Assessment Questions on Economics Essay Example

6ECONOMICS

Assessment Questions on Economics

Assessment Questions on Economics

Question One

Name of StudentName of Student 1

rice Name of Student 5Name of Student 4Name of Student 3Name of Student 2P

oName of Student 6D

Quantity (Potatoes)

The above demand/supply curve shows a rightward shift of the demand curve from (Do to D1, while the supply curves (So) remainconstant. The rightward shift depicts an increase in the demand for Potatoes following a decrease in incomes. Therefore, there exist an inverse relationship between income and demand for inferior goods. The above diagram explains the effect of a reduction in incomes on the demand for potatoes (inferior goods). When incomes decrease, the demand for Potatoes increases.

Question Two

One of the major externality in the technology industry is environmental pollution. Most of the production processes results in emission of unsafe waste materials.

The government aims at increasing output and consumption by increasing the level of human capital. Increased human capital would result to increased output and consumption.

In order to achieve its policy objective of having more students enroll for technical courses, the government should subsidize the enrollment fees for the students.

rice (Fee) SoName of Student 9Name of Student 8Name of Student 7P

Po Name of Student 11Name of Student 10

P1 Name of Student 13Name of Student 12

uantity demanded Name of Student 14Q

From above demand/ supply curve, a decrease in fee would result to an increase in the number of students enrolling for technical courses.

Question Three:

Perfect Competition

Name of Student 15

Name of Student 17Name of Student 16Supply

rice (p)Name of Student 19Name of Student 18P

In a perfect Competition, the price is determined by the market forces of demand and supply. The output depends on the prevailing market price. Perfect Competition is said to be efficient since the market clears such that there is neither surplus nor deficit. The area above Price (p) represent consumer surplus while the area below Price (p) indicates the producer surplus. In a perfect competition, both areas are usually equal. In a perfect market, the consumer and producer surplus totals are always equal.

Monopoly Market

Name of Student 20

PriceName of Student 22Name of Student 21

CName of Student 24Name of Student 23

m MCName of Student 25P

c P DName of Student 27Name of Student 26P

Name of Student 28

MR ARName of Student 29

Quantity

In a monopoly market, the price is set by the monopolist at Pm. The Monopolist price is usually higher than the Perfect market price Pc. Monopolist produce low output (Qm) at a higher price (Pm). A monopoly market is said to be inefficient since it does not meet market demand (Pm). The total producer surplus is usually more than the total consumer surplus in a monopoly market. Part of the consumer surplus is transferred into producer surplus.

Reference

Mankiw, N. G. (1985). Small menu costs and large business cycles: A macroeconomic model of monopoly. The Quarterly Journal of Economics, 529-537.