Significance of resource pricing and factors determining the resource demand which is different from the factors that determine product demand.

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Answer 1

Question

Chapter 16, Problem 1DQ

To determine

Significance of resource pricing and factors determining the resource demand which is different from the factors that determine product demand.

Expert Solution & Answer

Explanation of Solution

Households own the scarce resources which is their source of income. The resource pricing determines the income of households as firms acquire economic resources and pay as wage, rent, interest and profit to the household for the supply of resources. Resource pricing are the costs for the firm. Firms always desire to minimize the cost and maximize the profit. This in turn, would encourage the firms to efficiently use the scarce resource. Resource pricing helps in determining the allocation of resources in industries and firms.

The demand for products is determined by the income and tastes, whereas the demand for resources is passive based on demand of product that requires particular resources. The demand of resources depends on the demand of product. Unlike product, resources are less mobile. The demand of product is determined by geographic availability of resources. Thus, resources that demand geographically vary affecting the demand of products.

Since the demand for resources depends on the demand for goods and services, it is a derived demand. If there is no demand for goods, then there will no demand for resource too. Also, the demand for resource is determined by the productivity and its price.

If the resource price is low, then the cost of production will be low causing to increase the demand for resources and vice versa. Thus, the demand curve for resource slopes in the downward direction due to the law of diminishing returns.

Economics Concept Introduction

Concept introduction:

Resource pricing: Resource price refers to the pricing of natural and scarce resource for the optimum use.

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Exercise 6 Imagine that you head production of a multinational food processing company. The ongoing uncer- tainty about costs means that you are unsure of the future cost of one of your inputs, x2. Your firm's production function is y = f(x1, x2) = x²x²² The output price p is 1000, x1 = 27, and wx₁ = 60. 1. Suppose the current input price is Wx2 = 50. Solve for the optimal choice of x2. 2. Now suppose that the probability the input price remains 50 is 0.65 and the probability that Wx2 60 is 0.35. Solve for the optimal choice of x2. Round down to the nearest integer. = 3. Finally, suppose the costs do actually rise, i.e., Wx2 = 60. Calculate the difference in profit from the uncertainty in (2) vs. the certainty in (1).

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Answer 2

Question

Chapter 16, Problem 1DQ

To determine

Significance of resource pricing and factors determining the resource demand which is different from the factors that determine product demand.

Expert Solution & Answer

Explanation of Solution

Households own the scarce resources which is their source of income. The resource pricing determines the income of households as firms acquire economic resources and pay as wage, rent, interest and profit to the household for the supply of resources. Resource pricing are the costs for the firm. Firms always desire to minimize the cost and maximize the profit. This in turn, would encourage the firms to efficiently use the scarce resource. Resource pricing helps in determining the allocation of resources in industries and firms.

The demand for products is determined by the income and tastes, whereas the demand for resources is passive based on demand of product that requires particular resources. The demand of resources depends on the demand of product. Unlike product, resources are less mobile. The demand of product is determined by geographic availability of resources. Thus, resources that demand geographically vary affecting the demand of products.

Since the demand for resources depends on the demand for goods and services, it is a derived demand. If there is no demand for goods, then there will no demand for resource too. Also, the demand for resource is determined by the productivity and its price.

If the resource price is low, then the cost of production will be low causing to increase the demand for resources and vice versa. Thus, the demand curve for resource slopes in the downward direction due to the law of diminishing returns.

Economics Concept Introduction

Concept introduction:

Resource pricing: Resource price refers to the pricing of natural and scarce resource for the optimum use.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 16, Problem 1DQ

To determine

Significance of resource pricing and factors determining the resource demand which is different from the factors that determine product demand.

Expert Solution & Answer

Explanation of Solution

Households own the scarce resources which is their source of income. The resource pricing determines the income of households as firms acquire economic resources and pay as wage, rent, interest and profit to the household for the supply of resources. Resource pricing are the costs for the firm. Firms always desire to minimize the cost and maximize the profit. This in turn, would encourage the firms to efficiently use the scarce resource. Resource pricing helps in determining the allocation of resources in industries and firms.

The demand for products is determined by the income and tastes, whereas the demand for resources is passive based on demand of product that requires particular resources. The demand of resources depends on the demand of product. Unlike product, resources are less mobile. The demand of product is determined by geographic availability of resources. Thus, resources that demand geographically vary affecting the demand of products.

Since the demand for resources depends on the demand for goods and services, it is a derived demand. If there is no demand for goods, then there will no demand for resource too. Also, the demand for resource is determined by the productivity and its price.

If the resource price is low, then the cost of production will be low causing to increase the demand for resources and vice versa. Thus, the demand curve for resource slopes in the downward direction due to the law of diminishing returns.

Economics Concept Introduction

Concept introduction:

Resource pricing: Resource price refers to the pricing of natural and scarce resource for the optimum use.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 16, Problem 1DQ

To determine

Significance of resource pricing and factors determining the resource demand which is different from the factors that determine product demand.

