Microeconomics
1. Using the typical 'Facebook' lingo, write a definition for Microeconomics and then provide a standard English translation for your 'Facebook' definition. -Microeconomics: This means operations being studied of a national economy. (facebook lingo)
-Microeconomics: The study of the operations of the components of a national economy, such as individual firms, households, and consumers. (standard english translation)
Role of Money- M11
-Real Money is a medium that can be exchanged for goods and services and is used as a measure of their values on the market, including among its forms a commodity such as gold, an officially issued coin or note, or a deposit in a checking account or other readily liquefiable account.
-Play Money has no value in our society.
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 gold because you can keep it for store of value.
Circular Flow Model- M11
1. What does a circular flow model tell us?
-The circular flow of income is a simple model of the economy showing flows of goods and services and factors of production between firms and households in a market economy. It is a graphic representation
of the relationships of the Business (producer) Sector and Household (consumer) Sector and the product (goods and services) and Resource Markets (factors of production) in a market economy. Government also purchases goods and services from businesses and the factor of productions from household.
2. What is the role of households in the three sector circular flow model?
-Households (consumers) provide businesses with payments in exchange for jobs and goods and services. Households also pay taxes to the government, helping the government receive needed revenue.
3.What is the role of businesses in the three sector circular flow model?
-Businesses provide goods, and services to households, for the government businesses pay taxes, and supply goods and services.
4.What is the role of government in the three sector circular flow model?
-The government supply services and income to households, and gives services and payments to businesses.
-The government supply services and income to households, and gives services and payments to businesses.
5. What role do households have in the factors or resource market (inputs)? Households own land, labor, capital goods, and entrepreneurship.
Law of Demand and Law of Supply- M12
1. For each event described below, explain what happens to either the demand or supply curve. (increase/decrease? Shifts left or right?)
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 rise. b). What happens to the supply of orange juice if Florida is hit with very severe weather? The quanity supplied will decrease and the price will increase because the quantity demanded will exceed the quantity supplied.
c). In the market for coffee, severe global weather systems destroy 30% of the coffee bean crop.
Unfortunately the supply will decrease, because the coffee bean crop is destroyed.
d). In the market for cereal, if the price of cardboard material used to package cereal increases.
The supply will decrease unless the consumers really love cereal and will pay the new price.
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.
The demand will go down and there will be a surplus of doughnuts in businesses which will drive down the prices of doughnuts.
b). In the market for doughnuts, if widespread unemplyoment continues.
There will be a shift in supply 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 will rise because it's healthy and alot of people will want to purchase it.
3. What are two factors that can change the quanity demanded? Provide an example for each.
-The buyers: income can change
- Consumer: preferences can change
4. What are two factors that can change the quantity supplied. Provide an example for each.
-Number of buyers goes up or down, or more suppliers enter the market. Ex. If the product has good quality more ppl will purchase it but if not then less people would purchase it. People like to get their money's worth.
Reflection: What are two questions that you have about standards M11 and M12.
1. How do the changes of demand affect the price?
2. What are the injections into a circular flow of income?
