with relatively low prices and high production, leading to what may be considered a more efficient outcome resembling perfect competition.
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Briefly outline some of the main models of oligopoly in which firms compete according to output. Hence, discuss the contention that non-collusion is the inevitable outcome of oligopoly.
Oligopolistic firms may act independently or co-ordinate their actions in order to earn the maximum possible profit. Groups that agree on how much each firm will sell or on a common price are known as a cartel. There are legal restrictions on such collusion in most countries. In some oligopolies, strong competition between sellers will lead to relatively high output and low prices which results in an efficient outcome near perfect competition. This would most likely occur in an oligopoly that contains more firms. An oligopoly is known to have large Barriers to entry. These may be a result of economies of scale, the industry being associated with large capital expenditure, or ownership of raw materials and patents.
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This essay will therefore highlight the different factors of consumer behaviour influencing the demand curve, such as the socio-cultural factors as well as the psychological factors. The demand function is determined by the price of the product and any other included products' prices, introduced to the consumers as well as their income, sociological f actors, and tastes and preferences (Sloman, 2007). It is discussed by economists that any change in those factors would either change the slope of the demand curve, if the changes are endogenous; or will shift the curve either to the right or left if the changes are exogenous.
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have a large proportion of total output in the market as determined by the concentration ratio, which is a measurement of competitive behaviour. In the diagram below from the Bureau of Transportation Statistics, it can be seen to identify the five largest firms who have the largest share within the airline market. These include Delta airline, Southwest airline, American airlines, United airlines and US Airways. The top five airline alliances previously mentioned, in total account for 62% of all sales in the airline industry based on a 5-firm concentration ratio; whereas the other listed alliances make up the remaining sales.
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MP3-Players Market. A connection between brand loyalty, price competition and market entry barriers could be illustrated with an example of the monopolistically competitive MP3 player market.
The major factors that will drive the growth of the MP3 player market over the next five years include the availability of legitimate subscription, falling price points and pay-per-download online music sites as well as increasing Flash memory capacities and enhanced functionality of MP3 players (In-Stat, 2006). Throughout the assignment, the link between brand loyalty, price competition and barriers to entry will be developed further. Moreover, it will be demonstrated with an example of the fast growing MP3 player industry.
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Please read the article below by ABC journalist Ashley Hall dated 29 th April 2010 Cigarette tax hike sparks panic buying and identify TWO (2) economic issues you found interesting.
meaningful reflections on the contributions of others. You are encouraged to include relevant diagrams in your various discussions. Module info from lecturer: (i) Discussion 1: Discussion Topic 1 opens today (23rd May). You need to complete your initial discussion for this topic by 29th May. You don't need to be writing a lot for the initial discussion (i.e. no more than about 400 words). You may wish to back up your claims with references or just draw on your personal experiences. The discussion topic related to the taxing of cigarettes. There are a lot of issues that you could look at in the topic.
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Using supply and demand analysis explain and illustrate how the major factors determining supply and demand have determined equilibrium price and quantity traded.
Furthermore, this has a knock-on effect on household items as this will increase demand for smoke alarms, clocks etc. because the relationship between household items and non-rechargeable batteries is that they are complements. As the report even says 'everyday household items are likely to continue to relying on removable batteries' which shows the relationship both complements have. Therefore as current prices for batteries fall in the future, there is increase in demand for household items. Within the battery market, there are four different types of batteries such as alkaline, zinc carbon, rechargeable and specialist batteries. For instance, alkaline and zinc are close substitutes and because the UK is in recession, zinc carbon attracts 'consumers with lower incomes'.
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Many professional bodies, such as lawyers, are given exclusive rights to provide specific services, and also the right to govern who enters their ranks. These monopoly rights tend in practice to be permanent, although there is no economic rationale why this should be the case. An interesting exception is that of the provision of local bus services. Until recently these were controlled through a licensing system which effectively gave specific operators exclusive rights to supply particular services, but these have now been thrown open to the forces of competition.
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For example, the UK's largest petrol retailer Esso announced price cuts to earn just 1p per litre in order to maintain a high market share and market power. This is known as market share strategy, a short run strategy as it little relation to the costs of production meaning that firms may even make a loss (shown by MC and MC1). This was confirmed by Hall et al (1996) as a survey of 654 UK companies concluded that 65% of firms used 'market-led pricing'.
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Microeconomics portfolio - plotting a demand curve and examining the effect of an increase on taxation on demand.
When the price of ice cream is 90 pence per scoop, it is sold 140 millions of scoops, whereas sellers would like to sell 180 millions, therefore there is a surplus of 40 million of scoops, which means that supply of goods is higher than its demand for 40 million units. To adjust distinction between demand of goods and its supply, and reach equilibrium point between them, needed to reduce the price of ice cream to 70 pence per scoop in this case supply and demand of ice cream will be equal.
