Micro-Economics

Micro-Economics

1.  Using  the typical 'Facebook' lingo, write a definition for Microeconomics and then provide a standard English translation for your 'Facebook' definition. FaceBook-the economics of indivuals and households,  and  Microeconomics- The study of the operations of the components of a national economy, such as individual firms, households, and consumers

Role Of Money- M11

1. Using what you learned about the three functions of money, explain how 'play money' differs from 'real' money? Real money deals medium of exchange, store of value, and a unit of account. Play money does not, it is fake, it cant be used for any of these functions.
2. Money has no actual value other than the value we attach to it. The barter system would still be practiced today if the participants did not agree to set a value on a piece of printed paper that represented the value of the goods and services they had to offer. What would you accept in place of money, if someone wanted to 'buy' your most prized material possession? I would accept anything that is valuble , and that would benefit me more then my most prize possession.

Circular Flow Model- M11

1.   What does a circular flow model tell us?

The circular flow model tells us the three basic elements of the economy and how they will work and communicate together to make sure that our needs and wants are all in tact.


2.  What is the role of households in the three sector circular flow model?

 Households provide businesses with payments in exchange for jobs and goods and services. They also pay taxes to the government and hold the four factors of production together.


3.  What is the role of businesses in the three sector circular flow model?

Businesses provide income, goods, and services to households. They also pay taxes, supply goods and services to the government.
4.  What is the role of government in the three sector circular flow model?

The government supplies services to houses and income. They also give services and payments to businesses.


5.  What role do households have in the factors or resource market (inputs)?

They own the four factors of production

The Law of Demand and the law of supply- M12

(a) What happens to the demand for chicken if concerns about mad cow disease lead to widespread euthanizing of  cows on U.S. cattle farms? The demand for chicken will go up because it substitutes for beef.

(b) What happens to the supply of orange juice if Florida is hit with very severe weather?

the supply for juice would decrease (go down) because all the oranges would we gone or spoiled.

(c) In the market for coffee, severe global weather systems destroy 30% of the coffee bean crop.

the Supply will decrease


(d) In the market for cereal, if the price of cardboard material used to package cereal increases. The supply will go down unless people are willing to pay more money for that cereal. 


2. For each part below,  EXPLAIN what happens to equilibrium quantity and price(increase or decrease?).

a)  In the market for doughnuts, if they were found to be a major contributor to high cholesterol in adults.supply and demand will shift to the left and will drop. 


b)  In the market for doughnuts, if widespread unemployment continues. A supply will shift to the left, because less doughnuts will be produced and the price will drop on them. 


c) In the market for doughnuts, if Krispy Kreme introduces a new whole wheat 'low-calorie' doughnut. The demand and supply curve will shift to the right. 


3.  What are two factors that can change the quantity demanded?  Provide an example for each. Buyers income change, consumer preferences change.


4.  What are two factors that can change the quantity supplied.  Provide an example for each. Number of buyers goes up or down, more suppliers enter the market.