Help For Your Introductory Economics Course

Which of the following would cause an increase in the demand for apples? Choice A: A decrease in consumer incomes (apples are a normal good). Choice B: A decrease in the price of apples. Choice C: An increase in the number of firms in the market. Choice D: An increase in the price of pears, a substitute for apples. Choice A is incorrect because a decrease in consumer incomes should cause a decrease in demand for apples, given that apples are a normal good. Choice A would be true if apples were an inferior good, meaning that when people have less money they buy more apples rather than some preferred alternative, which would increase demand for apples. Choice B is incorrect because a decrease in price of apples would be a movement along the demand curve, increasing the quantity demanded, but not increasing demand. The demand curve does not shift when the price changes, because the demand curve already is a representation of the quantity demanded at each price point. Choice C is incorrect

Assume that the weather in Florida is exceptionally cold this year and has damaged the citrus crops, raising the costs for the companies that use a lot of oranges to produce orange juice. Indicate which of the following statements describing the resulting effects in the market for orange juice are true of false. #1. The demand for orange juice decreases. #2. The quantity of orange juice demanded decreases. #3. The supply of orange juice decreases. #4. The quantity of orange juice supplied decreases. When faced with a question like this, the first thing to determine is whether this problem deals with a change in supply or a change in demand. In this problem we are discussing the costs of production for orange juice producers. We don’t see any information mentioned about the consumers who purchase orange juice. This tells us two things: a change in the production costs leads to a shift in the supply curve , but the habits of consumers have not changed so there is no shift in the de

The table below shows the demand schedule for four different types of consumers. There are 20,000 consumers total, and they are divided evenly through types A-D. What is the quantity demanded at a price of $10 for this good? To solve this problem, we first need to know how many consumers are in each group. Since there are 20,000 consumers total, and they are evenly divided between groups, there are 20,000 divided by 4 consumer types, which means there are 5000 consumers for each customer type. Moving on, we need to find out what the quantity demanded is at the market price of $10. How do we find that? First we look to the chart above and locate the line that has a market price of $10. Looking horizontally, we can see that at a price of $10, people who are type A will want to purchase 4 units each. We also must remember that there are 5000 people that are classified as type A. To calculate the quantity demanded we need to multiply the number of units demanded by the number of people dem

Consider the production possibilities frontier (PPF) that shows the trade-off between the production of oranges and grapefruit. Suppose there has been a disease in the area that kills citrus trees. Make a drawing to show what the PPF would look like before (PPF1) and after the citrus tree disease (PPF2). The production possibilities frontier (PPF) is a curve that shows the maximum attainable combinations of two products that may be produced with available resources and current technology. The point where the curve touches the y-axis (the vertical axis) indicates how many oranges could be produced if all of the focus was on producing oranges and none of the focus was on producing grapefruit. The point on the x-axis (the horizontal axis) indicates how many grapefruit could be produced if zero oranges were produced. All the points along the curve indicate different combinations of orange and grapefruit that could be produced efficiently. Points outside the curve are not attainable due t

To receive an exemplary score on the Supply and Demand section of your paper, you’ll need to do the following: -Effectively evaluate trends in demand over time -Explain the impact the demand trends have on the industry and the firm in detail -Analyze information and data related to the demand and supply for the firm’s product(s) -Use the information and data on supply and demand to support a recommendation (or recommendations) for the firm’s actions (noted in bold text in example below) - Include a graphical representation of data and information (using the last 5 years of company sales data is a great choice, as shown in example below) -Use concrete examples in your analysis (in the example below you’ll notice a discussion of demand in China and of the supply of cocoa) Here is an example that meets the above requirements: Supply and Demand With the demand for chocolate rising and its growing popularity in the international markets, it’s important that we analyze and underst

