Determine: How the 12 principles of economics work.

Question

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Answer 1

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter P1, Problem 1.1BC

To determine

Determine:

How the 12 principles of economics work.

Expert Solution & Answer

Explanation of Solution

There are generally twelve principles of economics. The explanation given below relates those principles to the given case.

First: P Company fulfills the needs of consumers who are willing to make a choice between quality and convenience to acquire lower prices.

Second: The real cost of vacant airline seat or vacant hotel room is the income that they would have received from its use in the next best alternative.

Third: The amount paid for tickets depends on how much inconvenience and time is saved by buying it for higher prices. Similarly, the amount paid for advance ticket depends on the variation in price and cancellation policy.

Fourth: P Company is popular as people exploit the opportunities of getting hotels, flights, and many other benefits at lower cost.

Fifth: In Europe, gains from P Company network are more because it involves trade of goods and services provided to the people.

Sixth: O Company and E Company provided many incentives to the travelers to use their services. Hence, market of online services will move towards equilibrium.

Seventh: P Company used the resources like hotel rooms and airline seats in a very efficient manner. It is not wise to keep vacant seats and room, if someone wants them at going price.

Eighth: Vacant seats and room lead to inefficiency. So, P Company made its product popular and familiar through online services.

Ninth: A brief slump in the airline industry was managed by the government, as government intervention helped the industry by avoiding loss of jobs of many supporting staffs and company failure.

Tenth: Due to the attack of September 2001, people stopped spending on airline tickets. As a result, the salary of airline workers reduced.

Eleventh: The whole economy was suffering from depression after the attack of 2001 because the production was greater than the spending in the economy.

Twelfth: Congress provided aid of $15 billion to stabilize the airline industry and prevented major recession in the industry.

Economics Concept Introduction

Concept Introduction:

Twelve principles of economics are:

Resources are scarce, so people must make choices.
The true cost of anything is the next best alternative foregone, which is termed as opportunity cost.
Marginal decision and incentive are very important.
People respond to incentives by exploiting available opportunities to make themselves better off.
Trade benefits to everyone.
Market moves towards equilibrium.
Resources should be used efficiently to achieve social goals.
Market leads to efficiency.
When the market fails, government intervenes to maintain equilibrium.
Spending of one person becomes income of another.
Sometimes, spending varies with the economy’s productive capacity.
Government policies can change spending.

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Students have asked these similar questions

At the 8:10 café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (that is she cannot price discriminate). Students with early classes Students without early classes Coffee 70 60 Banana 50 100 The MC of coffee is 10. The MC of a banana is 40. Is bundling more profitable than selling separately? HINT: if you sell the bundle, can you make more by offering coffee separately? If so, what price should be charged for the bundle? (Show calculations)

Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000. Use the following demand data: Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% `Tweeners $2 10% Seniors $2 10% Others $0 40%

Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000. Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% `Tweeners $2 10% Seniors $2 10% Others $0 40% ur marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000.

Answer 2

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter P1, Problem 1.1BC

To determine

Determine:

How the 12 principles of economics work.

Expert Solution & Answer

Explanation of Solution

There are generally twelve principles of economics. The explanation given below relates those principles to the given case.

First: P Company fulfills the needs of consumers who are willing to make a choice between quality and convenience to acquire lower prices.

Second: The real cost of vacant airline seat or vacant hotel room is the income that they would have received from its use in the next best alternative.

Third: The amount paid for tickets depends on how much inconvenience and time is saved by buying it for higher prices. Similarly, the amount paid for advance ticket depends on the variation in price and cancellation policy.

Fourth: P Company is popular as people exploit the opportunities of getting hotels, flights, and many other benefits at lower cost.

Fifth: In Europe, gains from P Company network are more because it involves trade of goods and services provided to the people.

Sixth: O Company and E Company provided many incentives to the travelers to use their services. Hence, market of online services will move towards equilibrium.

Seventh: P Company used the resources like hotel rooms and airline seats in a very efficient manner. It is not wise to keep vacant seats and room, if someone wants them at going price.

Eighth: Vacant seats and room lead to inefficiency. So, P Company made its product popular and familiar through online services.

Ninth: A brief slump in the airline industry was managed by the government, as government intervention helped the industry by avoiding loss of jobs of many supporting staffs and company failure.

