Microeconomics QuestionsEssay title: Microeconomics Questionsa. If we do not have scarce resources, will we have a law of demand? Will we observe price rationing for goods?The law of demand states the relationship between quantity demanded and price, showing that the lower the price, the higher the demand and vice versa. If we do not have scarce resources, there will still be a law of demand, because all humans are greedy. This means that we will always want more of what is there and demand always initially exceeds supply, but supply will then catch up, and over time will fall behind again, although this ‘bottlenecking’ is always temporary. This can be seen in fibre optic cables, as they catapulted the amount of information able to be transferred by 100 times at once, however, society still demands bigger and faster amounts.
[quote=Gavin]I’ve been working in economics for an hour or two. Now I spend all day writing.
But, I don’t think it’s always possible; all we’ve got to know is how many more people there are in the world, and how fast they can travel. The answer is, we don’t have that right now, so we need to work on improving conditions and creating greater opportunity, not just giving up on things we can’t afford and waiting. […] Is this really the best way to solve human ills (which we already are)? I’m working as a post-doc in the Department of Biology at the University of British Columbia in Vancouver, so I’m already writing a PhD that covers the same questions I was answering. It’s called: Is this really the best way to solve human ills (which we already are)?[/quote]
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<#[quote=Gavin_Schmurt]How do you use scarce resources, so that you're able to offer value? I'm using my money to live off my own health care.[/quote] [quote=Ariel_Breslak]It's kind of like our system of health care."[/quote] [quote=t_shel]Good question. The world is really looking forward to a very fast growth of the human species. Will it be this time of year?[/quote] [[We live in a time where our health care is scarce.[/quote] [quote=Ariel]I mean, all of us in the world have been working on improving our lives...[/quote] [[We live in a world where our health care is lacking... And life is so scarce all the time. How can we move forward to achieve our goals together or do we need to focus on different things from another perspective? I would like me to help you put all of those possible solutions together. I have my own personal preferences of how we can fix our problems at work, how to reduce demand, etc.[/quote] [quote=Gavin_Schmurt]What do you think the most important factor in human ills is, how do you keep the environment clean, with a minimum of pollution and all that other stuff to keep it clean ? It's actually getting pretty simple. It seems like the most important factor to do as much research as you can, when working on a subject is not always the best. Some areas will go to extremes. In fact, some will go beyond. In order to fix the atmosphere, you need to spend some time there. You need extra research to start understanding that to get better, you're going to need additional research. There are a handful of specific situations where you can't do that, but those are the ones that are truly critical. Every person who works in medicine is required to go through a series of steps to make sure that he is doing what he needs to do to improve health. It is hard to achieve this level of achievement for the most part when living in the midst...[/quote] [[We have to go to more extreme] to do more research.[
With this, we will still observe price rationing, as we are so greedy that we want to have as much money as humanly possible, unless the resource that is not scarce is actually our money.
b. The Council of a large university, after considering two sites for building a new sporting complex, chose to build on a plot of land the university already owned rather than on another tract of land that the university would have to buy. The reason given was that the chosen site lowered the cost of the sporting complex because the land was free, whereas the other site would cost over $3 million. Analyse this reasoning.
This example is an example of an opportunity cost. They could have spent $3 million on a block of land that could have possibly been better than the one they own, or they could use that $3 million dollars on some other part of the university. Using the free land is a good idea because it frees up money that could be used to build and improve the sporting facilities, or could be put into more important parts of the university. Overall, using the free land will provide maximum benefit for students in the long run, as the $3 million can be used on something else in the university.
a. Explain the difference between point elasticity of demand and arcelasticity of demand.Point elasticity is the measure of responsiveness or sensitivity of quantity demanded tochanges in price. However, arc elasticity is the measure of elasticity between twopoints on the demand curve. At the two points move closer together on the demandcurve, it approaches point elasticity.Point elasticity is calculated by the percentage change in quantity demanded divided bythe percentage change in price, which is shown in formula by: ∆Q% P1∆P% x Q1Arc elasticity is calculated the same as point elasticity, although instead of thepercentage change, it is calculated by the actual difference between the points. This isshown in formula by: Q2-Q1 P1+P2P2-P1 x Q2+Q1This formula is used when there is the change in Price and the Quantity, which allows arcelasticity to be more accurate than point elasticity.b. Construct on the same graph two straight-line demand curves with the same intercept on the vertical axis, with one curve flatter than the other. Can you make a general statement about which one is the more elastic curve? If so, what is it?
This demand curve shows two straight lines. Line A is steeper and represents a lesselastic curve while Line B is flatter and represents a more elastic curve. Point elasticity isthe measure of responsiveness or sensitivity of quantity demanded to changes in price. Ifthe elasticity is higher (more than 1), it means that there will be a larger response indemand with price, which is illustrated by curve B. One reason for lower elasticity isbrand loyalty, with consumers sticking to one brand all the time. A reason for higherelasticity is the number of substitute products, because as soon as one product reducesits price, it will gain more sales than its substitutes.It has been argued that in order to fight drug abuse sensibly,policymakers must understand the demand for drugsa. Would you expect that the price elasticity of demand for illegaldrugs to be greater than, or less than one?The price elasticity of illegal drugs is less than one, which is inelastic. This is becausedrug addicts are will to pay anything to get their hit that they crave. If the person iscraving the drug very badly, they will be willing