Question and Answer Microeconomics

1. All firms, no matter what type of firm structure they are producing in, make their production decisions based on where:

c. quantity demanded of a taxed good in response to a change in the tax rate

Without access to fuel, industry is hindered. The time it takes to travel from point a to point b increases tremendously if there is a limit to the amount of fuel that one has access to. In the 1970’s during an “oil crisis”, gas stations limited customers to 10 gallons each. The need to stop at more gas stations more often will increase shipping time, decrease productivity, and hinder new nations in their development and entrance into the postmodern marketplace.

the highest-cost firm in operation breaks even, while the low cost firms will earn profit.

1. College logo t-shirts priced at $15 sell at a rate of 25 per week, but when the bookstore marks them down to $10 it finds that it can sell 50 t-shirts per week. What is the price elasticity of demand for the logo t-shirts? Is the demand elastic or inelastic?

Supply and demand is best describes as the varying of prices of a specific service, product or commodity and the desirability for consumers. In theory, the supply and demand model works best for markets that are normally in perfect competition. Now in order for this desired market to work, there has to be a numerous amount of sellers and a numerous amount of buyers that have no real or major impact on the pricing of goods and services. In the follow essay, we will receive a better understand on what the supply and demand really is, further discuss a brief historical perspective on the supply and demand in comparison to the fickle prices of gasoline, go into detail about government involvement in gasoline prices, and finally examine how the supply and demand of gasoline is applicable in our everyday lives.

So when demand increases and a supply doesn’t change, a shift in price will happen. This shift will move to the right causing a new Equilibrium.

Suppose a general sales tax of 5% is applied to all purchases, and purchasing behavior does not change as a result. In consideration of the sum total of ALL sales taxes paid, illustrate why this tax system is regressive.

Discussion 1: Elasticity. Analyze the determinants of the price elasticity of demand and determine if each of the

One microeconomic concept Proposition 56 relates to is supply, demand, and equilibrium. Taxes imposed by the government reduce both demand and supply, and cause the market equilibrium to increase and quantity to decrease. Consumers will not want to purchase because of the increase in

At the new equilibrium point E2, the equilibrium quantity shifts inward to 4,000,000 barrels. There is a deadweight loss of $1 trillion which the market cannot account for as shown in the triangle depicted on the graph.

The topic of this paper is Gasoline prices and potentially higher state sales tax. According to Stephen Singer’s article (2017, August 24); Connecticut legislators are deciding to raise the state sales tax and gas prices from its current rate to 6.85% to close a budget gap that’s predicted to reach $3.5 billion over two years to help lower state aid cut to towns. I disagree with the decision the legislatures of Connecticut are making to fix a budget gap with higher taxes on retail products and gasoline prices because increasing the prices of these products with higher taxes would increase the price of consumer goods and services. According to the law of demand and the law of supply, when there is an

Additionally, Sally is withdrawing $34,000 from her savings account that pays 4% interest/year to purchase the furniture and equipment; she will quit her current job that pays $25,000 per year. She expects total revenues from the new business in the first year to be $70,000. Calculate the following:

Rise in price will see a greater quantity supplied (quantity will rise), shift in supply curve. (McTaggart, 2010), (Layton, 2009).

Changes to indirect taxes in particular can have an effect on the pattern of demand for goods and services. For example, the rising value of duty on cigarettes and alcohol is designed to cause a substitution effect among consumers and thereby reduce the demand for what are perceived as “de-merit goods”. In contrast, a government financial subsidy to producers has the effect of reducing their costs of production, lowering the market price and encouraging an expansion of demand.