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Economics: Concepts and Applications

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Added on  2023-06-10

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This article covers various concepts and applications of economics, including perfect competition, monopoly, rent control, price elasticity, monetary policy, and fiscal policy. It also includes diagrams and equations to explain the concepts. The article is relevant for students studying economics in college or university.

Economics: Concepts and Applications

   Added on 2023-06-10

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Running head: ECONOMICS
Economics
Name of the student
Name of the university
Author Note
Economics: Concepts and Applications_1
1ECONOMICS
Table of Contents
Part 1:.........................................................................................................................................2
Part 2:.........................................................................................................................................3
Answer 1:...............................................................................................................................3
Answer 2:...............................................................................................................................4
Answer 3:...............................................................................................................................6
Answer 4:...............................................................................................................................7
Answer 5:...............................................................................................................................7
Reference and Bibliography:......................................................................................................9
Economics: Concepts and Applications_2
2ECONOMICS
Part 1:
1) If the competitive price is insufficient to cover average total costs, firms should:
A) Definitely shut down as soon as possible
2) A monopoly is a seller of a product:
A) Without a close substitute
3)
4) In the long run, a perfectly competitive market will:
A) Produce a quantity of output where ATC is at its lowest level.
5) In figure 1, at price P1, a profit maximising firm would produce:
B) Zero output
6) Suppose that you get tired of taking care of your lawn and shrubs, so you hire a
professional gardener. As a result, GDP will:
A) Rise
7) An expansionary money policy in Australia is most likely to:
C) Appreciate the value of the dollar and increase Australian net export.
8) With respect to statistics on the labour market, we can say that:
A) The labour force is the sum of the employed and unemployed.
9) Refer to the Table above. Using 2013 as the base year, for 2014:
C) Real GDP is $880.
Economics: Concepts and Applications_3
3ECONOMICS
P1
Pm
Q1Q3 Q2
S
D
Quantity of rented property
Rented charge
Maximum rent
Part 2:
Answer 1:
Figure 1: The effects of rent control
Source: (created by author)
Figure 1 above has represented the effects of rent control or rent ceiling compared
with the free-market mechanism. Under the free-market condition, rent is P1 and the
corresponding quantity of rented property is Q1. However, after applying rent ceiling, market
price is become Pm and corresponding quantity of rented property is Q3 Q2. Hence, the
property market can experience excess demand for property.
As rent ceiling is imposed below the actual market price, buyers intend to buy more
property and consequently, demand increases (Tu, de Haan and Boelhouwer 2017). However,
comparatively lower prices reduce the returns to property owners for which they can decrease
Economics: Concepts and Applications_4

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