People, Profit and Price Essay Example | Topics and Well Written Essays - 1500 words

People, Profit and Price - Essay ExampleQ2 What do you mean by income ginger snap? Identify the symbolic form of income elasticity. Income elasticity of get hold of refers to the reaction of demand to change in consumers income. In otherwise words, it is the extent of change in demand to a change in consumers income. Income elasticity of demand is calculated by the ratio of percentage change in demand to income (Anon., 2005, p.22). According to Anon (2005, p.22) it is represent as Income Elasticity of Demand = In symbolic form, eY= Where eY =Income elasticity of demand Y =income of consumer, Q=quantity demand, Y=proportionate change in income Q 3 what is mean by occupation function? What is the use of production function in production analysis? The production function refers to a technological relationship surrounded by input and output (Anon., 2005, p.50).It indicates the output of a business, industry, or economy for the input. When it comes to the use of production function in production analysis, assume a firm that uses N amount of inputs, such as, machinery, labor, and materials, for producing a single output. exertion function (q=f(x)) is used to summarize the technological possibilities of that firm. Here, q represents the output and x=(x1, x2xn) is an N?1 vector of inputs (Coelli, Prasada, Christopher and George, 2005, p.12). Q 4 what ar the characteristic features of free market economics? How are the central problems of resource allocation understand in such economic? Characteristics of free market economy include consumers, producers, private owners, and government are primary actors, three actors (consumer, producer, property owners) are impelled by self-interest while government is driven by social welfare, all factors of production are the property of private owners, owners have the right to buy and sell through market mechanism, competition exists when there is freedom to allocate resources. Decision making is deconcentrate since ps yche economic actors are free to allocate their resources. Resource allocation is defined by individual economic agents. Economic actors pursue their interest but resource allocation is in interest of conjunction (Anderton, 2006, p.22). Q 5 explain the term economic costs? How do these differ from accounting costs? habituate examples to illustrate your answer The economic cost (EC) is greater than the accounting cost (AC) because EC includes both apparent accounting cost and implicit cost which is the value of owners personal resources.EC incorporates implicit costs that could have been gained when very(prenominal) resources are invested somewhere else. If a couple decides to invest $100,000 on building for opening a restaurant. inexplicit costs would be 3 percent or $3,000 or the money earned from some other investment. It is because of different rate of return in mutual funds (9 percent) and capital investment (6 percent) on $100,000(Musgrave and Elia, 2001). toil 2 Explain the causes of market failure. Should market failure always invite government intervention? talk of the different ways in which government intervene in the market. Give example in last of your answer? Introduction Market failure is a blanket term used by economists to outline situations in which markets might not work and/or markets might