Econ 200 Principles of Business Economics
Principles of Economics
You
are required to suggest:
1. Suggest how an economist would approach the problem of alcohol abuse. Provide
two (2) possible solutions to this problem. Include the four (4) elements of
the economic way of thinking in your analysis. Economist could approach alcohol
abuse by first increasing the price and taxes this will eventually make it
harder to get for the abusers, also they can limit the places where it is sold
and how often it is being sold in turn this will give them limited purchasing
places. This would be apply to the cost and benefits of alcohol abuse. The cost
being that it cost too much to purchase for buyers and sellers to purchase and
distribute. There would be less bars selling it so the benefit would be less
consumption of public intoxication and driving under the influence lowering the
risk of DUI accidents and fatalities. Second limiting the hours it can be sold
in stores and at bars this will make the sellers think at the margin. If the
government was to intervene and dictate to sellers how they can do their
business this would bring about marginal change. The hopes are that this would
have sellers saying if we stop selling alcohol 2 hours before close or keep a
tab on a 4 drink minimum per person how many people would make it home safe
without accidents or getting tickets. With the rational people respond to
incentives this would make people think about the things they would not
normally consider like if I keep spending all my families money on alcohol I
will not have money to send my child to college and what is more important
2. Analyze how prescription drugs affect the demand and supply of other products and services in this country. Prescription drugs affect the supply and demand of other products and services in this country because it will impact the Changes in health care cost in many ways by bringing on the need for more drugs when people are sick with this it means more prescriptions and now the doctors will find ways to increase the cost to get more money from the insurance companies. Now the distributors will have to increase the shipping side as well as the bottle sizes based of the bulk of the doctors. With this it brings in more jobs. Now you will run the risk of people abusing the drugs, and with this the government can regulate to pharmacist how many prescriptions one person can receive in any given period or even how often they can be refilled. This will lower the supply.
3. Formulate a reason why the elasticity of demand is an important consideration when analyzing the impact of a shift in supply and why the elasticity of supply is an important consideration when analyzing the impact of a shift in demand. Include at least one (1) example in each scenario. The elasticity of demand is an important consideration when analyzing the impact of a shift in supply because as the slope moves downward it increases the quantity as well as lower prices. For example if you are a retail store you can have pants that you keep selling out off because everyone wants it this makes the demand go up. Things like gas, food, clothing, shoes, insurance just to name a few will always be in demand and no matter the price people will still buy it. The elasticity of supply is an important consideration when analyzing the impact of a shift in demand for example if you have a clothing store and you order tube tops but for 2 months they sat on the shelf and no one purchased them you are losing money, so have create a clearance to sell it for 50% off to get rid of it. You are now losing money but you are getting rid of the merchandise without suffering a total lose. This only means that the demand for that particular item was low because your customers did not like it for whatever reason. Next time this means you have to purchase less of that and more of the things that they do want like the pants.
4. Provide two (2) examples of increasing-cost industries in your state and propose why they would have a positively sloped supply curve. Increasing-cost industry is when the average cost of production increases as the total output increases based off the increasing input price and less productive input. Increasing input price which is when the industry grows they compete with others for the same inputs and because of the competition the price for those inputs goes up. The less productive input is just when a small firm uses only the most productive inputs; however if the market grows they will have to use less input. In Georgia two examples would be Gasoline and Groceries. The gas prices are in a fluctuating market right now as far as price no matter how high it goes up the demand will never go do because gasoline is a needed necessity to power generators, cars, planes, hot water tanks, stoves just to name a few. No matter how the people get upset they will need go out of demand. For example last week at the Kroger’s gas was $3.19 a gallon this week it is back up to $3.41 now because you need fuel to get around people will shop around in the area to find the lowest available price, but it will still bowl down to convenience and how bad you need it at that moment. The second example is Groceries is just like gasoline it will always be needed it is extremely important in the human race to survive. With all of the different stores like Wal-Mart, Target, Kroger’s, Publix, Ingles, Save-A-lot and many more competing for your business a loaf of bread can run anywhere from $ 1.29 to $3.59 now unless you do not like or eat bread. Like on the fruits and vegetables, so many people are converting over to becoming vegetarians it’s becoming expensive to just purchase grapes. Then again all these are necessities in life and will never go away, so therefore, people will pay what they have to just to get it.
