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Instructor:
Sireen Abdelqader
Student Name:
Student ID #
Course Name
Course Code
Section
Maryam Al-Ghawi
201001030
Introduction to microeconomics
ECON
202
CRN: 11200
Assignment Name Assignment #1
Instructions Complete the information required and
staple this Identifying Page to all out-ofclass-assignments.
Chapter 1
Concepts:
Fundamental concepts:
Scarcity and efficiency
Scarcity: goods are limited so it’s not available to everyone.
Efficiency: using scarcity resources to produce more goods and make them the best.
Free goods vs. economic goods
Free goods: price of free good is zero that we don’t have to buy any thing
Economic goods: goods which are useful for the society but its scarcity and people need effort
for it.
Macroeconomics and microeconomics
Macroeconomics: economics of higher goods taken by governments.
Microeconomics: goods or something has an individual price. Such as every land has a special
price.
Normative vs. positive economics
Normative economics: make the value more than what is it.
Positive economics: it’s just about the value like the doctors earns more than teachers.
Fallacy of composition, post hoc fallacy ‘keeps other things constant”
Fallacy of composition: if something happen in the part of a system it will be happen for the
whole. But what’s happen in the whole doesn’t change parts.
Post hoc fallacy ‘keeps other things constant”: something happen before another that’s caused by
the first event.
Key problems of economics of organization:
What, how, and for whom
What: what commodities are produce? People should know the new product if they want to buy
it.
How: how are good produced? Before buy any product the people must see the product is good
or not.
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For whom: for whom are good produced? The entire product which is produced the society
decide for whom this product.
Alternative economic system:
Command economic: the government put the prices and supply for the market then provided the
goods
Market economic: the prices and supply put by citizens and businesses.
Laissez faire: the goods of price put by the ownership.
Mixed economic: this price put by the government and centralized planning and private
economic.
Choice among production possibilities:
Inputs and outputs
Inputs: use commodities to produce goods
Outputs: goods which is making by some productions
Productions possibility frontier (ppf): find the higher quantity of goods to produce goods
efficiency.
Productive efficiency: we can produce from outputs some inputs which less good than the
outputs.
Inefficiency: use the resources to produces goods aren’t good.
Opportunity cost: taking something will instead by another thing that we pay money for studying
and take learning instead money.
Questions:
*According to the fallacy of composition if people didn’t buy any production from Apple
Macintosh, what will happen for the market? Also what will happen for the people if the
market doesn’t sell anything? Explain your answer.
Fallacy of composition: if something happen in the part of a system it will be happen for the
whole. But what’s happen in the whole doesn’t change parts. If the people don’t buy from
this product the company well be off but if the company don’t sell for people, the people may
buy another product.
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* Land without the governments. What’s the kind of economic system?
It’s a Laissez- faire economy.
Chapter 2
Concepts:
The market mechanism:
Market: through market buyer and seller can exchange the goods and price.
Market mechanism: exchanging the money from buyer and goods with services from the seller.
Markets for goods: going to market to see the product with the price.
Market for factors of productions: if the goods finish the price will be on interest for the seller.
Prices as signals: it’s a signal for the consumer to alert to reduce the demand.
Market equilibrium: at same time some people are selling while others are buying.
Perfect competition: seller and buyer in auction and the price don’t change.
Imperfect competition: seller and buyer can change the price of goods.
Adam smith’s invisible hand doctrine: it’s a market which seller and buyer can exchange the
goods and everyone try for himself.
Features of a modern economy:
Specialization and division of labor:
Specialized of labor: divide the works in small group. Everyone can provide a specific task.
Division of labor: cooperative group in order to increase the productions
Money
Factors of productions (land, labor, capital)
Land: highly specialized.
Labor: Division
Capital: highly specialized.
Capital, private property, and property right
Capital: highly specialized.
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Private property: goods which has a special features.
Property right: right for ownership.
Government’s economics role:
Efficiency, equity, stability
Efficiency: using scarcity resources to produce more goods and make them the best.
Equity: the market does not produce the fair income; it may produce inequalities in income
Stability: when the income be constant.
Inefficiencies: monopoly and externalities
Monopoly: when the people own the particular commodity, he can provide goods and services.
Externalities: a side which affect on the industrial and the cost are benefits.
Macroeconomics policies:
Fiscal and monetary policies: solve the power of the tax.
Stabilization and grows: it’s under Fiscal and monetary.
Questions:
*Classify the productions (land, labor, capital) to Specialization or division of labor?
Land: highly specialized.
Labor: Division
Capital: highly specialized.
*Write examples of public goods?
The sand is public good that everyone can use it.
Chapter 3
Concepts:
Supply and demand analysis:
Supply analysis: good that show by seller with a price.
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Analysis: it’s a specific time that buyer can buy goods with less of price.
Demand schedule or curve, DD: the relationship between price and quantity of goods.
Law of downward –sloping demand: the relationship between price and quantity. If the price
increases the quantity will decrease. Also, when the price decrease the quantity will increase.
Influences affecting demand curve: if the demand increase the price will decrease. Then it will
change in incomes, size of market, and price for the seller.
Supply schedule or curve, SS: the relationship between price and quantity that if price will
increase the quantity will decrease.
Influence effecting supply curve: change in the supply curve that changed the goods and services
for the buyer.
Equilibrium price and quantity: quantity of supply and demand is equal.
Shift of supply and demand curve: supply of the quantity and price decreased. The demand of
quantity and price increased.
All other held constant: this goods don’t change because the inputs and outputs still constant.
The inputs cause the outputs and outputs followed by inputs.
Rational by price: put a price that we expect that asset the price.
Question:
*Explain what will happen for the price and quantity if the demand rises and falls?
Demand rises: the price and quantity will increase.
Demand falls: the price and quantity will decrease
*What will happen for the people when the price of goods will rises?
The income effect and the people will feel like a poor. Also, the will substitute the product.
Chapter 4
Concepts:
Price of elasticity of demand: it’s a percentage change in quantity demanded divided by the
percentage change in price.
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Price of elasticity of supply: it’s a percentage change in quantity supplied divided by the
percentage change in price.
Elastic: when the supply and demand change the price, goods and service will change.
Inelastic: when the supply and demand change the price, goods and services still an affected.
Unit-elastic demand: it’s a kind of elastic when price change, the quantity will change.
Ed=%change in Q/%change in P: price elastic of demand is percentage change in quantity
divided in the percentage change in price.
Determinants of elasticity: the demand will increase because the price increased and people can
buy anything without matter about price.
Total revenue: P * Q= price * quantity.
Relationship of elasticity and revenue change: when the price change in the market, the elastic
measure how much it change. If the price decreases the revenue will decrease.
Incidence of a tax: a tax is divided between buyers and sellers.
Distortions from price control: it’s the higher and lower price to change the goods.
Question:
*Find the total revenue if someone buy 20 units at $4 each.
Total revenue= price*quantity=20*4=$80
*What will happen fir the revenue when the value of demand elastic equal to one?
Revenues unchanged when the price decrease.
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