Basic economics Assignment microeconomics Essay

Basic stintings Assignment microeconomics - Essay Examplea. Price Elasticity of want 9 4. b. Short-Run and Long-Run Price Elasticity 12 4. c. Price Elasticity of Demand for a Particular Brand 13 4. d. If Price Elasticity of Demand for Cigarettes Is Inelastic 13 References 14 Bibliography 15 1. a. Impact on Law of Demand when at that place is no Scarcity of Resources According to a possible action of Law of demand, an inverse relationship exists between quantity demanded by customers and price of products and/or serve. If there is no scarcity of resources in a habituated market, the price of a commodity may hail rapidly which in turn go away provide rise to demand of the commodity. As stated in the possible action, a decrease in price of a commodity increases its demand in market. Moreover, in economic perspective, human nature is termed to be always demanding which depicts that demand of commodity will continue to rise and thereby affecting its price at large. Therefore, it c an be stated that whether there is a scarcity of resources or not, the Law of Demand will still exist (Baumol & Blinder, 2009). Consequently, price rationing can also be observed in this case due to a fact that demands of human-beings are termed to be never-ending or unlimited. However, on the contrary, resources of goods are limited. Thus, price rationing will be strongly evident (Maddala, 2004). Conclusively, from an economic halt of view, it can be stated that resources will be efficiently used when there is no scarcity. ... efects of a Market System In the study of microeconomics, three fundamental problems faced by any ordination are What goods and/or services can be produced in a given(p) beau monde and what will be an appropriate quantity of production? How to produce the required goods and/or services? The produced goods and/or services will be targeted to which market segment or customers? (Gabay & Et. Al., 2007). On the similar context, price mechanism is referred to a s determining prices of goods and/or services with the influence of various forces of demand and supply in a given society. The theory assumes to have no interference in terms of remote factors to the society. According to a theory of economics, producers always die hard to produce those commodities which can be sold in market at a high price and apply those production techniques which are cost-efficient in order to maximise their profits. Similarly, customers tend to favour products which are less costly and thus it determines the price of the commodity in a given market. Thus, price mechanism states an interdependent relationship between self-interests of producers and buyers. In other words, actions of producers are regulated by actions of consumers and vice-versa. This efficiently determines quantity of production and price of a commodity, solving the three fundamental problems of a society (Jain & Khanna, 2007). However, there are a few defects that exist in a market which p rovides rise to various limitations of price mechanism theory. They can be place as, market competencies, inefficient or wasteful productions, external influences, indolence of commodities, uneven circulation of income and others (Jain & Khanna, 2007). 2. a. Reasoning The aspect of opportunity cost can be well identified in this case. It is