In this portion of your paper you will need to accurately assess how the price elasticity of demand impacts the firm’s pricing decisions and revenue growths. A good place to look to help you answer this question is in section 6.3 of your text: The Relationship between Price Elasticity of Demand and Total Revenue (pg. 181-184). When you write this section you should already have used several of the 5 determinants of elasticity of demand to determine whether or not your firm’s product faces an elastic or inelastic demand curve. If you are struggling with that section, look for an announcement posted this week that goes through these 5 determinates at length. Before we get into the relationship between elasticity of demand and total revenue, we should first understand what total revenue is and how it is calculated. Total revenue is the total amount of funds a seller receives from selling a good or service, which is calculated by multiplying the price per unit by the number of units sold.

In order to receive an exemplary score on the 3 different elements of the elasticity of demand section, you’ll need to meet the following criteria: - Analyze available data and information to justify how the price elasticity of demand for the firm’s product was determined and use research to illustrate these claims ( see underlined text in the sample paper for an example of how to meet these criteria ). In other words, be sure to state whether you have concluded the demand for your good is elastic or inelastic and use specific evidence to explain why. While you may be able to find enough information to calculate the price elasticity of demand, this is not required. You can use research on the factors of consumer responsiveness or evidence based on pricing and revenue growth to support your claim. - Explain all 5 factors that affect consumer responsiveness to price changes for the product using the concept of price elasticity of demand as a guide (see bold text in the sample paper) . T

Target (Example) • For finding Revenue you should find the Income Statement for your firm. The Income Statement (example below) is where you will find Revenues (needed for Milestone Two), Costs (needed for Milestone Three), and Net Earnings (or “Profit”). The first line will show you the revenue (or sales) and the line immediately below the total sales will show you the Costs of Goods Sold (COGS). Sometimes this is also called Cost of Revenue or Cost of Sales. These are the VARIABLE COSTS that your firms face, which is important in Milestone 3! Right beneath your variable costs you should see Selling General and Administrative expenses (SG&A), which are your FIXED COSTS. There is another post that explains why fixed and variable costs differ, but for now I want to focus on where you will see these costs on your Income Statement. • Notice for Total Revenues it shows from 2009 to 2014. If there isn’t a chart provided in the income statement that shows that trend you’ll need to cre

In order to receive an exemplary score on this portion of your paper, you’ll need to meet the following criteria: -Analyze the various costs a firm faces, their trends over time, and how they have impacted the firm’s profitability using concrete examples to substantiate claims. To help complete this section, you’ll need to view the income statement for you firm, preferably for the last five years (if available). The income statement is a financial statement that shows a firm’s revenues, costs, and profit over a period of time. You can use the income statement (or other research, if available) to see how different production costs have changed over time. For help with understanding the income statement, see page 266 in your text. Remember to discuss how the costs have impacted the firm’s profitability. Profit is equal to total revenue minus total costs. -Accurately apply the concepts of fixed and variable costs to the firm for informing its output decisions and provides insight into h

There are five determinants that we can use to determine whether the demand for your product is likely to be elastic or inelastic. You should cover at least two or three of the following characteristics to receive a score of proficient (or all five to receive an exemplary) and apply them to your product to support your determination of elastic or inelastic demand. Here is an example of the application of these determinants to gasoline, as we previously covered in a discussion board assignment. The availability of close substitutes to the good : Thinking back to module two, we learned that substitutes are goods and services that can be used for the same purpose.  If consumers have few options for substitutes, as in the case of gasoline, when the price rises the quantity demanded only falls slightly.  If few substitutes are available, the demand for the good tends to be more inelastic.  The demand for a good with many substitutes tends to be more elastic. The passage of time : In genera

