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Introduction to Economics (PDF)

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Added on  2021-04-17

Introduction to Economics (PDF)

   Added on 2021-04-17

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Running head: INTRODUCTION TO ECONOMICSIntroduction to economicsName of the universityName of the studentAuthor Note
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1INTRODUCTION TO ECONOMICSTable of ContentsAnswer 1:.........................................................................................................................................2Answer 2:.........................................................................................................................................4Answer 3:.........................................................................................................................................8Reference:......................................................................................................................................13
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2INTRODUCTION TO ECONOMICSAnswer 1:According to the basic concept of microeconomics, supply means the total amount ofproduct or services that the suppliers or sellers are willing to provide in the market at a specificprice in a particular time. The amount of supply of a product varies positively with its price,which means supply increases when per unit price of that product increases (Kolmar andHoffmann 2018). Moreover, the supply curve can be drawn from supply schedule of a firm. Thesupply schedule represents the relation between different price level and their correspondingamount of supply. Figure 1: Supply curve of a product or serviceSource: (created by author)
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3INTRODUCTION TO ECONOMICSIt can be stated from the above diagram that supply curve is upward rising with positiveslope. As, price of a commodity increases from P0 to P1, the quantity supplied of a firm alsoincreases from Q0 to Q1. Hence, the above curve has successfully represented a positiverelationship between price and quantity supplied of any product or service. .In general, every seller knows that price can influence the supply of a product directly.However, it is sometimes become difficult to analyse other factors that also can influence supplyof a product directly or indirectly (Fujii, Okamoto, Kagawa and Managi 2017). In case of sorbet,supply can be influenced by changing its input costs, technology, labour productivity andnumber of other sellers that are also supplying same type of products. Input costs of sorbet: To produce and sell sorbets, a producer needs labourers, machineries, rawmaterials and factory. The producer may supply less amount of sorbet at the given price if inputcosts of production vary. Those input costs include wage rate of labourers, price of machine andraw materials and rent of factory increase. The opposite situation can occur if the input costsdecrease (Paravisini, Rappoport, Schnabl and Wolfenzon 2014). This affect can be describedwith the help of figure 2, which is drawn below.
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