3 Uses of microeconomics analysis
Microeconomics analysis can be used to different branches of economics like the international economics, and public economics. Through microeconomics analysis we are able to understand the factors that contribute to burden of a commodity tax between the consumers on one hand, and the producers on the other hand.
Microeconomic analysis is also used to explain the damages incurred to the economic efficiency by the burden brought by a tax. Assumed that resources are optimally distributed before the tax is imposed, then through microeconomics analysis we can understand the amount of damage that can be caused to the social welfare.
Microeconomics analysis is also used to bring to understanding the complicated confusions brought up by millions of facts by the construction of different simplified models of behavior, which are the same as the actual facts in order to bring a clear understanding. The models also are used to enable the economist elaborate how phenomenon departs from an ideal construction they would lead to the achievement of social and individual objectives.
Question 2
- Graph
- B) A combination D if efficient since it is along the curve. Points along the curve are considered to be efficiently utilized. Combination D shows that the resources are fully used.
- C) Combination F is inefficient since it is located outside the curve. Points outside the curve are considered inefficient since the resources are not fully utilized.
- D) Moving from the point B to the point C in bikes we experience a reduction in the opportunity cost, since we are reducing the number of bikes to produce a greater number of laptops.
- E) The curve will move to the right indicating a rise in the number of resources since there is a new way leading to the production of laptops hence benefiting the country in different ways.
Question3
Dividing the task to the girls equally. Each would have to prepare 25 slides.
- Amy would take 5 hours to do the calculation and 5 hours to prepare the slides, while Diane would take 6 hours to do the calculations and 10 hours to prepare the slides.
- If Amy decides to specialize on the slides and Diane specialize on the calculations, then it would take them a total OF 12 hours to complete the task,
- No
Question 4
When I give money to a friend, there is a certainty that I am losing an opportunity to earn through investment in the stock market. The rate of return in case of the stock market is (1+ 4%)*(1+8%)-1= 12.32%.. calculating the future worth of 1000 dollars at the rate of 12.32% is given by 1000*(112.32%)^1=$1123.20
The value that the friend returned is less than the expected future worth of investment in the stock market.
Nominal rate of return in the stock market= (1+0%)*(1+8%)-1= 8%
1000*(1+8%)^1=$1080
Nominal rate of return in the case of the friend=(1100/1000)^1-1=10%. In the case of the zero return rates the future is lower than 1100 dollars; hence we can see that the markets nominal rate of return is higher than the nominal rate of return in case of the friend.