StudentShare solutions
Triangle menu

Microeconomics - Research Paper Example

Nobody downloaded yet

Extract of sample

The firm's decision to produce is driven by the profitability of the product at given market price. As long as the price is more than the marginal cost of production, the firm will produce and sell butter. But at point where the marginal cost is equal to marginal revenue, the firm will be indifferent and below that, it will stop producing and selling butter as the costs exceed the revenue earned. This is also referred to as profit maximization behavior of firms.
With the establishment of new butter making firms, the supply of butter in the market will increase. Given the demand is not changing, the supply will cause over-supply of butter and thus the price will move to equilibrium level, that is at the intersection of supply and demand curves. This will cause the price of butter to fall until it reaches the equilibrium level.
The overall output levels of production if butter will increase as the supply has increased. For typical firms, the price decrease will cause reduction in their profitability and thus those operating at just marginal margins.
As the new firms have entered the butter making industry, the out put will increase with the increase in the overall output of butter in the market, the firms increase their output levels. Firms which were just breaking even or making less profits may quit as the prices have gone down and their operations may have gone in loss region.
C - Using 2 or more diagrams, explain what will happen...
Firms which were just breaking even or making less profits may quit as the prices have gone down and their operations may have gone in loss region.

C - Using 2 or more diagrams, explain what will happen to the market price and output, AND to the price of a typical firm, if the annual insurance premiums that butter-making firms pay on their buildings increase.

If the annual insurance premium increases for the butter making firms, the total costs will increase because of increase in fixed costs. The increase in costs will cause the firms to reduce their supply until the Marginal revenue is more than the marginal costs.

The reduction in supply will cause the price to move up until it reaches equilibrium level.

The increase in cost will shift the ATC curve for the firms and thus reduce their margins on current price. To be profitable, they must increase the price levels if the firms are going to loss region due to increased costs.

D - Using 2 or more diagrams, explain what will happen to the market price and output, AND to the price of a typical firm, if the price of milk (which is used to make butter) falls.

If the price of milk falls, the cost of production of butter will go down as milk is the major raw material and ingredient of butter. Due to reduction of price of a major raw material, the costs will go down and thus new entrants will start entering the butter production segment. This will cause increase in supply of butter and thus the prices of butter will go down in the short run as well as in the long run. If the demand is held constant at original levels, the prices will go down until equilibrium price level is ...Show more


A - Explain with the help of a diagram for the market how the equlibrium price and quantity of butter are determined, AND explain with the help of a seperate diagram for a typical firm how the firm will decide how much butter to sell at the current market price.
Author : valentinespinka
Microeconomics Research Paper essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the research paper on your topic
"Microeconomics Research Paper"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Research Paper on the BP Gulf Oil Spill
Contents 1 Chapter 1 4 1.1 Introduction 4 1.2 Nature of the Issue 5 1.3 Research Question 6 1.4 Research Objective 7 2 Chapter 2 8 2.1 Literature Review 8 2.1.1 Theory of Externalities 8 2.1.2 Cost-Benefit Analysis of the Clean-up 10 2.1.3 Economic Policies of Government 11
16 pages (4000 words) Research Paper
Macro Economics Research Paper
Macroeconomics and microeconomics are the two most general areas of economics. Macroeconomists study combined indicators such as Gross Domestic Products (GDP), unemployment rates as well as price indices in order to understand how the whole economy works.
4 pages (1000 words) Research Paper
A firm analyzed by principles of microeconomics
Microecomics is a branch of economics that deals with the decision made by individuals at a personal level. The principle of microeconomics deals with the manner in which various individual organizations or individual consumers make decisions on how to manage the scarce resources that are available after evaluating the trade-offs and the costs In this research paper, we are going to make a study on the market structure of Wall-Mart supermarket, how it competes in the current market, its market power, how its market structure has changed over time, the nature of demand, the consumer setting, shape of the demand curve, the role of international trade, the cost structure, the nature of costs ( f
3 pages (750 words) Research Paper
Microeconomics College Research Paper
From the chart if we assume that the market equilibrium price is at 300, then lowest value uses refers to those areas whose average price is 200, these lowest value uses utilize 30 gallons a year while the highest value uses average price is 400 utilizing only 10 gallons a year
11 pages (2750 words) Research Paper
Research Paper for College Course -- Introduction to Microeconomics
Scottish philosopher Adam Smith is widely credited with advancing the principle of free trade through his 1776 work, An Inquiry into the Nature and Causes of the
4 pages (1000 words) Research Paper
UAE is a country which is blessed with immense oil resources whereas it lacks scarcity in manpower resources. In fact UAE is currently facing demographic imbalances because of the huge expatriate workforce available there. The number of overseas population is more than the
6 pages (1500 words) Research Paper
Research paper
Don Norman has not overcomplicated the importance of emotional appreciation simply because attractive design usually comes with emotional appreciation. Actually, by reading through, one gets important
4 pages (1000 words) Research Paper
Research paper
The research is done via a primary as well as secondary research to arrive at definitive findings and conclusions so as to suggest practical recommendations to address the issue. The
10 pages (2500 words) Research Paper
Research paper
In this regard, most societies hold the opinion that individuals who grow up with autonomy-thwarting parents have lower chances of exploring their sexual values and identities and therefore disregard social aspects that
2 pages (500 words) Research Paper
Research Paper
According to Wikipedia (Toyota, n.d.), the company was founded in 1933 with the division of Toyoda Automatic Loom Works that was devoted to the production of automobiles. However, in 1937 it already performed its activities as an independent company. Since its
5 pages (1250 words) Research Paper
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Contact Us