Three Theories Of Economics: The Three Types Of Microeconomics

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Economics itself is the production, consumption, and distribution of goods and services (Nondo). There are three types of economic system: market economy, mixed economy, and command/planned economy. Market economies are the best at deciding how much to produce, consume, and distribute. For example, capitalism is an example of a market economy. Under capitalism, prices and wages are determined by the forces of supply and demand. Command and control is where the planning authority makes all decisions regarding produce, consumption, and distribution. A mixed economy consists of market and command.
Microeconomics is the study of decisions that people and businesses make regarding allocation of resources and prices of goods and services (Nondo).
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When the price of an input go down, supply will increase, and vice versa(Nondo). For instance, when the cost of labor goes down, producers will use more of the resource, which can increase. A fall in input prices makes production more profitable at each output price, so firms supply a larger quantity at each price, and the supply curve shifts to the right. Examples of input prices include wages and prices of raw materials. Labor and equipment are substitutes and compliments. Technology determines how much input is required to produce a unit of output. Technology enhances productivity, and shifts the supply curve to the right. Changes in positive economic outlook will result in an increase in supply, and vice versa. Sellers may adjust supply when their expectations of future prices change, and this shifts the supply curve to the left. Taxes and subsides are incentives that will shift the supply curve …show more content…
This period is when a firm or individual can change the quantity of one input only, while the other input remains unchanged. For example, labor in the short run can easily be changed, while the amount of capital cannot. The short run is anytime a period is than less or equal to a year. The long run is the quantity in which a period of all inputs can be varied. It is a period of three years, during which all inputs of production become variable. Inputs can include labor, capital, or other resources. Fixed is a cost that does not change with the amount of output produced, so they are already paid in the short run. Although short run has reduced cost, long run does not; due to the fact business can be done at any

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