Economic excercise II

  CAPTHER 4:THE MARKET FORCES OF SUPPLY  AND DEMAND
     What is market
 A market is group of buyers  and sellers of a particular good or service . the buyers as a group determine the  demand for the product, and the sellers as group determine the supply of the product.
  Markets take many forms. Sometimes markets are highly organized ,such as the markets for  many  agricultural commodietes .in these markets,buyers and sellers meet at a specife time and place where an auctioneer help  set prices and arrange sales . more often ,markets are less organized.for example consider the  market for ice cream in aparticuler town.buyers of ice cream do not meet to gether atany on time. The sallers of ice cream  are in different locations  and offer somewhat different products. There is no auchtioneeer calling out the  price of ice cream each sellers posts a  price  for an ice-cream cone,and each  store,nonetheless,these  consumers and producers  of ice cream are closely  connected.
Chapther 5: ELASTICITY AND THIS APPLYCATION
     The law of demand states  that a fall in the price of good raises the quantity demanded.the price elasticity of demand  measures howes I the  mach the quantity demanded respons to a change  in price.demand a the for good is ssaid to be elastic if the quantity demanded  responds substantially to changes in the price.demand is said to be  enelastic if the quantity  demanded responds  only slightly to changes in the price.
     The price elasticity of demand for any good measures how willing consument are to move away  from the good as it price rises.thus the  elasticity  reflects  the many economic ,social,and psycholocigal  forces that shape  consumer tastes.
1.Availability of close substitutes
2.Necessitives   versus luxuries
3.Definition of the market
4.Time horizon 
Chapther 6: SUPPLY,DEMAND,AND GOVERNMENT POLICIES
    When the government,moved by the  complaints and campaign contributions of the ice-cream eaters imposes a  price ceiling on the market for ice cream two autcomes are possible .in panel (a)of figure 1, the government imposes a price ceiling of $4  per one, in this case ,because the price that balances supply and demand ($3) is bellow the ceiling ,the price the ceiling is not binding .market forces naturally move that economy to the equilibrium,and the price  ceiling has to effect on the price or the quantity sold.    Panel (b)  of figure 1 shows the other ,more interesting ,possibility .in this case ,the government  imposes a price ceiling of $2 per cone,because the equqlibrium price of $3 is above  the price ceiling   is a binding  constrain on the market the forces of supply and demand tend to move the price.


Chapther 7:CONSUMERS,PRODUCERS,AND THE EFFICIENCY OF MARKET 
  This chapther ,introduced the basic  tools of welfare economics-consumer and producer surplus-and used them to  evaluate the efficiency  of free markets we showed that be  fores of supply  and demend allocate  resources efficiency ,that is even  tough each buyer and seller  and a market  is corcenned only abaout  his or her  own wlfare ,they are to gether  let by an invisible  hand to an  equilibrium that  maximizes the total benefits to buyer and sellers .
    A word of warning in is order. To conclude that markets are efficient, we mae several  asummtions about how market work . when these  asummtions  do not  hold our  conclusion that the market quilibirium is efficient  my no longer be true.
   first ,our analysis assumed that  that markets are perfectly  competitive, in the word however  competitions is  sometimes far  from perfect.
   Second ,ouranalysis assumed  that a outcome  in a market metters only to the buyersand the sallers in that market.
   Market power  and externalities are example of a general  phenomenon called market failure-the inability  of some  unregulated markets to  allocate  resouerces  efficiently.

CHAPTHER 8: APPLICATION;THE COST OF TEXATION
     Now let`s of welfare economics  to measure the use the,sellers, gains and loses  from a taxt a good.to do this, we  must take into account  how the taxt  affects buyers  and the government.the benefit received by  and a market  is measured by  consumer surplus- the amount buyers are  willing  to pay for  the good minues the amount they actually  pay for it.the benefit received by  sellers in a market  is  meansured  by producer surplus-the amount  sellers receive for the good minus  thir costs.
CHAPTHER 9: APLICATION:INTERNATIONAL TRADE
     Consider the market for steel.the steel market is well  suited do examining thegains and lossesfrom international trade.steel is made in many  countries around the word,and there is much word trade in steel. Mereover ,the steel market is one in which policymarket ofen consider (and sometimes inplement) trade  restrictions to protect  domestic steel  producers from foreign  competitors.we examine  hare the steel market in the imaginary country of isoland
CHAPTHER 10:EXTERNALITIES
  The market failures  examined in this chapther fall under the general cathegory called externalities  an externality  aries when a person engags in  an activity  that influences  the well-being of a  bystander and yet neither  pays nor receive  any compensation for that effect.if the impact on the bystander is ardverse,it is called a negative externality ; if it is beneficiel , it iscalled a negative extenality.in the prensentace  of extenalities society`s interst in a market outcome extends  beyond the well-bring  of bystanders  f buyers and  sellers  who participatein the  market:it also in cludes the ell-bring who are affected indirectly.because buyers and sellers  neglect the external effects  of their actions  when deciding how much to demand  or supplythe market  equilibrium fails to  maximine the total  benefit to society as a whole.will emit too much pollutions unless the government prevents or discourages them from doing so.
CHAPTHER 11: PUBLIC GOODS COMMON RESOURCES
     The  oetizens smallown U.S.A.,like seeing fireworks  on the fourth of july. Each of the town`s 500 residents places a $1,000 Of benfits exceed the $1,000 of sosts it is efficient for smallwonn  resident to have a fireworks display on the fourth of july.
    Would the private mrket produce the efficient outcome? Probably not.imagin that Ellen ,a smallown  entreprencur, decided to put on a fireworks disply. Ellen would surely have trouble selling  tickets  to the event because has potential  customers would quickly  figure out that  the couldsee the  fireworks even without a ticket. Because fireworks as not excludable, people have an incentive to bee freriders.a free riders is person who receives the benefit of the good but does not pay for it . because people would have an incentive to be free riders  rather that  ticket buyers, the market would  fail to provide the efficient outcome.
      One way to view this market  failure is that  it aries  because of an externalilty. If  Ellen  makes puts on the  fireworks display , see confers an external benefit on those who see the display  without paying for it. When even tought the  fireworks display is  socially desirable,it is not take the external benefits into account. Privately  rational but socially inefficient  disicion not to put on the display.
CHAPTHER 12: THE DESIGN  OF THE TAX SYSTEM
    In this chapther, we build on these lessons to  discus the design  of a tax system. We begin with  a financial overview of the U.S government, when thinking about the tax system it is useful to know some basic facts about how the U.S.governmet raises and spends money. we then consider the  fundamental  principles of taxation. most people agree that taxes should imposes as small a  cost on society as possible and that the burden of taxes should be  distributed fairly. That is, the tax system should be both efficient and equality.as  we will see, however  stating  these goalds is easier that achieving them.
CHAPTHER 13: THE COSTS OF PRODUCTION
   We begin our discuusstion of costs at hugry Helen`s cookie Factory. Helen the owner of the firms. Buys flour,sugar,chocolate, chips,and other cookie  igeredients. Shealso buys  the mixers and ovens andhires workers torun this equipment. She than sells  the cookiers to comsumers .by examining some of the issues that Helen faces  in the bussines, we can lern some lessons about costs that apply to all