What is meant by Market Structure? Table 12.1on page 392 of your text has a table that quickly summarized the four different market structures: I’ll quickly go over the different characteristics to help you decide which market structure your firm participates in. Number of firms The number of firms is referencing how much competition that your firm faces. In a perfectly competitive or monopolistically competitive market your firm will face many different competitors. In an oligopoly there will be a few major players that dominate the market. If your firm is a monopoly you are the only firm in your industry; you are the only seller of a good or service and there are no close substitutes. Type of product If your firm is in perfect competition, your firm produces a product that is identical to the product your competitors produce. In monopolistic competition your firm produces a product that is differentiated from the substitute products that its competitors produce. In an oligopoly the p

There are various elements you must meet in the Overall Market section of your paper. I will summarize these requirements here, and then you can use the corresponding numbers (in bold) to find examples of each within the sample paper that follows. Market Share Market share is the percentage of an industry or market's total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. You’ll need to cover the following in your paper: (1) Discuss the market share of the firm and its top competitors (2) Provide detail on the current percentages for your firm and its top competitors ( For more detail on finding market share data, take a look at this post .) (3) Present the data graphically (4) Describe the trend over time Barriers to Entry Barriers to entry represent something that keeps new firms from entering a

There are various elements you must meet in the Recommendations section of your paper. I will summarize these requirements here, and then you can use the corresponding numbers (in bold) to find examples of each within the sample paper that follows. Recommendation for Future Production (1) Effectively develop a recommendation for how the firm can manage its future production by incorporating the data presented (2) Relate the recommendation to the economic principles presented in the paper Recommended Action (3) Suggest how the firm’s position within the market and among its competitors will allow it to take the recommended action (4) Provide advice for how the firm can strengthen its position in the market Recommendation to Sustain its Success (5) Describes how the firm can sustain its success going forward by evaluating the demand trends and price elasticity (6) Provides specific ideas for how the firm can sustain its success Here is an example of an exemplary Recommen

Here are some important terms to know: Marginal Physical Product (MPP) -The physical output that is due to the addition of one more unit of a variable factor of production.  The change in total product occurring when a variable input is increased and all other inputs are held constant.  (Also known as marginal product ) Law of diminishing marginal product : The observation that after some point, successive equal-sized increases in a variable factor of production, such as labor, added to fixed factors of production will result in smaller increases in output. Marginal Revenue Product (MRP): The marginal physical product (MPP) times marginal revenue (MR) obtained from a one-unit change in labor input. Now let’s put these terms into use by solving some sample problems… Sample Problem: Calculating Marginal Physical Product (MPP) A bakery owner is considering how many bakers it needs each day.  If there are no bakers working, then 0 donuts will be produced that day.  If one ba

Finding Market Share Data for Your Firm Statista is one of the best resources to find market data for your firm.  To access it, click on the A-Z Database List in the Quick Links box on the library home page . When the list of databases comes up, click on the letter "S" and then scroll to the bottom of the databases beginning with "S" and click on Statista . Simply type in the company name and the words "market share" into the search bar. If you can’t find what you’re looking for through Statista… Other databases available from the A-Z Database List that have market share information include: IBISWorld (search by company name and industries will come up; select an industry and then click on the "Major Companies" tab to view a bar graph and company descriptions of major market share holders) and   Mintel Reports (type in company name and "market share" and click on appropriate results).  Even with this criteria, the market share fo

Every society faces trade-offs because we live in a world of scarcity .  Suppose Stacy has the opportunity to go to school next year full-time to become a Nurse Practitioner.  Stacy currently works as a nurse and earns $60,000 per year at her hospital.  Stacy has been offered another job to work as a home healthcare nurse that would pay $70,000 per year.  If Stacy goes to school to become a Nurse Practitioner for one year, she would not have time to work.  What is the opportunity cost of Stacy going to Nurse Practitioner school? To answer this question, we need to start by making sure we understand the underlined economic terms above. Let’s start with trade-offs, which occur due to scarcity.  Scarcity is one of the cornerstone concepts of economics.  Scarcity describes a situation in which unlimited wants exceed the limited resources available to fulfill those wants.  A trade-off is the idea that, because of scarcity, producing more of one good or service means producing less o