Monday, September 13, 2010

Microeconomics Could Serve You Well

Well, it looks like many small towns and communities throughout the United States now take bull by the horns, and work with associations of local economic development, city analysts, and trading rooms. They want to get their economy cooking again, and they are tired sigh and moan, and complain about the global economic downturn, the price of real estat, and all the "For Rent signs" in the center of the shopping-center business is no longer in LB.

City government know they need the tax receipt to those small businesses want less regulation, and those who wish to work openly. But before you go and join one of the organizations or start installing two cents, I believe you need to know a little about the micro economy. Now, you may be able to go online, or go to the bookstore and take a book on the topic. However, if you really want to learn the basic principles of micro economics, I suggest you read some of the older text books until you have a good working knowledge base.

I realize of course many who have not read the book since economics courses or high school, but when you pull out one of your old text books, or can go online and buy a micro-economic books to help you refresh your memory. Let me suggest a few books as I have in my personal library has helped me very much, not only with the knowledge of my own personal work, and my writing, but also my ability to describe the micro economy to others when I was sitting at the Symposium , conference, or talk with other business leaders;

1. "Micro Economics," by Edwin G. Dolan and Lindsay D. David, 1986
2. "Micro Economic Theory," by Dominick Salvatore, 1974


Of course, I recommend two books, or books like them. Many of the books of the new economy is too politically correct, and a little bit tired in their view of capitalism. Capitalism and free market system is very simple and at the micro economic level you can see the things that happen in real-time, as long as you understand what's happening, you can help increase sales, increase income tax, and get your city moving again . Please consider this.

Lance Winslow is the founder retired from Nationwide Franchise Chain, and now run line Think Tank. Lance Winslow believes the U.S. economy.

Wednesday, September 8, 2010

Micro Economics - Understanding the Law of Demand and Supply

Micro-economy is a concern with
  1. Determining the price we pay for products and services.
  2. What is the output required by the market.
  3. The effects of government intervention in market forces.
Understanding the micro-economy will help us to analyze the nature of the offer and demand concepts and how they affect the operation of a market economy.

A. Request
In the case of the micro economy, demand is defined as the relationship between product prices and customers' desire to buy a certain quality.The laws also demand to price and quality of the sale, if such price increase in the quality of product sold decrease and the price, the quality of reduction products sold increased.

B. Supply
Supply results reflect the readiness of suppliers to produce and sell at market prices that occurred and these factors affect all high supplier. provided. For most products, the amount offered will be increased by increasing the price level, all other factors remain constant.
Supply law determines as a) the amount offered to increase the price.
b) Quantities offered smaller with lower prices.
c) manufacturers increase their product price increase supply.

C. Demand and supply Equilibrium
When prices fell to the buyer willing to pay, it resulted in a balance. But the effect occurs when the price is too low. In fact, the strength of demand and supply leading to equilibrium price and quantity.
a) Because the demand is greater than supply, price level increases.
b) A greater supply than demand, price level fell.
c) Only one equilibrium price guarantee

D. Other influences have four fundamental change we can learn, any changes affecting the supply or demand:
a) a positive demand trends will increase demand.
b) a negative demand shift will decrease demand.
c) positive supply shift will increase demand.
s) negative supply shift will decrease demand.

E. Government intervention
Government intervention designed to achieve:
a) the fair distribution of income among individuals and regions.
b) To promote the employment and income growth.
c) To protect low-income recipients.
and include:
a) the minimum wage.
b) rent control.
c) The Council Farm marketing.
d) Tax.

Tuesday, March 23, 2010

Monopoly, Monopolistic and Oligopoly

5) Monopolies, oligopolies, and monopolistic competitive industries all
A) earn positive profits in the long run.
B) have market power.
C) are completely unconstrained in their pricing.
D) raise price and quantity over what would occur in perfect competition in order to maximize their profits.
Answer:B

7)A monopoly is an industry with
A)a single firm in which the entry of new firms is blocked.
B)a small number of firms each large enough to impact the market price of its output.
C)many firms each able to differentiate their product.
D)many firms each too small to impact the market price of its output.
Answer:A

8)An oligopoly is an industry market structure with
A)a single firm in which the entry of new firms is blocked.
B)a small number of firms each large enough to impact the market price of its output.
C)many firms each able to differentiate their product.
D)many firms each too small to impact the market price.
Answer:B

9) Monopolistic competition is an industry market structure with
A) single firm in which the entry of new firms is blocked.
B) small number of firms each large enough to impact the market price of its output.
C) many firms each able to differentiate their products.
D) many firms each too small to impact the market price of its output.
Answer:C

13)When ________ substitutes exist, a monopolist has ________ power to raise price.
A) more; more
B) more; less
C) fewer; less
D) no; infinite
Answer:B

17)In a monopolistic industry there is(are)
A) many firms and free entry of new firms.
B) many firms and entry of new firms is blocked.
C) a single firm and free entry of new firms.
D) a single firm and entry of new firms is blocked.
Answer:D

Refer to the information provided in Figure 13.1 below to answer the question that follows.