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Define price elasticity of demand, and explain the main influences which make the demand for some goods elastic and the demand for others inelastic. B. How relevant do you consider price elasticity and income elasticity of demand to be to the followi
It means that if quantity changes, price respond more sensitive. On (graph 2 A) shows perfectly inelastic demand= 0, that means at any given price demand is constant. But on (graph 2 B) it is directly opposite to (A). Income elasticity of demand or YED measures change in quantity demanded of product to change in income. YED = % change in QD of X % change in real income YED can be positive, zero or negative- inferior (see graph 5).
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Once the person's reservation wage wR had been met they begin to move along the budget constraint substituting leisure for work. Work is by definition a Giffen good, as the price of work (wage) increases people will consume more but when income rises and people become richer consumption will fall. The optimum level of work and leisure time initially in this diagram for the individual is point A where the indifference curve I0 lies tangent to the budget constraint. Suppose the wage rate were to rise (w�w1).
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Explain what is implied by the assumption that decision makers are rational? How is the assumption of rationality used in the economic analysis of individual behaviour?
These are an essential component of consumer demand theory and to meet the consumer's goal of utility it is essential that they are followed; only consumers who do are considered rational. The first axiom of rationality is completeness. This rule states that the consumer must possess the ability to order every possible combination of goods as per their personal preference, however indifference is acceptable. If this axiom is violated it will lead to incomplete and incompetent decision making as not all the options will be properly considered and assessed if preferred by the consumer therefore leading to information failure.
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What is the Prisoners Dilemma, and what significance does it have for understanding economic behaviour?
If your accomplice has stayed silent it is in your interests to betray and if they have betrayed it still makes sense to follow to reduce your own sentence. Therefore if each individual plays for themselves both will betray and serve for 5 years. However this is not the optimum pay off for the pair as they will be serving more time than if they had trusted each other to stay silent. The prisoner's dilemma game is unique in that the equilibrium gives a sub-optimal Pareto solution meaning that rationality leads the player to betray even though both would be better of by co-operating.
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The government is using economic measures to reduce traffic congestion and this includes supply and demand, income and price elasticities and the role of substitutes and complements which will all be discussed in this essay. The demand for transport which then leads to traffic congestion is not an area of theoretical analysis as it also has great practical relevance. The rate at which traffic congestion is produced in a city is mainly concerned with the establishment of a stable relationship between the demand for and supply of transport infrastructure and transport services.
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Therefore the firm will take the market price of the product or service as given. The second characteristic is that all products are homogenous. This means that all products are perceived to be identical, regardless of who produces them or where it is purchased from. The products could also be referred to as being undifferentiated. The third characteristic is that consumers and producers have a perfect knowledge of the market. Sloman states that perfect knowledge occurs when "Producers are fully aware of prices, costs and market opportunities.
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depends on how much you have. A rule in the demand theory states that, "If all other factors remain equal, the higher the price of a good, the less people will demand that good." In other words the higher the price, the lower the quantity demanded and it is the same vice versa. Putting this theory into context of the organic food market, as mentioned earlier, demand for organic products has declined. Shoppers today value price over nutritional value. According to research carried out by Jonathon Banks for Neilson Europe, Vaughan (2009)
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It affected both developed countries and developing countries. Vietnam was one of the countries influenced most. B. VIETNAM ECONOMIC By the new political and economic campaign named Doi Moi in 1986, Vietnam switched from centralized economy to socialist-oriented market economy. It allowed farmers to sell goods at free market, appealed foreigners for investing in Vietnam and encouraged private-business. This was the reason of growth in economy of Vietnam by the late 1990s. (Library of Congress - Federal Research Division, pp.8)
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Especially, the company keeps the customers closer to each other and itself with the open forum which connected to some other parent's forums in Vietnam. Here, the customers could discuss the company' products, give advice and order to the company regarding to their desired products and services which they could most be satisfied. Babyzone aims for the market dominance in the next 5 years as of the leading online B2C Company with its customers-oriented and friendly website, diversified products, attractive marketing campaign, and thorough services.
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Shipping cargo containers to other ports was one such option, although this could be limiting due to port capabilities, such as, many updated containers were too wide to travel through the Panama Canal. Air freight was another alternative option; however it was three times the expense of shipping cargo containers. Managers must always operate in the short-run because at any particular point in time, there is at least one fixed input in the production process, but they must also constantly maintain a plan for the long-run.
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The articles highlight the number of substitute goods, the percentage of a consumer's budget spent on a product, and the time period that the product is under construction as strong influences on the price elasticity of gas and airplane ticket prices. The price of gasoline has begun to show a shift from heavily inelastic to more elastic in recent history. Our textbook, Economics for Managers, discusses the affects of the inelasticity of gasoline prices that was present in the mid 2000s.
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