Tenth: Due to the attack of September 2001, people stopped spending on airline tickets. As a result, the salary of airline workers reduced.

Eleventh: The whole economy was suffering from depression after the attack of 2001 because the production was greater than the spending in the economy.

Twelfth: Congress provided aid of $15 billion to stabilize the airline industry and prevented major recession in the industry.

Economics Concept Introduction

Concept Introduction:

Twelve principles of economics are:

Resources are scarce, so people must make choices.
The true cost of anything is the next best alternative foregone, which is termed as opportunity cost.
Marginal decision and incentive are very important.
People respond to incentives by exploiting available opportunities to make themselves better off.
Trade benefits to everyone.
Market moves towards equilibrium.
Resources should be used efficiently to achieve social goals.
Market leads to efficiency.
When the market fails, government intervenes to maintain equilibrium.
Spending of one person becomes income of another.
Sometimes, spending varies with the economy’s productive capacity.
Government policies can change spending.

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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

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter P1, Problem 1.1BC

To determine

Determine:

How the 12 principles of economics work.

Expert Solution & Answer

Explanation of Solution

There are generally twelve principles of economics. The explanation given below relates those principles to the given case.

First: P Company fulfills the needs of consumers who are willing to make a choice between quality and convenience to acquire lower prices.

Second: The real cost of vacant airline seat or vacant hotel room is the income that they would have received from its use in the next best alternative.

Third: The amount paid for tickets depends on how much inconvenience and time is saved by buying it for higher prices. Similarly, the amount paid for advance ticket depends on the variation in price and cancellation policy.

Fourth: P Company is popular as people exploit the opportunities of getting hotels, flights, and many other benefits at lower cost.

Fifth: In Europe, gains from P Company network are more because it involves trade of goods and services provided to the people.

Sixth: O Company and E Company provided many incentives to the travelers to use their services. Hence, market of online services will move towards equilibrium.

Seventh: P Company used the resources like hotel rooms and airline seats in a very efficient manner. It is not wise to keep vacant seats and room, if someone wants them at going price.

Eighth: Vacant seats and room lead to inefficiency. So, P Company made its product popular and familiar through online services.

Ninth: A brief slump in the airline industry was managed by the government, as government intervention helped the industry by avoiding loss of jobs of many supporting staffs and company failure.

Tenth: Due to the attack of September 2001, people stopped spending on airline tickets. As a result, the salary of airline workers reduced.

Eleventh: The whole economy was suffering from depression after the attack of 2001 because the production was greater than the spending in the economy.

Twelfth: Congress provided aid of $15 billion to stabilize the airline industry and prevented major recession in the industry.

Economics Concept Introduction

Concept Introduction:

Twelve principles of economics are:

Resources are scarce, so people must make choices.
The true cost of anything is the next best alternative foregone, which is termed as opportunity cost.
Marginal decision and incentive are very important.
People respond to incentives by exploiting available opportunities to make themselves better off.
Trade benefits to everyone.
Market moves towards equilibrium.
Resources should be used efficiently to achieve social goals.
Market leads to efficiency.
When the market fails, government intervenes to maintain equilibrium.
Spending of one person becomes income of another.
Sometimes, spending varies with the economy’s productive capacity.
Government policies can change spending.

Want to see more full solutions like this?

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

Answer 4

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter P1, Problem 1.1BC

To determine

Determine:

How the 12 principles of economics work.

Expert Solution & Answer

Explanation of Solution

There are generally twelve principles of economics. The explanation given below relates those principles to the given case.

First: P Company fulfills the needs of consumers who are willing to make a choice between quality and convenience to acquire lower prices.

Second: The real cost of vacant airline seat or vacant hotel room is the income that they would have received from its use in the next best alternative.

Third: The amount paid for tickets depends on how much inconvenience and time is saved by buying it for higher prices. Similarly, the amount paid for advance ticket depends on the variation in price and cancellation policy.

Fourth: P Company is popular as people exploit the opportunities of getting hotels, flights, and many other benefits at lower cost.

Fifth: In Europe, gains from P Company network are more because it involves trade of goods and services provided to the people.

Sixth: O Company and E Company provided many incentives to the travelers to use their services. Hence, market of online services will move towards equilibrium.

Seventh: P Company used the resources like hotel rooms and airline seats in a very efficient manner. It is not wise to keep vacant seats and room, if someone wants them at going price.

