The point of this essay is to clarify and point up the different concepts of elasticity of demand passing through examples and diagrams.
The point of this essay is to clarify and point up the different concepts of elasticity of demand passing through examples and diagrams. In every market economy, when the price of a good rises the quantity demanded will fall and vise versa. Conversely, in most cases this is not enough. We would also like to know how much will the quantity demanded rise or fall. In other words, we will want to know how responsive demand is to a rise in price. This responsiveness of quantity demanded to a change in price is what we call price elasticity of demand. Therefore, what we want to compare is the size of the change in quantity demanded with the size in the change in price. Because of the different units that price and quantity are measured in, the only approach we can do this is to use percentage or proportionate changes. From this derives the "formula of the price elasticity of demand (PED)" for a product, which is the percentage (or proportionate) 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
'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.
'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. Gross National Product is a basic measure of national economic health. Governments and businesses use it to make important decisions. GNP is defined to be the total value of all final goods and services produced in an economy in a year. GNP is a measure of one thing- market economic activity, however it can be interpreted in different ways and used for different purposes. GNP is a measure of production; if a can of beans is bought for £1, it enters the GNP, and it is in indication that the economy has produced an extra £1 of output. GNP is also a measure of the additional value that our efforts have produced. An example is in the production of a loaf of bread. 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. There is nothing left over. The
"IS IT TRUE THAT ANY PARETO EFFICIENT ALLOCATION COULD BE ACHIEVED BY LUMP SUM REDISTRIBUTION OF ENDOWMENT? ELABORATE YOUR ARGUMENT BY USING THE EDGEWORTH BOX."
"IS IT TRUE THAT ANY PARETO EFFICIENT ALLOCATION COULD BE ACHIEVED BY LUMP SUM REDISTRIBUTION OF ENDOWMENT? ELABORATE YOUR ARGUMENT BY USING THE EDGEWORTH BOX." - - - - - - - - - - - CATHERINE ROBINS 03008113 - - - - - - - - - - - DR ERIKA SEKI THURSDAY, 12 - 1pm Pareto optimality is a central concept in economics, especially welfare economics, as a measure of efficiency. The term is named after Vilfredo Pareto, an Italian economist who used the concept in his studies of economic efficiency and income distribution. An allocation of resources is Pareto optimal if there is no way that one individual could be made better off without making any other individual worse off following a reorganisation of production or distribution1. It is a point where there is no other feasible allocation which either consumer prefers. If not Pareto efficient, we are being wasteful, because someone could be made happier without making someone else less happy. Pareto optimality is, therefore, a situation in which economic welfare is maximised. Welfare economics is concerned with the "social desirability of alternative economic states"2. The Fundamental Theorems of Welfare Economics link the concepts of competitive equilibrium and Pareto-optimal allocation. From the First Fundamental Theorem of Welfare Economics we know that, in a market economy where producers and consumers are all
Process control at Polaroid.
PROCESS CONTROL AT POLAROID (A) SITUATIONAL ANALYSIS Project Greenlight: Polaroid's R2 factory at Waltham, Massachusetts manufactures integral film. Project Greenlight, an initiative to make quality control process more effective, has been introduced at the R2 building of Polaroid during the first six months of 1985. The Project aims to reduce quality-monitoring costs while maintaining or even improving upon the present level of product quality. The conceptualizers of the Project, George Murray and Joe O Leary, hoped to devise a method to make quality control process more effective, beyond merely reducing the number of samples taken. Project Greenlight had three key elements. * Statistical process control principles would be adopted: processes in control and capable of producing within specifications would produce more consistent quality. * Production operators would be given the process control tools that the process-engineering technicians had been using and, in conjunction with sampling, would be expected to make disposition decisions themselves. * Quality control auditors would concentrate on training operators and operationalizing specifications on new products. Project Greenlight is an effort to shift the film production plant from a traditional Quality Control inspection mentality to a worker based process control mentality. Responsibility for quality
Show what would happen in a market if the government placed a tax on a normal good. Who would bear the burden the tax, and how would the burden reflect supply and demand conditions?
ECONOMICS COURSEWORK Q. Show what would happen in a market if the government placed a tax on a normal good. Who would bear the burden the tax, and how would the burden reflect supply and demand conditions? Explain why there is a tendency for taxes to have social costs, and why, even so, they may still be justifiable. Tax revenue is the biggest source of income for any government. Higher the tax revenue for the government, more funds available for it to spend on public and to regulate income in the country. Hence the implications and the consequences of tax are a major issue in microeconomics. Individuals and the businesses are the general source of tax revenues for the government in an economy. There are two types of taxation, which the government can use: Direct and Indirect Taxation. Direct tax is that tax which is levied on income, either of individuals as income-tax or on businesses such as corporation tax. On the other hand, Indirect tax is one in which the government levies the tax on goods and services such as VAT in UK. The implication of government levying the tax on a normal good is a case of an indirect tax. Normal good is a good for which, when income rises the demand for product also rises (positive income elasticity). In order to examine the burden of a tax placed by the government on a normal good, we have to look at several demand/supply situations. When a
"Analyse the problems of seasonality in supply and demand and ability to devise strategies to cope with the problem."
