Supply and Demand and Price Essay

Sports teams are switching to a variable-pricing strategy for tickets so that they can get a higher profit on games with record attendance numbers. They feel the need to do so because the marginal costs, such as construction payment and players’ salaries, did not equal to the marginal revenue, since attendance was severely dropping. To pay for the marginal cost, the sports team needed to capitalize on things that they were sure of, like increasing attendances to games between major sporting rivals.

Market failure is a failure when markets yield an inefficient output of resources leading to negative impacts on the society, nonrivalrousness in consumption and nonexclusiveness in use. Eg: the monopoly is an abuse of market power causing stagnation and idleness.

Choose one of the three types of market failure and give a real world example of it. Do you believe the government has the ability to solve this problem?

Recent medical advances have greatly enhanced the ability to successfully transplant organs and tissue. Forty-five years ago the first successful kidney transplant was performed in the United States, followed twenty years later by the first heart transplant. Statistics from the United Network for Organ Sharing (ONOS) indicate that in 1998 a total of 20,961 transplants were performed in the United States. Although the number of transplants has risen sharply in recent years, the demand for organs far outweighs the supply. To date, more than 65,000 people are on the national organ transplant waiting list and about 4,000 of them will die this year- about 11 every day- while waiting for a chance to extend their life through organ donation

1. Name two types of market failure. Explain why each may cause market outcomes to be inefficient.

Explain whether each of the following government activities is motivated by a concern about equity or a concern about efficiency. In the case of efficiency, discuss the type of market failure.

Consumers have shown an increasing preference for digital versatile disks (DVD). If, at the same time, more factories make these, what should happen to the equilibrium price and quantity of these?

| An oligopolist that faces a kinked demand curve is charging price P = 6. Demand for an increase in price is Q = 280  40P and demand for a decrease in price is Q = 100  10P. Over what range of marginal cost would the optimal price remain unchanged?Answer

1A. Market failure is a situation in which the allocation of goods and services is not efficient. In any given market, the quantity of a product demanded by consumers does not equate to the quantity supplied by suppliers. This is a direct result of a lack of certain economically ideal factors, which prevents equilibrium.

The market price of a good is determined by both the supply and demand for it. In the world today supply and demand is perhaps one of the most fundamental principles that exists for economics and the backbone of a market economy. Supply is represented by how much the market can offer. The quantity supplied refers to the amount of a certain good that producers are willing to supply for a certain demand price. What determines this interconnection is how much of a good or service is supplied to the market or otherwise known as the supply relationship or supply schedule which is graphically represented by the supply curve. In demand the schedule is depicted graphically as the demand curve which represents the

While many see free trade beneficial not only to America, but to all nations as well, others would argue that the entire concept of free trade is now a major misconception. What has become commonplace in the U.S. economy is now “tradition” enough to discourage the very thought of disagreeing with free trade. The incorporation of this government deal has long since been a part of history, making it hard for one to plea the case of operating otherwise. Whether viewed as good or bad, analyzing and recognizing the various factors of free trade only serves as a fundamental measure in strengthening the argument.

It is commonly believed that free trade between nations is a mutually beneficial arrangement for all parties involved; indeed, this is held to be an absolute truth. Though free trade is undoubtedly the most effective form of commerce between countries from a purely economic standpoint, increasingly we find that our so-called "free trade agreements" are horribly unbalanced. Indicative of these fiascoes is the North American

Different market decisions determine how an economy is run. There are several different factors that account for how markets make their decisions, which determines how they function. The theory of markets mostly depends on supply and demand. However, it is key to note that there is a difference in demand/supply and quantity demanded/supplied. A demand is how much the buyer plans to purchase at various markets prices and the quantity demanded is what the buyer actually purchases at a particular price. Supply is the producer or the seller’s plan of the amount the seller will make available at different market prices and the quantity supplied is the actual amount that the seller makes available at a particular market price. It is important to

The theory of comparative advantage explains the benefit of free trade. According to this theory by David Ricardo in the early 19th century, “Both countries will be better off if each specializes in the industry where it has a comparative advantage, and if the two trade with one another.” (Citation) International trade opens up markets to foreign supplier, and domestic companies need to improve their efficiency, boost productivity, and lower cost to increase competitiveness instead of enjoying monopolies or oligopolies that enabled them to keep prices well above marginal costs. On the other hand, international trade also offers domestic companies bigger demands and broader markets; therefore more jobs relevant to export have been created. Furthermore, jobs in the US supported by goods exports pay 13-18 percent more than the US national average (ustr.gov).

When a good is a necessity it is something that is needed; unlike a simple desire to have something. These items have more of an inelastic demand even if the prices fluctuate. Wheat is a rich commodity in our country. The demand for wheat is inelastic. No matter how high the price rise the demand will still remain high in view of the fact that the price is determined by supply and demand. There are many producers of wheat which does not raise the profit level much for the farmers since their competition are all selling identical products. Other items, such as; basics in personal care, food, commodities, and medicine. The basic items that are needed to survive. Demands for these items may change over time but will not change very much. Their value can fluctuate if there are comparable substitutes available. Personal care items such as clothes and shoes are not in a single category where choices are concerned. There are a wide variety of manufactures and stores that sell them. So if the price raises the demand would be elastic because of substitutes. Food as a basic need is inelastic. However, if the prices were to rise on beef consumers could choose to substitute eating chicken, turkey, or pork instead. So even though the prices rose the demand would not increase because of acceptable substitutes. Medical service as a necessity is inelastic in demand. This is a service that is unquestionably needed for survival.