Principles of Microeconomics Essay Example | Topics and Well Written Essays - 1250 words

Principles of Microeconomics - Essay exemplificationThis will create imbalance in the economy hence may yield in a shortage of consumer veraciouss. Question 2 opportunity cost means the best substitute given up in order to produce more of other type of goods. As more of one good is produced the opportunity cost to produce it rises (Sloman). Each time we make a choice to do something simultaneously we are eliminating the choice of an alternative good. Moreover, if a country is producing more of one good it has to sacrifice incessantly increasing amount of the other. The reason for it is difference in factor of yield. Production factors may suit production of a particular type of good and shifting resources to production of other type of good would result in increasing opportunity cost. For example if government decides to build a shopping mall rather of hospital, the facilities and health care provided by that hospital is given up or forgone. Question 3 remove is standard deman ded a change in quantity demanded occurs when there is movement along the demand fold with respect to legal injury and quantity. It usually stems from a change in the outlay of the product. An increase in the price causes spileward movement along the demand kink up leading to an increase in the quantity demanded whereas a lessen in the price causes an upward movement along the curve causing a decrease in the quantity demanded. ... It is important to note that this causes a total change in the range of price and quantity combinations. Price D1 D2 Quantity Question 4 An economic residuum is located when demand and cut of the commodity in discussion meets (Sloman). This pourboire is said to be the optimum level of functioning point in an economy because all the stakeholders are able to achieve their objective of buying and selling their goods at their desired quantity level. However, economist work hard to reach this point since much(prenominal) an equilibrium is theoretical. counterbalance would only be achieved at a point where demand and fork out curves intersect. Moreover, any point on a lower floor or above the equilibrium will either create excess demand in bailiwick of low price, or excess supply in case of higher price. The gap in supply and demand will exist in the short term. However, as sellers and consumers readjust their sell and purchase habit, equilibrium will be reached eventually. Question 5 If the technology to produce pagers improves it will push the supply curve to the right and there will be an increase in supply of pagers, meaning that for every price, the quantity supplied will increase. If the prices of cellular phones drop, the aggregate demand for pagers will decrease because cell phones are an alternative product, move the aggregate demand curve to the left, meaning that for every price, the quantity demanded will decrease. Both these factors shall bring down the price of pagers down by a significant level and make pagers much cheaper. Certain products stand a very limited supply and an excessive demand, such as the superbowl tickets. The price elasticity of such products is extremely low as people are willing to pay more than the