Microeconomics - 8th Edition (Books Title: Economics: Principles, Applications,
ID: 1225913 • Letter: M
Question
Microeconomics - 8th Edition (Books Title: Economics: Principles, Applications, and Tools 8th edition) Author: Arthur O'Sullivan, Steven Sheffrin) (ISBN: 9780132949330) Answer all questions. List the question and then you answer. Chapter 20 Elasticity: A Measure of Responsiveness #1-Page 433-Answer question #1.7 (in the long run ). Show your computation #2-How can we use the price elasticity of demand to predict the effect of taxes? Chapter 21 - Market Efficiency and Government Intervention #3-Page 458-Answer question #21(You are willing ) #4-How does a minimum price (floor price) affect the market? Chapter 22 - Consumer Choice Using Utility Theory #5-Page 489-Answer question #1.1 (Based on Figure 22.1 ) #6-Explain the equimarginal principle Chapter 23 - Production Technology and Cost #7-Page 516-Answer question #2.8 (For a firm that ) #8-How do indivisible inputs affect production costs? Chapter 24 - Perfect Competition #9-Page 540-Answer question #29 (The break-even price ) #10-Explain the break-even price and the shut-down rule.Explanation / Answer
Price elasticity of demand measures the % change in quantity demanded due to % change in price.When price elasticity of demand is >1,then this is called elastic-that means quantity is highly responsive with the change in price.On the otherhand, if price elasticity of demand is <1,then this is called inelastic,when tax is imposed on particular good the overall price level will increase. As price increases for elastic good,quantity demand will fall.When supply is inelastic, the firm will produce the same quantity no matter what is the price.So tax imposition does not affect the product.
Market efficiency-Efficient market fully reflects all the available information of market.
Government intervention-When govt. takes some regulatory actions or steps to interfere the decision taken by the individual is called govt. intervention.
Consumer choice by utility-By the concept of utility consumer can enjoy their goods.It basically refers the preference set.
1)Consumers will maximise their utility by choosing the bundle of goods,which gives them maximum satisfaction.
2)At equilibrium the marginal utility / price of each good is the same. This combination of good ensures, that they maximise their total utility.So,MUx/Px=MUy/Py=MUz/Pz.
3)Extra consumption doesnot bring all time greater return.Sometimes,it happens that more consumption brings less utility.This is known as diminishing marginal utility.
Equimarginal Principal- When a person has his limited income to distribute into different goods and services then in which way the distribution will bring the maximum return is known as equimarginal principal.