Expert Solution & Answer

Explanation of Solution

Households own the scarce resources which is their source of income. The resource pricing determines the income of households as firms acquire economic resources and pay as wage, rent, interest and profit to the household for the supply of resources. Resource pricing are the costs for the firm. Firms always desire to minimize the cost and maximize the profit. This in turn, would encourage the firms to efficiently use the scarce resource. Resource pricing helps in determining the allocation of resources in industries and firms.

The demand for products is determined by the income and tastes, whereas the demand for resources is passive based on demand of product that requires particular resources. The demand of resources depends on the demand of product. Unlike product, resources are less mobile. The demand of product is determined by geographic availability of resources. Thus, resources that demand geographically vary affecting the demand of products.

Since the demand for resources depends on the demand for goods and services, it is a derived demand. If there is no demand for goods, then there will no demand for resource too. Also, the demand for resource is determined by the productivity and its price.

If the resource price is low, then the cost of production will be low causing to increase the demand for resources and vice versa. Thus, the demand curve for resource slopes in the downward direction due to the law of diminishing returns.

Economics Concept Introduction

Concept introduction:

Resource pricing: Resource price refers to the pricing of natural and scarce resource for the optimum use.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 16, Problem 1DQ

To determine

Significance of resource pricing and factors determining the resource demand which is different from the factors that determine product demand.

Expert Solution & Answer

Explanation of Solution

Households own the scarce resources which is their source of income. The resource pricing determines the income of households as firms acquire economic resources and pay as wage, rent, interest and profit to the household for the supply of resources. Resource pricing are the costs for the firm. Firms always desire to minimize the cost and maximize the profit. This in turn, would encourage the firms to efficiently use the scarce resource. Resource pricing helps in determining the allocation of resources in industries and firms.

The demand for products is determined by the income and tastes, whereas the demand for resources is passive based on demand of product that requires particular resources. The demand of resources depends on the demand of product. Unlike product, resources are less mobile. The demand of product is determined by geographic availability of resources. Thus, resources that demand geographically vary affecting the demand of products.

Since the demand for resources depends on the demand for goods and services, it is a derived demand. If there is no demand for goods, then there will no demand for resource too. Also, the demand for resource is determined by the productivity and its price.

If the resource price is low, then the cost of production will be low causing to increase the demand for resources and vice versa. Thus, the demand curve for resource slopes in the downward direction due to the law of diminishing returns.

Economics Concept Introduction

Concept introduction:

Resource pricing: Resource price refers to the pricing of natural and scarce resource for the optimum use.

Answer 6

Chapter 16, Problem 1DQ

To determine

Significance of resource pricing and factors determining the resource demand which is different from the factors that determine product demand.

Expert Solution & Answer

Explanation of Solution

Households own the scarce resources which is their source of income. The resource pricing determines the income of households as firms acquire economic resources and pay as wage, rent, interest and profit to the household for the supply of resources. Resource pricing are the costs for the firm. Firms always desire to minimize the cost and maximize the profit. This in turn, would encourage the firms to efficiently use the scarce resource. Resource pricing helps in determining the allocation of resources in industries and firms.

The demand for products is determined by the income and tastes, whereas the demand for resources is passive based on demand of product that requires particular resources. The demand of resources depends on the demand of product. Unlike product, resources are less mobile. The demand of product is determined by geographic availability of resources. Thus, resources that demand geographically vary affecting the demand of products.

Since the demand for resources depends on the demand for goods and services, it is a derived demand. If there is no demand for goods, then there will no demand for resource too. Also, the demand for resource is determined by the productivity and its price.

If the resource price is low, then the cost of production will be low causing to increase the demand for resources and vice versa. Thus, the demand curve for resource slopes in the downward direction due to the law of diminishing returns.

Economics Concept Introduction

Concept introduction:

Resource pricing: Resource price refers to the pricing of natural and scarce resource for the optimum use.

Answer 7

Chapter 16, Problem 1DQ

To determine

Significance of resource pricing and factors determining the resource demand which is different from the factors that determine product demand.

Answer 8

Expert Solution & Answer

Explanation of Solution

Households own the scarce resources which is their source of income. The resource pricing determines the income of households as firms acquire economic resources and pay as wage, rent, interest and profit to the household for the supply of resources. Resource pricing are the costs for the firm. Firms always desire to minimize the cost and maximize the profit. This in turn, would encourage the firms to efficiently use the scarce resource. Resource pricing helps in determining the allocation of resources in industries and firms.

The demand for products is determined by the income and tastes, whereas the demand for resources is passive based on demand of product that requires particular resources. The demand of resources depends on the demand of product. Unlike product, resources are less mobile. The demand of product is determined by geographic availability of resources. Thus, resources that demand geographically vary affecting the demand of products.

Since the demand for resources depends on the demand for goods and services, it is a derived demand. If there is no demand for goods, then there will no demand for resource too. Also, the demand for resource is determined by the productivity and its price.

If the resource price is low, then the cost of production will be low causing to increase the demand for resources and vice versa. Thus, the demand curve for resource slopes in the downward direction due to the law of diminishing returns.