Essays on Equilibrium Point

Adam Smith is an important figure in the field of economics. Smith’s writings in economics contributed greatly to the development of capitalism as a means of economic organization in society. One aspect of the society that puzzled Smith was how it was made up of individuals acting in their own interest, yet it still held itself together. Smith theorized that an invisible hand played an important role in a society based on a market economy. According to Smith, the invisible hand leads the private interests of individuals in a direction that benefits the interests of the whole society ( ...

I. Introduction Advances in recombinant DNA technology and bioinformatics-based data analysis have driven the explosion of structural biology in the last two decades (Kelly, Jess, and Price 119). This has resulted to the identification of at least 2000 proteins annually and a growing need in performing structural studies in these new proteins. The current trend involves the concern of analyzing protein structures close to its natural conditions (and other conditions) and of measuring their rates of structural changes, an essential factor in their biological functions. The technique of circular dichroism (CD) has gained an increasing popularity in addressing these ...

Question One

The supply and demand model makes use of the supply curve and demand curve to illustrate how equilibrium is determined in a competitive market. The wheat supply curve shows the quantities that farmers are willing to offer in the market at different prices. On the other hand, the wheat demand curve shows the amount of wheat that buyers are willing to purchase at different market prices. These curves are derived from their respective demand and supply schedules. The two curves can be plotted on the same graph to show the equilibrium price and quantity of wheat. The equilibrium price ...

Question 1. Explain why the aggregate demand curve slopes downward?

Answer: The summary of the IS-LM model is depicted by AD curve. AD curve slopes downward because at a lower level of price, the real money balance increases, and interest rate falls, which stimulates the investments. As a result the equilibrium income increases.

Question 2. What is the impact of an increase in taxes on the interest rate, income, consumption, and investment?

Answer: When the tax increases, it will cause the IS curve to shift towards left reaching to IS2 from IS1. As a result of this, the equilibrium point A shifts to B where the interest rate will reach to r2 by falling from r1. The income will also be reduced from Y1 to Y2. The increase in the tax ...

The equilibrium price is determined by forces of demand and supply of a commodity. At the equilibrium point the quantity of coffee supplied in the market is equal to quantity demanded. This means that suppliers will sell all the quantity they supply and customers will be able to get the quantity they need from the market. The equilibrium price will therefore be shown by the intersection of supply and demand curve.

However, when I go to purchase a tin of 500 grams of coffee I do not always pay the same price. This means that the equilibrium price keeps on changing ...

Economists use the term Ceteris Paribus to indicate that ‘all other factors’ that could impact the consequences of one variable over another are held ‘constant or same’. The economists usually apply Ceteris Paribus in Law of Demand and Supply to provide an understanding to learners that there are several external factors that impact consumer demand and buying patterns. Similarly, there are supply side variables that could impact market demand, economic decisions and market equilibrium. In other words, the economists study how one variable could be affected by another if all other variables are kept constant. Market Economy system ...

Chapter 10

Question#1: Use Keynesian cross to explain why fiscal policy has a multiplied effect on national income. Answer: The equation for calculation of national income under Keynesian model is Y=C+I+G+(X-M). In this formula, the Y denotes national income, C denotes level of consumption, I denote level of investment done in the economy, G denotes government’s expenditure, X denotes imports, and M denotes imports of an economy. With the help of this formula, the governments drive fiscal policies for the economy. With the help of this equation, it has been said by Keynes himself that when the ...

Considering the losing market sales in domestic industry and in order to protect the domestic manufacturers, Indian Government imposed a ban on import on duty free flat panel TV’s. Prior to ban and additional import duty regulation by the Indian Government, leading TV manufacturers, Samsung, LG, Panasonic and Sony were running their production capacity to only 60-70% and were refraining from making additional investment for expanding their capacity courtesy to low demand from domestic consumers. The decreasing domestic demand was a result of underground TV market being run by grey marketers who were being benefitted from duty free import and ...

Equilibrium in the market is attained when the quantity offered by the suppliers equals the quantity demanded by the buyers. We define equilibrium as the price at which quantity demanded equals quantity supplied. Graphically, this is the point of intersection of the demand and the supply curve. This is shown in the figure below. P S P1

P0 E

P2 D

Q1d Q0 Q1s Q2d Q

In the above figure the demand and the supply curve intersects at the point E. This is the equilibrium point. The equilibrium price is P0 and the equilibrium quantity is Q0. At a price higher than this market ...

Section A: Monetary policy

For instance, according to the article, the Bank of Japan (BoJ) is the monetary authority that is responsible for regulating the monetary provision in Japan. The article presents the economic inertia in the Japanese economy. Due to this economic inertia, the Japanese Prime Minister, Shinzo Abe, has come up with an economic plan that has three parts in order to rescue the country from the stagnant economic situation. This move to trigger a growth in the Japanese has also been initiated by the Bank of Japan. The Bank of Japan has adopted expanding its plan of “quantitative easing” in increasing ...

The Keynesian economics school has invented the aggregate demand (AD) and aggregate supply (AS) model to explain the macroeconomic equilibrium in the economies. The model is based on two main macroeconomic variables those are the explanatory variables of AS and AD: 1) price level in the economy and 2) real output in the same economy. In this essay, I will explain what AS and AD includes, and how the economy works at the macroeconomic level.

Graph 1: AS and AD model in Graph

Aggregate supply (AS) includes the information of the total production level in an economy depending on the price level. In the short run, AS ...

The world has been migrating from the analogue era to the digital era for the last couple of years. In the digital era, electronics are very essential components and hence their demand has increased. The number of electronics manufacturers has consistently increased over the years, and the level of production has surpassed the growing demand. Lenovo has been affected by the situation and therefore the company needs to take keen note on the demand and supply concepts.

Price determination using demand and supply curves

The price of any product should be derived from the demand and supply curves. The place at which the two curves intersect ...

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A firm investing in production factors uses them to produce competitive products. Monetary value of the use of economic resources of the company for the production and sale of products or services is called the cost of production or cost of services . Cost of products (services) is a set of costs on a production and marketing costs associated with the provision of services . In cost reflects all costs incurred by labor and materials costs in the form of raw , material , fuel and energy resources , depreciation of fixed assets, wages. Cost ...

DD Curve: DD Curve is the summarized relationship between Exchange Rate and Ouput Level which shows all the combinations of output and the exchange rate for which the output market is in short run equilibrium i.e (aggregate demand= aggregate output) E2 The above figure represents upward sloping DD Curve explaining the effect of movement in exchange rate on output level when both Domestic Price Levels(P) and Foreign Price Levels(P*) are fixed. The figure represents the effect of depreciation of domestic currency on domestic output levels and related aggregate demand. Thus, when domestic currency depreciates ...

Question 1

What are the three major categories of revenues for the federal government? The different kinds of taxes imposed by the federal government allow it to raise trillions of dollars in tax revenues (Tax Policy Center, 2013). The trillion in dollar revenues raised by the federal government come from three major sources; individual income taxes, payroll taxes and corporate income taxes. Major sources of revenue accounts for 46 percent from individual income taxes, 34 percent from payroll taxes and 11 percent corporate income taxes (National Priorities, 2013a).

The three categories of revenues for the federal government are as follows;

- Individual Taxes Individual taxes are the most prominent category of ...

It has been proved by economic theory that perfect competition is the best effective structure to maximize society’s benefits (Consumer Surplus + Producer Surplus). In a perfect competition (price equals marginal cost, MC=P), when there are no entrance barriers and no producer is able to influence the pricing levels, the equilibrium point is on the intersection of the supply and demand curve. Monopolistic firms, however, are able to influence pricing levels, as they have no competitors and maintain high market share. The equilibrium point in monopolistic markets is on the intersection of marginal cost and marginal revenue curves (MR=MC). This ...

Economics deals with scientific study of how people allocate and use the scarce resources to meet their unlimited wants. It aims at putting to better use the resources which are always scarce. Scarcity and choice prompts individuals to forego some of their needs so as to meet the most urgent ones first. Therefore, there is an alternative a person must forego. The price of this alternative is the opportunity cost. Scarcity and choice are all about weighing benefits of alternatives that a person has. For example, a consumer may choose to build a residential house instead of buying a private car. This is because ...

The equilibrium price is determined by forces both demand and supply of a product. At the equilibrium point the quantity of tea supplied in the market is equal to quantity demanded. This means that customers will be able to get the quantity they need from the market while suppliers will sell all the quantity they supply in the market. The equilibrium price will therefore be shown by the intersection of supply and demand curve. At the equilibrium point the market clears ensuring satisfaction of customers and suppliers.

However, price of a packet of 500 grams of tea keeps on changing making ...