Answer to Question #165283 in Microeconomics for Sujay Alapati

Question

1. Explain how opportunity cost’s rate of change changes within the context of the Production Possibility Frontier (Explain thoroughly with words and graphs).
2. Explain the differences between TOTAL UTILITY and TOTAL COSTS vs MARGINAL UTILITY and MARGINAL COSTS? (Explain thoroughly with words and graphs).
3. Explain the relationship between firms and consumers and how resources are allocated in the economy? (Explain thoroughly with words and graphs).
4. Explain how government intervention is “good” and when it is “bad” (Explain thoroughly with words and graphs).
5. Models, theories and concepts organize our thinking. List and explain possible flaws in our economic framework. (Explain thoroughly with words and graphs).
6. There are impacts to trade in the economy and therefore impacts “gains from trade.” How will this be remedied in the future? Please use economics to reason through your answer.

Answer 1

(1) The decision to increase the production of an extra Marginal unit of one good or service leads to a decrease in the protection of another good.

(2) Total cost refer to satisfaction gained from consuming a good or a service while marginal cost is the satisfaction received from consuming an additional quantity of a good or service. Total cost is the sum of all cost of producing a certain level output while marginal cost is the change in total cost when quantity produced changes by one unit.

(3) Firms produce goods and services consumed by consumers. In free market economy resources are allocated through interaction of free and self-directed market.

(4) Government intervention is good when it is controlling prices in the market so that producers do not humiliate consumers by overpricing the goods. It is also bad when it's taxing too much on producers making them to get little or no profit.

(5) Flows of the economy include ; low income status and unemployment .This state make people live below poverty line and also depend on government assistance.

(6) The remedy include giving room for domestic industry to grow and raising imports.