18)Refer to Figure 13.1. The demand curve facing an individual producer of wheat is most likely represented by
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
Answer:B

19)Refer to Figure 13.1. The demand curve facing an electric company is most likely represented by
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
Answer:A

20)Refer to Figure 13.1. The demand curve facing Microsoft is most likely represented by
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
Answer:A

21)Refer to Figure 13.1. The demand curve for insulin is most likely represented by
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
Answer:C

22)Firms with market power must decide all of the following EXCEPT
A) how much to supply in each input market.
B) how much to produce.
C) how to produce it.
D) what price to charge for their output.
Answer:A

1) The music production industry is an example of a(n) ________ industry.
A) perfectly competitive
B) monopolistic
C) monopolistically competitive
D) oligopolistic
Answer:D

2)Of the four oligopolistic markets below, in which is there considerable price competition?
A)music production industry
B)stent industry
C)airline industry
D)high-definition DVD industry
Answer: A

3)In general, oligopolists compete
A)on price alone.
B)on many dimensions except for price.
C)on price, R&D, and marketing and advertising.
D)on quality alone.
Answer:C

4)To determine their optimal strategy, oligopolists must ________ to their strategy.
A)anticipate the reaction of their customers
B)anticipate the reaction of their rivals
C)anticipate the reaction of government
D)both (A) and (B) are correct.
Answer:D

6)A(n) ________ industry has a single, unique product and blocked entry.
A)perfectly competitive
B)monopolistically competitive
C)monopolistic
D)oligopolistic
Answer:C

7) A few firms each large enough to influence market price characterizes the ________ market structure.
A) perfect competition
B) monopolistic competition
C) oligopoly
D) monopoly
Answer:C

8) Which of the following is the best example of an oligopolistic industry?
A) grocery stores
B) automobiles
C) electric power
D) designer clothes
Answer:B

9)Products may be homogeneous or differentiated in the ________ market structure.
A)perfectly competitive
B)monopolistic
C)monopolistically competitive
D)oligopolistic
Answer:D

11)Oligopoly is difficult to analyze because
A) there is no price competition among oligopolistic firms.
B) of the complex interdependence that usually exists among oligopolistic firms.
C) price is NOT a decision variable for oligopolistic firms.
D) there is price competition among oligopolistic firms but no competition on product quality.
Answer:B

12) The four largest firms account for approximately 90% of U.S. beer sales. The U.S. beer industry would be best classified as a(n)
A) perfectly competitive industry.
B) monopolistically competitive industry.
C) oligopoly.
D) monopoly.
Answer:C

14)Oligopolistic firms are
A) able to influence price only if the oligopolist's products are standardized.
B) able to influence price only if the oligopolist's products are differentiated.
C) able to influence price regardless of whether or not the product is differentiated or standardized by virtue of their size.
D) unable to influence price regardless of whether or not the product is differentiated or standardized.
Answer:C

Cost

1) Assume firms in an industry break even. New investors ________ attracted to the industry and current ones ________ running away from it.
A) are not; are not
B) are not; are
C) are; are not
D) are; are
Answer:A

2) Firms that are "breaking even" are
A) earning zero economic profits.
B) earning less than a normal rate of return.
C) shutting down in the short run.
D) All of the above are correct.
Answer:A

3) Firms earning a profit will want to ________ their profits in the short run while firms suffering losses will want to ________ their losses.
A) maximize; maximize
B) maximize; minimize
C) minimize; maximize
D) minimize; minimize
Answer:B

4)In the short run,
A)all firms that earn a loss will shut down.
B)if current firms are earning a profit, new firms will enter the industry.
C)firms act such that they minimize losses or maximize profits.
D)All of the above are correct.
Answer:C

Refer to the information provided below in Figure 9.1 to answer the questions that follow.

25) Refer to Figure 9.1. This farmer maximizes profits by producing ________ bushels of wheat.
A) 6
B) 9
C) 12
D) 16
Answer:C

26)Refer to Figure 9.1. If this farmer maximizes profits, his total costs will be
A) $11.
B) $66.
C) $90.
D) $132.
Answer:D

27) Refer to Figure 9.1. If this farmer maximizes profits, his TVC will be
A) $24.
B) $42.
C) $108.
D) $255.
Answer:C

28)Refer to Figure 9.1. If this farmer maximizes profits, his fixed costs will be
A) $0.
B) $24.
C) $45.
D) indeterminate unless we know the level of output the firm is producing.
Answer:B

29)Refer to Figure 9.1. If this farmer maximizes profits, his total revenue will be
A) $90.
B) $135.
C) $180.
D) $240.
Answer:C

