Essentials of Economics
1. Apart from price the other factors that cause shifts in the supply curve are number of suppliers, technology and expectations of suppliers. When the number of suppliers increases there is a corresponding increase in supply, leading to a shift of the curve to the right. Technological developments increase efficiency in production leading to a shift of the supply curve to the right. If sellers predict an increase in prices in the future they may limit supply so that they can increase it when prices are optimum. This leads to a shift of the curve to the left. Prices of competitor goods and relevant inputs also cause shifts of the supply curve (McEachern 2011, p. 76).
2.
a) Fixed costs are business expenses that are independent of business activity, for example, rent and employee salaries.
b) Variable costs are business expenses that vary proportionally with business activity, for example, raw materials for a manufacturing company.
c) Marginal cost is the cost of producing one more unit of a good, for instance, the cost of wax required to make one more candle.
d) Average cost is the total cost divided by the number of goods produced. For instance, if it costs $6 to produce 3 candles, the average cost is $2.
e) Short-run costs refer to the cost of production in the short term, sychg as the cost of running a firm for one week.
3. The main factors that determine price in the different categories of railway travel by China railways are the type of trip and traveler, and the type of price change. Shopping and leisure trips are more price elastic than commuter trips because travelers can afford to wait. Traveling in the first class category is less price elastic than the economy class. This is because many travelers will tend to avoid congestion in the economy class, leading to a high demand for the first class category, especially considering that the firm is a monopoly (Arnold 2008, p.143).
4. This pricing policy is called skimming pricing. It is a mild version of price discrimination. It serves to give a firm immense profit, before competition arises to lower market prices. It is a policy that captures the consumer surplus. It ensures that no consumer will pay less for a durable good than the maximum price they are ready and willing to pay for it (Krugman 2009, p. 112).
5. Each short-run average cost curve is a tangent to the long-run average cost curve. Each short-run average cost curve derives from a fixed input, usually capital. Therefore, as the quantity of input varies, the short-run average cost curve shifts to a different position. In the long-term, a line drawn through all the points occupied by short-run average cost curves, forms the long-run average cost curve.
6. The company can forecast the demand for the new flavor of tea by carrying out a survey. The best method to conduct such a survey is to explain the new flavor through media or directly to individuals, giving a free sample of the tea to a number of individuals and collecting relevant data. Data that may be appropriate in estimating the new flavor's demand include age groups, social status and gender. Through such a survey, the firm can have an idea of the general demand of the product, although it cannot be very precise (Sloman 2008, p. 146).
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2.
a) Fixed costs are business expenses that are independent of business activity, for example, rent and employee salaries.
b) Variable costs are business expenses that vary proportionally with business activity, for example, raw materials for a manufacturing company.
c) Marginal cost is the cost of producing one more unit of a good, for instance, the cost of wax required to make one more candle.
d) Average cost is the total cost divided by the number of goods produced. For instance, if it costs $6 to produce 3 candles, the average cost is $2.
e) Short-run costs refer to the cost of production in the short term, sychg as the cost of running a firm for one week.
3. The main factors that determine price in the different categories of railway travel by China railways are the type of trip and traveler, and the type of price change. Shopping and leisure trips are more price elastic than commuter trips because travelers can afford to wait. Traveling in the first class category is less price elastic than the economy class. This is because many travelers will tend to avoid congestion in the economy class, leading to a high demand for the first class category, especially considering that the firm is a monopoly (Arnold 2008, p.143).
4. This pricing policy is called skimming pricing. It is a mild version of price discrimination. It serves to give a firm immense profit, before competition arises to lower market prices. It is a policy that captures the consumer surplus. It ensures that no consumer will pay less for a durable good than the maximum price they are ready and willing to pay for it (Krugman 2009, p. 112).
5. Each short-run average cost curve is a tangent to the long-run average cost curve. Each short-run average cost curve derives from a fixed input, usually capital. Therefore, as the quantity of input varies, the short-run average cost curve shifts to a different position. In the long-term, a line drawn through all the points occupied by short-run average cost curves, forms the long-run average cost curve.
6. The company can forecast the demand for the new flavor of tea by carrying out a survey. The best method to conduct such a survey is to explain the new flavor through media or directly to individuals, giving a free sample of the tea to a number of individuals and collecting relevant data. Data that may be appropriate in estimating the new flavor's demand include age groups, social status and gender. Through such a survey, the firm can have an idea of the general demand of the product, although it cannot be very precise (Sloman 2008, p. 146).
Attain best US essay writing help in economics from qualified writers at academicessayservices.com.
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