firms in the economy.
   What is a firms  profit? The amount that  the fim receiver for tha sale of its out(cookies) is called its
Total revenue.the amount that the firms puys to buys input (flour,sugar,workers,ovens and so forth) it
Called ist total costs.that is,
                                   Profit=total revenue - tatal costs
 CHAPTHER14: FIRMS IN COMPETTIVE MARKETS
    We examine  the behavior of competitive firms,such a your local gas station. You may  racall that a market is competitive  if each buyers and sellers is
Smell compared to the size  of market and  therefore has little  abilityto influence market prices. By contast , if a  fims and influence  the market price of the good it sells, it is  said to have market power latter in the book, we examine  the behafior of firms with market power,such as your local water company. our analysis  of coperitive firms I this chapther will  shad light on the decisionsthe liebehid the supplay curve in a comperitiive market.
CHAPTHER 15: MONOPOLY
    A we examine  the prodiction and pricing decisions of monopolies , we also con considers the implications  of monopoly fo society as a whole .monopoly firms, like competitive firms aim to maximize profit. But  this goal has very different ramificatios  for comperititve and  monopoly firms . in competitive  markets,the  buying decisions of self-interesed consumers and the selling decisions of self –imtersed  producers are unwittingly guided by competition  the out comen a market with a monopoly is often not in the best interest of society.
CAPTHER 16: OLIGOPOLY
   Figure 1  summarizes  the four types of market structure. The firs question to ask about any market is how many firmst there are. If there is only one firm, the market is a monopoly  if there are only a fewirms, tha market is an olipogoly. If there are many firms ,we need to task another question: do the firms  sell identical or differentiated producs? If many firms sell differentiated products , the market is monopolistically competitive. If many firms  sell idencital  , the market is perfectly  competitive , economists define the various products  we can examine oligopoly.
CHAPTHER 17:MONOLISTIC COMPETITION
   One the other hand,the markets for books seems monopolistic. Because each book is unique, publishers have some latitude in choosing what price the charge. The sellers in this market are price makers rather that price takers. And indeed , the price of books greatly exceeds marginal costs. The price of a typical hardcover,nover ,for istance , is about $25, whereas the cost of printing one additional copy of the novel is less that $5. This market structure is called monpopolistic competition. Monopolistic competition describes a market with the following attributes ;
 1.many sellers: the are many firms competing for the some group of customers.
 2. product differentiation:each firm produced a producers  that is at least slightly   different from those                  of  otherfirms.
 3.free entry: firms  can enter on (or exit)  the market restriction.
A moment`s thought reveals a long list of markets with these attributers;books,CDs,movies,computer ,games,restaurants, piano lessons, cookies ,furniture and so on. Monopolistic competition, like olipogoly  is a market market structure that lies  between the extreme cases of competition and mon
CHAPTHER 18: THE MARKETS OF THE FACTORS OF PRODUCTION
    The make it`s hiring decision, the firms must consider law the size of it work force affects the amount of output produce. In other words, it mustconsider how  the number of apple pickers affects the   quantity  apples is can harverst  and sell.table 1 gives a numerical examplein the first column is the number of workers. In the second column  is the quantity of aplles the workers harvest each week.
       These to columns  of number describe  the firm`s ability to produce . recall that economists use the term production function to describe the relationship  between the quantity of the input used in production and the quantity of output from production . here the “input” is the apple pickers and the “output”  is the apples,the other inputs- the trees  themselves,the land, the firms trucks and tractors and so on-are held fixed for now. This firm`s  production function shows that if the firms hires 1 worker  will pick 100 bushels of apples per week. If them firms hires 2 workers, the 2 workers together will pick180 bushels per week and so on.
CHAPTHER 19: EARNINGS AND DISCRIMINATION
  Ho important are ability,erffort, and change in determining wages?  It is heard to say because ability, effort, and change are difficult to measure. But indirect evidence suggest that they are very important. When labor economists  study wages, th relate a worker`s wage to those  variables that can be measured , such as  years of scolding, years of experience, age and job characteristics. Although all of these  measured variables affect a worker`s wage as theory predicts  the acound for less that halb of  thevariation in wages and our economy. Because so much of  the variation in wages is left unexplained, omitted, variables, including ability,effourt,and change, must play and important role.


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