Assessment Item Macro and Microeconomics - Essay Example

Only on StudentShare

Extract of sample
Assessment Item Macro and Microeconomics

The reason for PED being elastic in the long run is that consumers may switch to alternate fuel sources such as gasoline or they may use alternate methods to travel other than private transport such as travelling in public buses. Consumers also take time to adjust to price changes (Grant 2000). In the short run if the price of petrol increases consumers will still demand petrol because it takes time to adjust their demand for petrol to a change in its price. 1c. As the PED of petrol is inelastic a rise in price will cause total expenditure on petrol to rise too. When demand is inelastic, price and total expenditure (also total revenue) move in the same direction (Sloman 2007). For example let us assume that the price of petrol rises in the long run from $4 to $5. At $4 total expenditure on petrol was $400 with consumption being 100 liters of petrol at PED of 0.2. Given the PED formula: PED= % change in quantity demanded % change in price At PED of 0.2, given a price of $5 quantity demanded for petrol will fall by 5 liters to 95 liters. The total expenditure after the price increase would be $5*95= $475 (more than $400). Hence this shows that as price is increased total expenditure will also increase if demand is inelastic. 2. Carbon tax is a form of pollution tax. ...Show more

Summary

1a. Price elasticity of demand (PED) is the extent to which quantity demanded changes to a change in price (Bamord, Brunskill, Cain, Grant, Munday, Walton 2002). When PED of a good is between 0 and 1 then it is said to have inelastic demand with the good being more inelastic the closer the value is to zero…
Author : vandervortmicah
Save Your Time for More Important Things
Let us write a custom essay on your topic
"Assessment Item Macro and Microeconomics Essay"
with a personal 20% discount.
Find out more

Related Essays

Econs Macro and Microeconomics Essay
The current account balance can be obtained using the mathematical formula below; CAB = X - M + NY + NCT (Krugman & Wells, 2008). Where CBA is the current account balance X – Represents exports M – Represents imports NY – Represents Net income from abroad NCT – Represents current transfers A budget balance occurs where there is either a deficit or a surplus.
6 pages (1500 words) Essay
Economic Inequality Macro and Microeconomics Essay
However, there are some goals which may conflict with the other. This is because in order to achieve certain goal, there may be a need to sacrifice another. Because of this, countries need to prioritize their goals for their economies, assess the trade-offs and later on decide on the best way to achieve a certain goal.
6 pages (1500 words) Essay
Youth Unemployment in UK
Name Institution Course Tutor Date Youth Unemployment in UK Youth unemployment is a worldwide economic crisis, especially with the current global economic hardships. A recent report by the Office for National Statistics indicates that the number of jobless youth in the UK hit a record of 1.02 million in the quarter (Pym, 2011: 21).
4 pages (1000 words) Essay
Macro and Microeconomics: International Trading
It is therefore vivid to note that the government should always control employment by creating more jobs to the unemployed. It is fundamental to note that importation always has adverse effects on the level of unemployment. This is because countries that rely mostly on imported goods reduce the development and expansion of the local industries in the country (Carbaugh 2008).
4 pages (1000 words) Assignment
Macro and Microeconomics
Therefore, if the price of the shirt is 220 francs, the price of the shirt in dollars is calculated as follows. 1 dollar = 5.5 francs Dollar price of shirt = 220 francs Using the principle of cross-multiplication, Price of shirt in dollars = (220 francs x 1dollar)/5.5 francs = 40 dollars Question two Supposing that a Frenchman wants to import a new Chrysler Neon costing 14,300 dollars and the prevailing exchange rate is 5.5 francs/dollar, the franc price of the car can be determined.
4 pages (1000 words) Essay
Microeconomics Essay
211). The number of buses in Utropica is represented by Cobb-Douglas function, which is considered to be linear and homogenous demonstration of constant return by changing of production scale. According to the fact that a sum of indicators’ powers defines type of a function concerning its increase or decrease, we can predict functional behavior beforehand by making the following calculation: F(L, K) = 1.1 + 0.41 = 1.51 Taking into account that calculated figure exceeds 1, it can be concluded that our function will reproduce increasing returns to scale.
5 pages (1250 words) Essay
Unemployment In UK and Effect of a Wage Increase
For instance, in analysing the issue of whether an increase in the minimum hourly wage causes unemployment, Baumol and Blinder (2009, p. 115) produced a model that we reflect in this work as Figure 1. Figure 1. Anticipated impact of an increase in hourly minimum wage Source: Baumol and Blinder 2009, p.
5 pages (1250 words) Essay
Macro & Microeconomics Questions
This type of assumed Gross Domestic Product is often referred to as potential gross domestic product and is often presented in budget statements (Thoma, 2012). It has however not always turned out that the potential gross domestic product values are achieved.
4 pages (1000 words) Assignment
The Difference between Macro and Microeconomics
Moreover, the author will have to take an examination the next morning. In the first case, it is assumed that the author has already prepared for the examination and does not need to study anymore. It is also assumed that the author is jobless. Driving to the concert will involve fuel cost.
3 pages (750 words) Essay
Macroeconomic policies, government attitudes towards Inequality
Like due to inequality in the wages or income of the workers many people cannot gain the all opportunities of the life so overall standard of living of society decline. The other point is about the riskiness of jobs, due to inequality the risk of getting good jobs arises in the societies its mean the loss of jobs is directly proportion to the cost of health insurance that is beneficial for the poor and the lost of home (Stiglitz, 2012).
6 pages (1500 words) Essay
Issues in Money, Banking & Finance
veloped economies as part of normal re-establishment of equilibrium, Japan has found it hard to recover from such a decline for many reasons, including bad debt burdens and the daunting task of restructuring its economy. This inability to reverse the decline in price levels, in
8 pages (2000 words) Essay
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT