Essays on Microeconomics Assignment

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365875 microeconomicsASSIGNMENT QUESTIONS1. How does the principal of opportunity cost apply to you attending college? Let’s say you decide to save some expenses by not buying the textbook and study guide for this unit what might be the opportunity cost of that decision? (1 mark) Basically, opportunity cost is the cost of not choosing an alternative. Based on the 2 alternative choices below, the opportunity cost is alternative 2, buying the textbook and study guide for this unit. Alternative 1 Save expenses by not buying the textbook and study guide for this unit. Alternative 2 buying the textbook and study guide for this unit. 2.

For each of the following, draw a diagram that illustrates the effect on the market for cars. Indicate in each case the impact on equilibrium price and quantity (West 2003;5)a) The price of petrol, a complementary product, keeps risinghttp: //www. netmba. com/econ/micro/supply-demand/The increase in price of petrol cause a shift in the equilibrium price from D1 vs S intersection to Do vs S intersection. b) There is an increase in the price of compulsory car insuranceThe increase in the price of compulsory car insurance will cause a shift in the equilibrium price from the D1 vs S intersection to the Do vs S intersection. c) A technological innovation reduces the cost of productionhttp: //www. netmba. com/econ/micro/supply-demand/A technology innovation reduces the cost of production causes a shift in the equilibrium price from Do vs S intersection to D1 vs S intersection. http: //www. netmba. com/econ/micro/supply-demand/d) A local government imposes a green tax on car ownership (2 marks)http: //www. netmba. com/econ/micro/supply-demand/ A local government imposition of a green tax on car ownership causes the equilibrium price from D1 vs S intersection to Do vs S intersection (Samuelson, 1973;125). 3.

The supply of oil will never actually run out. Why? (1 mark)The supply of oil will never actually run out because there are alternative sources of energy. Some environment friendly cars will use solar panels (sun energy) to run their cars. Some electricity generating companies will use atomic energy to generate electricity. Other electric companies are shifting from fossil oil to waterfalls (hydroelectric power) to generate home and office electricity. The shift in fuel demand from oil to other sources will prevent the supply of oil from actually running out (Samuelson, 1973;25).

4. Under a situation of rent control on units, flats and apartment who actually wins and who loses? What are the long term implications of having rent control? (2 marks)Under a situation of rent control on units, flats, and apartments, the actual winners are the tenants of the units. They are able an amount equal to the difference between the maximum rental payment allowed by the rent control law and the rent payment under the situation where the rent control on units, flats, and apartments is not implemented.

On the other hand. the actual losers are the tenants of the units. They are not able to collect an amount equal to the difference between the maximum rental payment allowed by the rent control law and the rent payment under the situation where the rent control on units, flats, and apartments is not implemented (Albelda et al, 1999;138).

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