BUSINESS STUDIES H/W 3 Q: "Analyse the problems of seasonality in supply and demand and ability to devise strategies to cope with the problem." Demand is the amount of a product that consumers are willing and able to purchase as any given price. Supply is the ability for firm to provide for these demands of goods for the people. Seasonality means the changes in the season i.e. summer and winter. Some goods are said to be seasonal in that the demand for those goods tend to go up in particular seasons such as the demand for warm clothes during winter and the demand for drinks during summer tend to be high only during these seasons. Demand and supply are linked together because an effect in demand will have a direct effect on the supply and an increase in supply will affect demand, the reason for this is the change it has on the market price. Not all goods are affected by seasonal change only good that are made for specific season are affected by seasons. As mentioned above the demand for Jackets and warm clothes by summer will be very little or none at all. The problem that this causes is that the supply also has to be reduced. So much that these days when the market is very hard to be competing in seasonal goods are completely taken of the production line up to the time when the demand of the good rises again. This has actually been a strategy to cope with the change in
Management Accounting Assignment on 'Jones Compact Cars'.
Unit 13- Management Accounting Assignment - 'Jones Compact Cars' I have given the opportunity to investigate and write a full management report on Jones Compact Cars. The firm requires my expertise in the area of management accounting; I will use my knowledge to evaluate each course of action needed to run the firm effectively. Jones Compact Cars is a small family business in rural Southgate. It was established 40 years ago and its star product is the flame red MG. The firm is not functioning efficiently and there is a lot of room for improvement. The firm suffers from four major problems, poor marketing, internal co-ordination, personnel and the lack of production. I will investigate the above and outline the major problems to a greater degree. One of the major problems that can be seen is that the firm does not practice good budgetary control. The sales forecast is set but it is very rarely monitored and costs are poorly controlled. The firm believes that if it sells 300 cars at the price of £40 each they will break even. From using the company information, by analysing and producing a break-even chart I have found out that The firm is incorrect in its assumption that it needs to sell 300 cars per year to break even. The actual amount that has to be sold to break even is 321 cars each month. I have illustrated this in my break-even
Case Facts Gartland Steel was a fully integrated steel producer, the fourth largest in the US. It was the largely accepted industry leader in sensitivity to environmental issues and in its actions to alleviate pollution. The Clean Air Act of 1970 created the EPA (Environmental Protection Agency) to establish and enforce air quality goals. The standards postulated threshold levels beyond which ambient pollutants were damaging to health and welfare. Emission rates standards were set 'stack-by-stack' for most industrial processes. Though the aim was to bring most of the geographical areas within the purview of the Act, 160 of the 247 regions were non-compliant by the 1975 deadline. The main reason was found to be the high costs of implementing 'stack-by-stack' standards. Offset Policy To counter this problem, the EPA created the 'offset' policy which allowed firms to trade pollution rights within non-attainment regions. In this policy, the companies were allowed intra-pollution category trading but not inter-pollution category trading. This led to a market in pollution rights. Bubble Policy This was a derivative of the offset policy. As per this policy, a firm would be free to decide how to bring the net level of pollution within standards, as against installation of mandated stack-by-stack equipment. The policies were however complex and approval by authorities was
Advise on the changes in citizens' welfare caused by the increase in university fees, considering the resultant partial switch from public to private funding of university education.
Microeconomic Essay 2003/04 Advise on the changes in citizens' welfare caused by the increase in university fees, considering the resultant partial switch from public to private funding of university education. Citizen Welfare can be measured using several economic forms of analysis. The current controversy over the introduction of top up fees have led people to evaluate the effective increase in consumer prices. Any change in policy can have both good and bad effects on different groups of society. For many problems in society, we wish to observe the effects of a policy change and its repercussions on the welfare of society. In this paper I will attempt to discuss the result of an increase in university fees by examining the Marshallian and the Hicksian measures of consumer surplus. I will consider the differences in analysis and the outcome of applying them to the situation. In the situation of an increase in fees, we are essentially looking at an increase in price. The diagram below shows a monetary loss due to the increase in price from p1 to p2. Students are now paying more for their tuition they are consuming. After the price increase the student moves from x1 to x2 at a new higher price of p2. Each unit of education is now more expensive by an amount of (p2 - p1). The result of this means that the student now has to pay (p2 - p1)x2 more money than before.1 Due to
Quality control and Quality assurance within Sainsbury's
SAINSBURY'S Quality control and Quality assurance within Sainsbury's Quality control and quality assurance are very different; even though their ultimate objective is the same-to provide a guarantee of product quality to the end user. Sensory appraisal of product quality is essential in ensuring that product of acceptable quality is available for consumer purchase. Description of product quality must be standardised to ensure that quality assessments are carried out objectively. A course has been set up in conjunction with Sainsbury's to enable their suppliers to understand the principles and practice of sensory evaluation, and how to apply these within the Sainsbury's Quality Attribute System (QAS). Quality control Business in the past accepted that you could not guarantee quality; they were bound to make some mistakes. In recent years customers have grown to except a higher degree of quality. This effected many retail outlets, as they now needed to increase the standards of their products, which meant changing the ways products are checked and inspected before being put to the public eye. Quality assurance Quality assurance is based on the idea that quality is everybody's responsibility. Sainsbury's emphasis is on trying to ensure goods and services are produced free of faults. Quality assurance in Sainsbury's is based on the belief that if everybody involved in the