Microeconomics

Isocost curve is that curve represents the combination of inputs that will cost the producer the same amout of money. We get the slope of the isocost line. The isocost line shows the various combinations of labor and capital a firm can buy with a given price. The slope of isocost line = PL/Pk. In the given equation, the price of labour is indicated by PL and the price of capital is given by PK. The isocost line may change if the amount of money spent to buy factors changes but the slope…

FINANCIAL RATIO ANALYSIS Operating Profitability Ratios Gross Profit Margin Gross profit margin is used to compare a company with its competitors. A higher gross profit margin indicates that a company can make a good profit provided it keeps its overhead costs under control whereas a lower gross profit margin indicates that the company is unable to control its production costs. Ideal gross profit margin depends on the industry. From the above graph, the gross profit margin has shown a…

Theory of consumer choice Consumer choice denotes the decision an individual will have to make on the products or services they wish to purchase. Theory of consumer choice thus analyses how individuals decide to spend their money keeping in mind their preferences as well as budget constraints. It assumes that people will want to maximize their utility through an optimal combination of goods that they can afford. This theory has three underlying assumptions: The first being utility maximization,…

The advanced pricing technique that would be most appropriate for a Sam’s Club or Costco would be second degree price discrimination. Second degree price discrimination is defined by Thomas and Maurice (2010, p. 583) as, “When a firm offers lower prices for larger quantities and lets buyers self-select the price they pay by choosing how much to buy.” Therefore, when the same consumer buys more than one unit of a good or service at a time the marginal value placed on consuming additional units…

Law of Supply and Demand — how it applies to all One of the most basic economic laws, the law of Supply and Demand is connected to and is applicable practically into all economic principles in every way. The law of supply and demand explains how prices are fixed for the sale of goods. In its application to the real market, supply and demand pull against each other until the market finds an equilibrium price. Demand is the degree at which consumers want to buy a product. As the Economic theory…

Introduction Externality is the effect of an economics decisions which is done by one parties on the unrelated parties who did not have a choice and whose interests were not taken into account and it cause the market become inefficient. Externalities are spillover effects that fall on parties not otherwise involved in a market as a producer or a consumer of a good or service. Externality can be negative or positive. Positive Externality Negative externality Is beneficial Increase social…

Name: Morad Hijazin Course Number: ECON 5F70 040, Semester: Summer 2016 Assignment Name: Unit 4 Application Application: Explain why monopolistic competitors earn only a normal profit in the long run. Provide an industry example to illustrate your explanation. As we know in the monopolistic competitors the firms are price makers, we are talking about big businesses that control the whole market, and the barriers to enter their industries are very difficult. Now the firms in long-run at the…

Gregory Mankiw affirms that there are two main decision makers in the society that include consumers and firms. Moreover, the definition of economic terms may vary depending on the context they are used in. For instance, supply in the consumer market refers to the amount of products that producers are able to provide in the consumer market. On the other hand, demand refers to the amount of goods that consumers are willing and are able to purchase in the market. Elasticity refers to the…

PEAR Assignment #1 Cocktail Party Economics by Eveline J. Adomait and Richard G. Maranta discusses the main concepts behind economics using simple language and real life examples. Cocktail Party Economics is divided into twelve chapters, each discussing a different topic related to the subject of economics. This essay will focus on Chapter 7- Demanding Clients (A Venti Chapter) and it’s relation to the recent minimum wage increase in five Canadian provinces. Chapter 7- demanding Clients (A Venti…

The science of economics is part of a fundamental thread woven deep into the fabrication of the United States financial infrastructure. It is a mixed system comprised of socialism and capitalism and is predominately owned and operated by the private sector; however, it is subject to government policies, taxations and regulations. Additionally, at the heart of the United States economics is the drive to generate wealth and prosperity which are fueled by the competitive nature of the private…