Management Economics0U Nit 1 Essay

672 Words Mar 30th, 2015 3 Pages
1. Lesson 1
a. From Lesson 1 how many different definitions of economics can you find? Explain briefly how they are related to one another. [definitions, not descriptions].
1-Economics is the study of allocation of scarce means to alternative uses.
2- We want to understand the typical person, not the exceptions ir unique people.
3- Economics is not dismal, it's about understanding about what is going on. It is an art an a science at the same time. Economic is not an exact science, that is why some doubt is a science.
4- The study of men in the ordinary life. Study people in all aspects of their life.
5- The study of individual choice and its understanding. Choice involves scarcity we have to choose.

b. Why are
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Can you explain this?
Because the individuals would decide to wait until price drops, therefore they seller may lose income. When price rises less people buy and when prices go down more people buy.

c. Prove (or clearly explain) that the elasticity of any straight line that goes through the origin is unity (1).
It is because the line its constant and it is unit elastic. Any change in price will be matched by a change in quantity.

3. Lesson 3
a. The simple case of a fixed per-unit tax is indicative of more complicated ones. Construct a similar analysis for a proportional sales tax and a progressive sales tax. How do the tax revenues, and quantities produced compare in these various cases?
The sales tax will always be the same and will not change demand since it will be there for any product. The buyer pays the sales tax and is aware of that. This will not affect supply or demand.
The Progressive tax changes depending on the price of the product. This causes price to rise with the amount, but it can cause demand to go down since the price rises and is an obstacle for buyers for the products with progressive tax.
b. Explain the deadweight loss for the case of a subsidy. The deadweight loss is allocate inefficiency. It results when the total of producer and consumer surplus falls short of the subsidy received. This is when

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