List the Ten Principles of Economics, please. Be ready to explain all of them, because I might ask you to explain a couple of them on examination.
List the Ten Principles of Economics, please. Be ready to explain all of them, because I might ask you to explain a couple of them on examination.
- People Face Tradeoffs.
To get one thing, you have to give up something else. Making decisions requires trading off one goal against another. - The Cost of Something is What You Give Up to Get It.
Decision-makers have to consider both the obvious and implicit costs of their actions. - Rational People Think at the Margin.
A rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost. - People Respond to Incentives.
Behavior changes when costs or benefits change.
- Trade Can Make Everyone Better Off.
Trade allows each person to specialize in the activities he or she does best. By trading with others, people can buy a greater variety of goods or services. - Markets Are Usually a Good Way to Organize Economic Activity.
Households and firms that interact in market economies act as if they are guided by an "invisible hand" that leads the market to allocate resources efficiently. The opposite of this is economic activity that is organized by a central planner within the government. - Governments Can Sometimes Improve Market Outcomes.
When a market fails to allocate resources efficiently, the government can change the outcome through public policy. Examples are regulations against monopolies and pollution.
8. A Country's Standard of Living Depends on Its Ability to Produce Goods and Services.
Countries whose workers produce a large quantity of goods and services per unit of time enjoy a high standard of living. Similarly, as a nation's productivity grows, so does its average income.
9. Prices Rise When the Government Prints Too Much Money.
When a government creates large quantities of the nation's money, the value of the money falls. As a result, prices increase, requiring more of the same money to buy goods and services.
10. Society Faces a Short-Run Tradeoff Between Inflation and Unemployment.
Reducing inflation often causes a temporary rise in unemployment. This tradeoff is crucial for understanding the short-run effects of changes in taxes,government spending and monetary policy.
You must decide whether or not to attend graduate school (Master Degree) after your graduation of Alma University. How might you use marginal analysis to make your decision? What principles would help you to do so?
We use one of the tens principle of economic is “How people make decision” The cost of something is what you give up to get it.
Whether to go to class or sleep in?
Whether to go to college or to work?
The opportunity cost of an item is what you give up to get that item.
Consider the following pairs of goods. Which would you expect to have the more elastic demand? Explain each of your answer in detail.
a. water or diamonds
Necessities differ from luxury goods because while the demand for necessities remains relatively constant, the demand for luxury goods fluctuates depending upon income and prices. Luxury goods have high income elasticity of demand which means as people become wealthier, they will buy more and more of the luxury good. This also means that if there was a decline in income, its demand will drop. With a shortage of income, less people are willing to buy expensive and unnecessary goods. However, necessities are always important.
B. insulin or nasal decongestant spray
E. personal computers or IBM personal computers
You are the owner of the Canteen on campus in SDU, and you know that the price elasticity of demand for your pizza is 0.5. What will happen to your total revenue from your pizza sales if you raise your prices? Prove your answer on the graph.
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Why do farmers suffer declines in their total revenues when they become more productive as a group? You must demonstrate your answer on the graph. (Hint: Why good news for farming can be bad news for farmers).
if farmers are made worse off by the discovery of this new hybrid, why do they adopt it? The answer to this question goes to the heart of how competitive markets work. Because each farmer is a small part of the market for wheat, he or she takes the price of wheat as given. For any given price of wheat, it is better to use the new hybrid in order to produce and sell more wheat. Yet when all farmers do this, the supply of wheat rises, the price falls, and farmers are worse off.
When an advance in farm technology increases the supply of wheat from S1 to S2, the price of wheat falls. Because the demand for wheat is inelastic, the increase in the quantity sold from 100 to 110 is proportionately smaller than the decrease in the price from $3to $2. As a result, farmers’ total revenue falls from $300.( $3*100) to $220 ($2*110)
List the Ten Principles of Economics, please. Be ready to explain all of them, because I might ask you to explain a couple of them on examination.
- People Face Tradeoffs.
To get one thing, you have to give up something else. Making decisions requires trading off one goal against another. - The Cost of Something is What You Give Up to Get It.
Decision-makers have to consider both the obvious and implicit costs of their actions. - Rational People Think at the Margin.
A rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost. - People Respond to Incentives.
Behavior changes when costs or benefits change.
- Trade Can Make Everyone Better Off.
Trade allows each person to specialize in the activities he or she does best. By trading with others, people can buy a greater variety of goods or services. - Markets Are Usually a Good Way to Organize Economic Activity.
Households and firms that interact in market economies act as if they are guided by an "invisible hand" that leads the market to allocate resources efficiently. The opposite of this is economic activity that is organized by a central planner within the government. - Governments Can Sometimes Improve Market Outcomes.
When a market fails to allocate resources efficiently, the government can change the outcome through public policy. Examples are regulations against monopolies and pollution.
8. A Country's Standard of Living Depends on Its Ability to Produce Goods and Services.
Countries whose workers produce a large quantity of goods and services per unit of time enjoy a high standard of living. Similarly, as a nation's productivity grows, so does its average income.
9. Prices Rise When the Government Prints Too Much Money.
When a government creates large quantities of the nation's money, the value of the money falls. As a result, prices increase, requiring more of the same money to buy goods and services.
10. Society Faces a Short-Run Tradeoff Between Inflation and Unemployment.
Reducing inflation often causes a temporary rise in unemployment. This tradeoff is crucial for understanding the short-run effects of changes in taxes,government spending and monetary policy.