30) Refer to Figure 9.1. If this farmer maximizes profits, his profits will be
A) -$24.
B) $45.
C) $48.
D) $72.
Answer:C

31)Refer to Figure 9.1. If this farmer maximizes profits, his operating profit (or loss) will be
A) -$24.
B) $48.
C) $72.
D) $156.
Answer:C

32)Refer to Figure 9.1. This farmer will earn zero operating profit if price will be
A) $7.
B) $9.
C) $10.
D) $11.
Answer:A

33) Refer to Figure 9.1. This farmer will earn zero economic profit if price will be
A) $7.
B) $9.
C) $10.
D) $11.
Answer:C

34)Refer to Figure 9.1. This farmer's shutdown point price is
A) $0.
B) $4.
C) $7.
D) $10.
Answer:C

Refer to the information provided in Figure 9.7 below to answer the questions that follow.

35) Refer to Figure 9.7. In which of the following price ranges will the firm continue to operate but at a loss?
A) $5-$6
B) $6-$7
C) $7-$8
D) $8-$9
Answer:B

36)Refer to Figure 9.7. The firm's shut down point is at a price of
A) $5
B) $6
C) $7
D) $8
Answer:B

37)Refer to Figure 9.7. Suppose demand for wheat is initially D2. If consumer incomes increase, then demand for wheat will shift to ________. This will ________ the equilibrium price of wheat and individual profit maximizing firms will produce ________ bushels of wheat.
A) D3; increase; 15
B) D1; increase; 10
C) D3; decrease; 7
D) D1; decrease; 0
Answer:A

38)Refer to Figure 9.7. Suppose demand for wheat is initially D2. If the price of rice (a substitute for wheat) falls, then demand for wheat will shift to ________. This will ________ the equilibrium price of wheat and individual profit maximizing firms will produce ________ bushels of wheat.
A) D3; increase; 15
B) D1; increase; 13
C) D3; decrease; 10
D) D1; decrease; 0
Answer:D

39) Refer to Figure 9.7. If demand for wheat is D2, then a profit maximizing firm will produce ________ units and earn a profit of ________.
A) 13; $0
B) 7; $0
C) 13; $91
D) 15; $30
Answer: B

40)Refer to Figure 9.7. If demand for wheat is D3, then a profit maximizing firm will produce ________ units and earn ________.
A) 15; positive profits
B) 9; positive profits
C) 12; negative profits
D) 13; exactly a normal return
Answer:A

41) Refer to Figure 9.7. If demand for wheat is D3, then in the long run
A) the firm will shut down.
B) the firm will exit the industry.
C) new firms will enter the industry and the current firms will expand production.
D) None of the above is correct.
Answer:C

42)Refer to Figure 9.7. If demand for wheat is D1, then a profit maximizing firm will produce ________ units and earn ________.
A) 0; negative profits
B) 5; zero profits
C) 10; negative profits
D) 12; positive profits
Answer: A

43) Refer to Figure 9.7. If demand for wheat is D1, then in the long run
A) the firm will increase its price and output.
B) the firm will exit the industry.
C) new firms will enter the industry and the current firms will expand production.
D) firms will increase their output so that their average fixed cost per unit falls.
Answer: B

44)Operating profit is
A) TR - TC.
B) TR - TFC.
C) TR - TVC.
D) TVC - TFC.
Answer:C

45)Economic profit is
A) TR - TC.
B) TR - TFC.
C) TR - TVC.
D) TVC - TFC.
Answer:A

46)A firm earns an operating profit if
A) revenues exceed variable costs of production.
B) revenues equal fixed costs.
C) price is less than average variable costs of production.
D) price equals marginal cost.
Answer: A

47) A firm suffers an operating loss if
A) price exceeds average variable cost but is less than average total cost.
B) price exceeds marginal cost.
C) revenues are smaller than total variable costs of production.
D) revenues are greater than total variable costs of production but less than total costs.
Answer:C

21) Under perfect competition,
A) resources are allocated among firms efficiently.
B) final products are distributed among households efficiently.
C) the system produces the goods and services consumers want.
D) All of the above are correct.
Answer:D

22)Which assumption leads to an efficient allocation of resources among firms?
A) Factor markets are open and competitive.
B) All firms pay the same prices for identical inputs.
C) Firms behave so as to maximize their profits.
D) All of the above are correct.
Answer:D

26) In perfect competition, ________ is the condition that ensures that firms produce the right things.
A) MUX = PX.
B) P = MC.
C) P = ATC.
D) MRPL = ATC.
Answer: B

9) The following market structure is an example of an imperfect market:
A) monopoly.
B) oligopoly.
C) monopolistic competition.
D) All of the above are correct.
Answer:D

My Blog List

LinkWithin

Related Posts with Thumbnails