Ma503 Business Economics For Equilibrium Assessment Answer

a. Identify and explain the key ideas that define economic way of thinking and the maximisation of scarce resources.
b. Analyse how prices are determined in a market.

c. Compare and contrast the key characteristics of various market structures and market strategies adopted by firms in different market environments.
d. Differentiate the objectives and consequences of macroeconomic policy in Australia and debate the conflicts between the achievements of those objectives.
e. Analyse economic fluctuations and Gross Domestic Product.
f. Describe and discuss the concept and consequences of unemployment.
g. Examine the relationship between exchange rate and international trade.
h. Compare monetary policy and fiscal policy in a macroeconomics context

other oil explorers have the opportunity to increase the supply of oil. Apart from that, in the short run the consumers of the market also have the chance to change their buying pattern. They can start conserving oil or use oil efficient cars in order to reduce the consumption in the long run.

Thus, the demand curve for oil in the short run is steeper than that of long run. Therefore, when the member of OPEC reduces supply in the short run in order to increase the price, it increases hugely increasing the overall revenue of the countries. However, in the long run, the price increases by small margin and due to the elastic nature of demand for oil, the revenue for countries go down. Hence, OPEC cannot maintain a high price for oil in the market.

Price ceiling is a tool used by the government in order to control the price of a product or service. Binding price ceiling is when the government put the price ceiling below the equilibrium price of the market. This is binding due to the fact that, at that price, there exists an excess demand in the market; however, the seller cannot increase the price above the ceiling (Smith, 2016).  For example if the equilibrium price of a cell phone market is $10 and the government imposes a ceiling of $8, The sellers would not be able to increase the price more than $8 despite excess demand in the cell phone market.

On the other hand, price floor is a tool used by the government to ensure a minimum price for the sellers of the market. It is binding when the price floor is imposed above the equilibrium price of the market (Schmidt, 2017). At that point there will be a shortage of demand; however, the condition would bind the sellers to reduce the price of the products. For example, if the equilibrium price of potato is $6 and the government fix the price at $8 this becomes a binding price floor where the price will not drop more than $8.

Quantity of soap per hour	total cost	Fixed cost	Variable cost	Average fixed cost	Avergae variable cost	Average total cost	marginal cost
0	2	2	0	#DIV/0!	#DIV/0!	#DIV/0!	0
1	2.3	2	0.3	2	0.3	2.3	0.3
2	2.5	2	0.5	1	0.25	1.25	0.2
3	3.8	2	1.8	0.666666667	0.6	1.266666667	1.3
4	4	2	2	0.5	0.5	1	0.2
5	4.2	2	2.2	0.4	0.44	0.84	0.2
6	4.6	2	2.6	0.333333333	0.433333333	0.766666667	0.4
7	5	2	3	0.285714286	0.428571429	0.714285714	0.4
8	5.3	2	3.2	0.25	0.4	0.6625	0.3
9	5.6	2	3.6	0.222222222	0.4	0.622222222	0.3
10	6	2	4	0.2	0.4	0.6	0.4

a) When the demand for money is high the customers use the money to buy goods and services from the economy and the demand goes up increasing the price level. On the other hand, if the supply of money in the economy is lowered less transaction will take place, demand for the products and services will go down leading to a decrease in price level (Olsen, 2017).

b) With the increase in money supply, the economy will experience more transaction in the economy. Demand for the goods and the services will increase and hence the price level will also increase leading to inflation in the economy.

The Gross Domestic Product (GDP) is the final value of all the products and the services produced in a fixed geographical are for a definite time period. The GDP is one of the most important economic indicators related to the performance of an economy. There are four different component of GDP that gets added up in order to provide the final value of the goods and the services. First component is the consumption of all goods and services within the economy. Investment is the second component that takes into account all the investment expenditure of the customers of the economy for a given period of time (Komlos, 2016). Third component is the government expenditure which accounts for the entire fund that government spends for the economy. Lastly, net export is the total export minus import for a given period of time.

Labour force

The labour force is the total number of population of the country who are capable to provide their effort as an input to production of goods or services.

Unemployment rate

Unemployment rate is the ratio between the total numbers of people unemployed in a given time point to the overall size of the labour force of the economy.

Labour force participation ratio

The labour force participation ratio is the ratio of the total adult population of the economy to the size of the labour force.

The labour force in this case would be employed + unemployed population of the economy

That means 11.67+ 0.7= 11.74 million.

The unemployment rate in this case would be (Unemployed / Total size of the labour force)

That means 0.7/11.74= 0.059 or 5 percent.

And the labour force participation ratio is the total labour/ total adult population of the economy

That means 11.74/18.94

= 0.61.

Reference

Bober, S., (2016). Alternative principles of economics. Routledge.

Emanuel, E. J., Ubel, P. A., Kessler, J. B., Meyer, G., Muller, R. W., Navathe, A. S., ... & Sen, A. P. (2016). Using behavioral economics to design physician incentives that deliver high-value care. Annals of internal medicine, 164(2), 114-119.

Komlos, J., (2016). Principles of economics for a post-meltdown world. Springer.

Olsen, J.A., (2017). Principles in health economics and policy. Oxford University Press.

Schmidt, S. (2017). A proposal for more sophisticated normative principles in introductory economics. The Journal of Economic Education, 48(1), 3-14.

Smith, H.M., (2016). Understanding economics. Routledge.