Eighth: Vacant seats and room lead to inefficiency. So, P Company made its product popular and familiar through online services.

Ninth: A brief slump in the airline industry was managed by the government, as government intervention helped the industry by avoiding loss of jobs of many supporting staffs and company failure.

Tenth: Due to the attack of September 2001, people stopped spending on airline tickets. As a result, the salary of airline workers reduced.

Eleventh: The whole economy was suffering from depression after the attack of 2001 because the production was greater than the spending in the economy.

Twelfth: Congress provided aid of $15 billion to stabilize the airline industry and prevented major recession in the industry.

Economics Concept Introduction

Concept Introduction:

Twelve principles of economics are:

Resources are scarce, so people must make choices.
The true cost of anything is the next best alternative foregone, which is termed as opportunity cost.
Marginal decision and incentive are very important.
People respond to incentives by exploiting available opportunities to make themselves better off.
Trade benefits to everyone.
Market moves towards equilibrium.
Resources should be used efficiently to achieve social goals.
Market leads to efficiency.
When the market fails, government intervenes to maintain equilibrium.
Spending of one person becomes income of another.
Sometimes, spending varies with the economy’s productive capacity.
Government policies can change spending.

Want to see more full solutions like this?

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

Answer 5

Chapter P1, Problem 1.1BC

To determine

Determine:

How the 12 principles of economics work.

Expert Solution & Answer

Explanation of Solution

There are generally twelve principles of economics. The explanation given below relates those principles to the given case.

First: P Company fulfills the needs of consumers who are willing to make a choice between quality and convenience to acquire lower prices.

Second: The real cost of vacant airline seat or vacant hotel room is the income that they would have received from its use in the next best alternative.

Third: The amount paid for tickets depends on how much inconvenience and time is saved by buying it for higher prices. Similarly, the amount paid for advance ticket depends on the variation in price and cancellation policy.

Fourth: P Company is popular as people exploit the opportunities of getting hotels, flights, and many other benefits at lower cost.

Fifth: In Europe, gains from P Company network are more because it involves trade of goods and services provided to the people.

Sixth: O Company and E Company provided many incentives to the travelers to use their services. Hence, market of online services will move towards equilibrium.

Seventh: P Company used the resources like hotel rooms and airline seats in a very efficient manner. It is not wise to keep vacant seats and room, if someone wants them at going price.

Eighth: Vacant seats and room lead to inefficiency. So, P Company made its product popular and familiar through online services.

Ninth: A brief slump in the airline industry was managed by the government, as government intervention helped the industry by avoiding loss of jobs of many supporting staffs and company failure.

Tenth: Due to the attack of September 2001, people stopped spending on airline tickets. As a result, the salary of airline workers reduced.

Eleventh: The whole economy was suffering from depression after the attack of 2001 because the production was greater than the spending in the economy.

Twelfth: Congress provided aid of $15 billion to stabilize the airline industry and prevented major recession in the industry.

Economics Concept Introduction

Concept Introduction:

Twelve principles of economics are:

Resources are scarce, so people must make choices.
The true cost of anything is the next best alternative foregone, which is termed as opportunity cost.
Marginal decision and incentive are very important.
People respond to incentives by exploiting available opportunities to make themselves better off.
Trade benefits to everyone.
Market moves towards equilibrium.
Resources should be used efficiently to achieve social goals.
Market leads to efficiency.
When the market fails, government intervenes to maintain equilibrium.
Spending of one person becomes income of another.
Sometimes, spending varies with the economy’s productive capacity.
Government policies can change spending.

Answer 6

Chapter P1, Problem 1.1BC

To determine

Determine:

How the 12 principles of economics work.

Expert Solution & Answer

Explanation of Solution

There are generally twelve principles of economics. The explanation given below relates those principles to the given case.

First: P Company fulfills the needs of consumers who are willing to make a choice between quality and convenience to acquire lower prices.

Second: The real cost of vacant airline seat or vacant hotel room is the income that they would have received from its use in the next best alternative.

Third: The amount paid for tickets depends on how much inconvenience and time is saved by buying it for higher prices. Similarly, the amount paid for advance ticket depends on the variation in price and cancellation policy.

Fourth: P Company is popular as people exploit the opportunities of getting hotels, flights, and many other benefits at lower cost.

