Standard M12 Supply and Demand Blog 5

Microeconomics

1.  Using  the typical 'Facebook' lingo, write a definition for Microeconomics and then provide a standard English translation for your 'Facebook' definition. Is a branch that studies how the individual parts of the economy, the household and the firms make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold. Microeconomics examines how these decisions and behaviours affect the supply and demand for goods and services.

Role of Money -M11

1.  Using what you learned about the three functions of money, explain how 'play money' differs from 'real' money? By Using what we learned about the three functions of money, Real money is a medium of exchange, unit of account, and a store of value. Play money doesn't has any of these characteristics.




2.  Money has no actual value other than the value we attach to it. The barter system would still be practiced today if the participants did not agree to set a value on a piece of printed paper that represented the value of the goods and services they had to offer.  What would you accept in place of money, if someone wanted to 'buy' your most prized material possession? I would accept anything they offer me as long as it value.

Circular Flow Model - M11

1.  What does a circular flow model tell us? What the circular flow model tells us is that three basic elements of the economy will work and interact together to ensure that our needs and wants are provided for.
 

2.  What is the role of households in the three sector circular flow model? Households provide businesses with payments in exchange for jobs and goods and services. They also pay taxes to the government and hold the four factors of production.





3.  What is the role of businesses in the three sector circular flow model? Businesses provide income, goods, and services to households. They also pay taxes, supply goods and services to the government.

4.  What is the role of government in the three sector circular flow model? The government supplies services to houses and income. They also give services and payments to businesses.



5.  What role do households have in the factors or resource market (inputs)? They household factors are the four factors of production.

Title:  Law of Demand and Law of Supply - M12

1. For each event described below, explain what happens to either the demand or supply curve. (increase/decrease, Shifts left or right?)

(a) What happens to the demand for chicken if concerns about mad cow disease lead to widespread euthanizing of  cows on U.S. cattle farms? The demand for chicken rises because it is a good substitute for beef and cows are becoming less and less.




(b) What happens to the supply of orange juice if Florida is hit with very severe weather? The supply of oranges will decrease and there will be no orange to make no orange because of the severe weather.



(c) In the market for coffee, severe global weather systems destroy 30% of the coffee bean crop. If the severe global weather destroy 30% of the coffee bean crop then the supply of the coffee will decrease to a low rate and there will be less coffee to sell.



(d) In the market for cereal, if the price of cardboard material used to package cereal increases. The supply will decrease unless the consumers are willing to pay more money . 




2. For each part below,  EXPLAIN what happens to equilibrium quantity and price (increase or decrease?).

a)  In the market for doughnuts, if they were found to be a major contributor to high cholesterol in adults. equilibrium quantity Demand and supply will drop resulting in a new equilibrium quantity. 



b)  In the market for doughnuts, if widespread unemployment continues. A shift in supply to the left because there will be less doughnuts that will be produced and the price will drop on them.



c) In the market for doughnuts, if Krispy Kreme introduces a new whole wheat 'low-calorie' doughnut. The demand curve and supply curve will shift to the right resulting in a higher equilibrium quantity price. 



3.  What are two factors that can change the quantity demanded?  Provide an example for each. 1. A change in consumers in come: an increase (decrease) in income shifts the demand curve to the right (left). 2. Population change: an increase (decrease) in population shifts the demand curve to the right (left).



4.  What are two factors that can change the quantity supplied.  Provide an example for each. A change in the inputs: an increase (decrease) in the input. The number's of buyers goes up or down and more suppliers enter the market.






Reflection:  What are two questions that you have about standards M11 and M12.
1) How supply shocks affect supply and demand curves.
2)