Help For Your Introductory Economics Course

Kirsten is earning $40,000 per year as a stylist in Sally’s Salon. She has worked hard to save $60,000 and is currently earning 5% annual interest on her savings account. She decides to quit her job at Sally’s Salon and uses her savings to open her own hair salon. In the first year of ownership, her salon earns revenues of $200,000 and has explicit costs of $157,000. What is Kirsten’s profit (or loss) in the first year? Economic profit is the total revenues minus total opportunity costs of all inputs used, or the total of all implicit and explicit costs. For this example we know the following for the first year: Revenue = $200,000 Explicit costs = $157,000 The implicit costs include Kirsten’s foregone salary from giving up her previous job of $40,000 for the year and lost interest from invested savings ($60,000 saved * 5% annual interest so the interest forgone for the year is $3,000) Economic profit = Revenues – explicit costs – implicit costs Economic profit = $200,000 – 157,000 – 40...

Price Elasticity of Demand Sample Problem #1: When Hank’s Hamburger Stand priced its signature burger at $7, they sold 500 burgers per week. When they raised the price to $8, they sold 450 burgers per week. Based on this information, calculate the price elasticity of demand for hamburgers. The price elasticity of demand = percentage change in quantity demanded / percentage change in price Start by calculating the % change in quantity demanded = change in quantity / (sum of quantities / 2), and then multiply 100 to put in % form % change in quantity demanded = (500 – 450) / ((500 + 450) /2) = 50 / (950 / 2) = 50 / 475 = .1053 .1053 X 100 = 10.53% is the change in quantity demanded Next calculate the percentage change in price = change in price / (sum of prices / 2), then multiply by 100 to put it in % form (7 – 8) / ((7 + 8)/2) = -1 / (15/2) = -1/7.5 = -.1333 -.1333 X 100 = -13.33% is the change in price Finally, calculate the elasticity of demand. The price elasticity of demand = perce...

All of the following pairs of goods are substitutes except -We observe the price of soda decreases and the demand for iced tea decreases. -We observe the price of steak increases and the demand for chicken increases. -We observe the price of bicycles increases and the demand for helmets decreases. To find the answer to this question, we must first know that two goods are substitutes when a change in the price of one causes a shift in demand for the other in the same direction as the price change. When the price of soda decreases the demand for iced tea decreases. These goods are substitutes because the demand for ice tea is moving in the same direction (decreasing) as the price of soda. Intuitively this makes sense because you’ll choose to drink one or the other with your meal – probably not both! When the price of steak increases the demand for chicken increases. Again, these goods are substitutes because the demand for chicken is moving in the same direction (increasing) as the price...

Milestone One: Expedia Example.  For the accompanying video that explains this paper, please view on YouTube here and here . Microeconomic Analysis of Expedia Expedia Group is off to an excellent start in 2018. Reports from the first quarter show year-over-year growth rates of 15% in revenue, gross bookings, and room nights (Investors Overview, n.d.). As a consultant hired by Expedia Group I will be analyzing market and business data in order to make recommendations to ensure Expedia’s future success and sustainability in the market. This paper will provide a brief overview of the firm before diving into Expedia’s demand trends over the last 5 years, supply and demand conditions, and the price elasticity of demand for their products. A discussion of the costs of production will follow with an in depth look at variable costs, fixed costs, and the impact to profitability. The overall market section will include a discussion of the market share, barriers to entry, and market structur...

One of the critical elements covered in the material this week is to analyze information and data related to the demand and supply for your firm’s product(s) to support your recommendation for the firm’s actions . You will include a graphical representation of the data and information used in your analysis . In a previous post I discussed the different aspects of demand that you could cover in your paper. You’ll want to think in terms of the factors mentioned that can impact demand for your firm (income, prices of related goods, tastes, population, demographics, and expected future prices) and make recommendations to the firm based on what you know from that research. This post will focus on how to analyze supply in this post since we haven’t covered that in detail yet and provide some ideas of concepts related to supply that could be applied to your firm. You don’t need to discuss everything I cover in this post; this is just to provide some ideas to help you get started on your rese...

One of the critical elements covered in the material this week is to evaluate the trends in demand over time and explain their impact on the industry and on the firm . But how do you evaluate the trends in demand over time and explain their impact on the industry and the firm? Here are some ideas of concepts that could be applied to your firm to help you evaluate the trends in demand. You don’t need to discuss everything I cover in this post; this is just to provide some ideas to help you get started on your research! Market demand is the demand by all the consumers of a given good or service. Find out who your customers are and provide detail on them. Use annual sales data to find out how much of the product is purchased. You should have received the Supply and Demand Help Excel Spreadsheet via email that will help you walk through the process of gathering and analyzing data. The main question to ask yourself as you analyze the data is: how has the annual sales data changed over time?...

Part I: Critical Element “Purpose” In order to receive a score of proficient (100%) on Milestone One you’ll need to outline the purpose of your paper and state how it will inform the conclusion. The best way to do this is to view the Final Project Guidelines and Rubric , paying particular attention to the Prompt and Critical Elements that will be addressed in your paper. When you turn in your final paper, in order to earn a score of exemplary (100%) you’ll also need to use industry-specific language to establish expertise. I recommend trying to write Milestone One as if it were your final paper, so that you can benefit from the feedback before your final paper is due. Below is an example of an introduction that would receive an exemplary score for The Hershey Company. Please keep in mind the following points as you work on your introduction: -The text in italics indicates where the purpose of the paper is outlined. -The underlined text indicates how the conclusion will be informed....