Fifth: In Europe, gains from P Company network are more because it involves trade of goods and services provided to the people.

Sixth: O Company and E Company provided many incentives to the travelers to use their services. Hence, market of online services will move towards equilibrium.

Seventh: P Company used the resources like hotel rooms and airline seats in a very efficient manner. It is not wise to keep vacant seats and room, if someone wants them at going price.

Eighth: Vacant seats and room lead to inefficiency. So, P Company made its product popular and familiar through online services.

Ninth: A brief slump in the airline industry was managed by the government, as government intervention helped the industry by avoiding loss of jobs of many supporting staffs and company failure.

Tenth: Due to the attack of September 2001, people stopped spending on airline tickets. As a result, the salary of airline workers reduced.

Eleventh: The whole economy was suffering from depression after the attack of 2001 because the production was greater than the spending in the economy.

Twelfth: Congress provided aid of $15 billion to stabilize the airline industry and prevented major recession in the industry.

Economics Concept Introduction

Concept Introduction:

Twelve principles of economics are:

Resources are scarce, so people must make choices.
The true cost of anything is the next best alternative foregone, which is termed as opportunity cost.
Marginal decision and incentive are very important.
People respond to incentives by exploiting available opportunities to make themselves better off.
Trade benefits to everyone.
Market moves towards equilibrium.
Resources should be used efficiently to achieve social goals.
Market leads to efficiency.
When the market fails, government intervenes to maintain equilibrium.
Spending of one person becomes income of another.
Sometimes, spending varies with the economy’s productive capacity.
Government policies can change spending.

Answer 7

Chapter P1, Problem 1.1BC

To determine

Determine:

How the 12 principles of economics work.

Answer 8

Expert Solution & Answer

Explanation of Solution

There are generally twelve principles of economics. The explanation given below relates those principles to the given case.

First: P Company fulfills the needs of consumers who are willing to make a choice between quality and convenience to acquire lower prices.

Second: The real cost of vacant airline seat or vacant hotel room is the income that they would have received from its use in the next best alternative.

Third: The amount paid for tickets depends on how much inconvenience and time is saved by buying it for higher prices. Similarly, the amount paid for advance ticket depends on the variation in price and cancellation policy.

Fourth: P Company is popular as people exploit the opportunities of getting hotels, flights, and many other benefits at lower cost.

Fifth: In Europe, gains from P Company network are more because it involves trade of goods and services provided to the people.

Sixth: O Company and E Company provided many incentives to the travelers to use their services. Hence, market of online services will move towards equilibrium.

Seventh: P Company used the resources like hotel rooms and airline seats in a very efficient manner. It is not wise to keep vacant seats and room, if someone wants them at going price.

Eighth: Vacant seats and room lead to inefficiency. So, P Company made its product popular and familiar through online services.

Ninth: A brief slump in the airline industry was managed by the government, as government intervention helped the industry by avoiding loss of jobs of many supporting staffs and company failure.

Tenth: Due to the attack of September 2001, people stopped spending on airline tickets. As a result, the salary of airline workers reduced.

Eleventh: The whole economy was suffering from depression after the attack of 2001 because the production was greater than the spending in the economy.

Twelfth: Congress provided aid of $15 billion to stabilize the airline industry and prevented major recession in the industry.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept Introduction:

Twelve principles of economics are:

Resources are scarce, so people must make choices.
The true cost of anything is the next best alternative foregone, which is termed as opportunity cost.
Marginal decision and incentive are very important.
People respond to incentives by exploiting available opportunities to make themselves better off.
Trade benefits to everyone.
Market moves towards equilibrium.
Resources should be used efficiently to achieve social goals.
Market leads to efficiency.
When the market fails, government intervenes to maintain equilibrium.
Spending of one person becomes income of another.
Sometimes, spending varies with the economy’s productive capacity.
Government policies can change spending.

Answer 12

Ch. P1 - Prob. 1.1BC Ch. P1 - Prob. 2.1BC Ch. P1 - Prob. 2.2BC Ch. P1 - Prob. 2.3BC Ch. P1 - Prob. 2.4BC

Determine: How the 12 principles of economics work.

Determine: How the 12 principles of economics work.

Explanation of Solution

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Chapter P1 Solutions

Determine:

How the 12 principles of economics work.