Writing Skills Wednesday (Evening)
Home Work for Practice
Muhammad Azmat Qazi
Date: January 27, 2016
Class: BBA-H (HMT-114)
1. This homework is intended for practice only.
Write down a topic sentence
- Markets lead to the most efficient allocation of
EXCEPT when there are market failures.
When someones actions affect the well being of
a bystander, and there is no compensation.
Application: International Trade
THE DETERMINANTS OF TRADE
Equilibrium Without Trade in Isolandia
Should Isolandia Trade?
Compare World Price with Domestic Price and
Determine weather Isolandia has a comparative
o World Price: The pri
Consumers Producers and Market Efficiency
Welfare economics: Study of how the allocation
of resources affects economic well-being.
* Market forces of supply and demand lead to
equilibrium point, which maximizes buyers and
sellers total welfare.
Interdependence & Gains of Trade
- We benefit from leaving in groups
(complement each other).
- Trade is not a zero-sum game (one wins,
other one loses).
- Example: Fish and Coconuts
- I am not good at fishing (32 fish
- 8 coconuts pe
The Costs of Taxation
How taxes affect welfare?
Compare the cost to buyers and sellers vs. the
benefit to the government (tax revenue).
THE DEADWEIGHT LOSS OF TAXATION
- Impact of tax is the same whether the tax is
levied on producers or consume
Elasticity: (magnitude of change) how
responsive is the quantity supplies/demanded to
changes in price.
ELASTICITY OF DEMAND
How much Qd responds to a change in the price.
PED: |% in Qd / % in Price|
*Calculate using the midpoint meth
Supply, Demand and Government Policies
Governments can intervene in the market
(regulate or tax); will affect the equilibrium.
Can result in unintended consequences.
-Not legal to raise the price above that level.
The Market Forces of Supply and
A group of buyers and sellers of a particular
good or service.
Ex: Farmers market, financial market.
Many buyers, many sellers, enough that no
body has an impact on the overall mar
PRINCIPLES OF ECONOMICS
Brown University, Fall 2015
Professor Rachel Friedberg
Robinson Hall 216
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