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Economics Report

It means that this year, though the demand has not changed, the organizer only sold 34,000 tickets for $600 each. Question: Was $500 the equilibrium market price last year? According to the given information, I think there are two possible situations: Situations . $500 was the equilibrium price. Since the seats in the coliseum cannot be changed, so that the supply of the tickets is perfectly inelastic. Thus the supply curve shall be vertical. Here is the demand curve and supply curve of these two years. Last year, $500 was the equilibrium price, the market was at the equilibrium point.

Besides, 36,000 tickets was the equilibrium quantity. This year, the price was raised from $500 to $600, which was above the equilibrium price, so that fewer people would like to buy the tickets at this price. Then a market surplus appeared. Only 34,000 tickets were sold. Situations. $500 was not the equilibrium price. Last year, since all the tickets were sold out, so $500 wasn’t above the equilibrium price, and also it is not the equilibrium price. Thus last year, $500 was below the equilibrium price. The following diagrams are the demand curve and supply curve of these two years in

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Economics Report By Killable was larger than quantity supplied. So the market was not at the equilibrium point. A shortage appeared. This year, the ticket price was raised from $500 to $600. Since there were still 2,000 tickets unsold, so quantity demanded was less than quantity supplied. That is to say, $600 was above the equilibrium price, and there came a surplus in the market. Conclusion: We cannot make sure whether $500 was the equilibrium price last year according to the given information. TOPIC 4. 1 When the demand for a firm’s output increases, the firm can have a number of options to increase quantities supplied to the market: a).

Begin a second production shift by hiring more workers and employing more raw materials. B). Build a second production line in the empty space of the existing manufacturing plant. C). Deplete inventories of finished products. D). Build a second manufacturing plant. I have ranked the given options like this: c, a, b, d (from the easiest to the hardest). Below is my explanation: There are two methods to determine how easily the firm can implement the option. The first one is by Judging how many inputs will need to be changed if the option is adopted. The more input need to be changed, the more difficult it is to implement the option.

The second one is by deciding how much will the option cost. The more the option costs, the more difficult it is to implement it. In order to be aware of whether the options are short-run or long-run, we need to know if there is any fixed factor during the implementation of the option. If there are fixed factors, then the option is short-run. If not, then it is long-run Now let’s have a look to the options from a to d. A). Begin a second production shift by hiring more workers and employing more raw trials. Analysis: In order to implement option a), the owner of the factory needs to hire more workers and employ more raw materials.

While he doesn’t need to build new manufacturing plants and buy more machines. B). Build a second production line in the empty space of the existing manufacturing plant. Analysis: In order to achieve option b), the owner of the factory needs to buy new machines. C). Deplete inventories of finished products. Analysis: Since the owner of the factory only needs to sell out his inventories of finished products, so he doesn’t need to change any input. Analysis: In order to implement this option, the owner of the factory needs to build a new manufacturing plant.

It means he needs to buy land and new machines, as well as employ more labor and raw materials. So there is no fixed factor. Option d is long- run. Below is a table that shows the conclusion of my analyses: Option Variable Factors Fixed factors Short-run or Long-run labor, raw materials manufacturing plant, machines short-run b machines, labor and raw materials manufacturing plant manufacturing plant, machines, labor and raw materials long-run According to the first method I mentioned, the more changing input the option involves, the more difficult it is to implement the option.

So the ranking of the options should be: c, a, b, d. (from the easiest to the hardest). According to the second method, it will be more difficult to implement the option if it costs more. So the ranking of the options should still be: c, a, b, d. (from the easiest to the hardest). In conclusion, the ranking of the options should be: c, a, b, d. (from the easiest to the (949 words)

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