5. Suggest how, under certain conditions, a perfectly competitive market is economically efficient. A perfectly competitive market is a homogenous product it also operates as a price taker where the buyer or seller takes the price as given without change. If this market was perfect the out would be that there would be many sellers who will produce less of a product and cannot control the market price. Secondly many buyers would be available who do not control the market. There would be no barriers to the entry or exit of the market meaning no sunk cost which is basically the price the firm as already paid or has committed to paying and it will not be recovered. Because of this the market will flow freely. There is no externalities because of production and/or consumption. In this market the sellers know all about the competition and transaction cost can be brought to a minimal when looking at prices because consumers will have all the information needed they can just pick a price based off the market price References
some related links are here:
2. Analyze how prescription drugs affect the demand and supply of other products and services in this country. Prescription drugs affect the supply and demand of other products and services in this country because it will impact the Changes in health care cost in many ways by bringing on the need for more drugs when people are sick with this it means more prescriptions and now the doctors will find ways to increase the cost to get more money from the insurance companies. Now the distributors will have to increase the shipping side as well as the bottle sizes based of the bulk of the doctors. With this it brings in more jobs. Now you will run the risk of people abusing the drugs, and with this the government can regulate to pharmacist how many prescriptions one person can receive in any given period or even how often they can be refilled. This will lower the supply.
3. Formulate a reason why the elasticity of demand is an important consideration when analyzing the impact of a shift in supply and why the elasticity of supply is an important consideration when analyzing the impact of a shift in demand. Include at least one (1) example in each scenario. The elasticity of demand is an important consideration when analyzing the impact of a shift in supply because as the slope moves downward it increases the quantity as well as lower prices. For example if you are a retail store you can have pants that you keep selling out off because everyone wants it this makes the demand go up. Things like gas, food, clothing, shoes, insurance just to name a few will always be in demand and no matter the price people will still buy it. The elasticity of supply is an important consideration when analyzing the impact of a shift in demand for example if you have a clothing store and you order tube tops but for 2 months they sat on the shelf and no one purchased them you are losing money, so have create a clearance to sell it for 50% off to get rid of it. You are now losing money but you are getting rid of the merchandise without suffering a total lose. This only means that the demand for that particular item was low because your customers did not like it for whatever reason. Next time this means you have to purchase less of that and more of the things that they do want like the pants.
4. Provide two (2) examples of increasing-cost industries in your state and propose why they would have a positively sloped supply curve. Increasing-cost industry is when the average cost of production increases as the total output increases based off the increasing input price and less productive input. Increasing input price which is when the industry grows they compete with others for the same inputs and because of the competition the price for those inputs goes up. The less productive input is just when a small firm uses only the most productive inputs; however if the market grows they will have to use less input. In Georgia two examples would be Gasoline and Groceries. The gas prices are in a fluctuating market right now as far as price no matter how high it goes up the demand will never go do because gasoline is a needed necessity to power generators, cars, planes, hot water tanks, stoves just to name a few. No matter how the people get upset they will need go out of demand. For example last week at the Kroger’s gas was $3.19 a gallon this week it is back up to $3.41 now because you need fuel to get around people will shop around in the area to find the lowest available price, but it will still bowl down to convenience and how bad you need it at that moment. The second example is Groceries is just like gasoline it will always be needed it is extremely important in the human race to survive. With all of the different stores like Wal-Mart, Target, Kroger’s, Publix, Ingles, Save-A-lot and many more competing for your business a loaf of bread can run anywhere from $ 1.29 to $3.59 now unless you do not like or eat bread. Like on the fruits and vegetables, so many people are converting over to becoming vegetarians it’s becoming expensive to just purchase grapes. Then again all these are necessities in life and will never go away, so therefore, people will pay what they have to just to get it.
5. Suggest how, under certain conditions, a perfectly competitive market is economically efficient. A perfectly competitive market is a homogenous product it also operates as a price taker where the buyer or seller takes the price as given without change. If this market was perfect the out would be that there would be many sellers who will produce less of a product and cannot control the market price. Secondly many buyers would be available who do not control the market. There would be no barriers to the entry or exit of the market meaning no sunk cost which is basically the price the firm as already paid or has committed to paying and it will not be recovered. Because of this the market will flow freely. There is no externalities because of production and/or consumption. In this market the sellers know all about the competition and transaction cost can be brought to a minimal when looking at prices because consumers will have all the information needed they can just pick a price based off the market price References
some related links are here:
Harrington, P. Marvin D.S. (2002) Analysis of the movement of Prescription
Drugs to the Over-The –Counter Status.
http://www.amcp.org/data/jmcp/Review-499-508.pdf O'Sullivan, A. Sheffrin, M.
Perez, S.J (2010) Survey of Economics, Principles, Applications, and Tools:
Pearson. Geoff, R. (2012). Perfect Competition. Economics of Competitive
markets
http://www.tutor2u.net/economics/revision-notes/a2-micro-perfect-competition.html
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