Exercise 3.2 and 3.3

EXERCISE 3.2 & 3.3 (Change in Demand)


Market Equilibrium is defined as the price where the Quantity Demanded is equal to Quantity Supplied so that there is no Surplus or shortage in the market.

Exercise 3-3: Effect of changes to demand

By definition, demand is the quantities that consumers are willing and able to buy at different prices at specific period of time. So to truly understand what causes the demand to change, we have to look back at the determinants of demand and in this case are the prices.  Prices play a big role in the market in such a way that if the price of particular product that has high demand goes up, people wouldn’t be interest in that product anymore and they would turn into substitute products.

My personal example for change in demand would be purchase of computers. My first computer cost me $1200, but today I can buy a laptop for only $500 that’s twice cheaper than the first I got. Relating to example, this will cause a big change in demand curve if I had to graph it.   

Exercise 2.2- Economic Game



Diner Game is the best game to understand economics and the concept of opportunity cost.It explains you clearly the cost of buying one thing over the other and how you need to understand which thing your business needs the most at any given time to best utilize the resources and technology.
I almost spend almost 2 hours playng this game today and i think i will get back to it. In very simple form it explains you the concept of Scarcity, Opportunity cost, time management and effective use of right technology.
For example: I can have 10 servers in the fast food resturant but if there is not enough seating i will be overpaying the servers and loosing on revenue. Similarly i can have 10 seats but if i have only 4 servers i will loosing customers because of the wait.
It is very important to understand your market and make business decisions accourdingly. Hence the study of economics.

Exercise 1-2: Possibility Curve

The graphs simply represent production, full employment and technology which are the most driving forces of our economy today. With regard to these possibilities curves, individuals, businesses and governments spend most of their time trying to make some good decisions based on production, employment and technology, and if decisions are made wisely, it would benefit the whole society.

We are all aware of the fact that there are limited resources to satisfy our wants, which means we are faced with scarcity all the time; that is loss of income. Another factor that many people and I deal with on daily basis is the opportunity cost. As you know, life is all about choices we make every day and that where opportunity cost comes into play.

Two years ago, I made a decision to go back to school so I would be able to earn higher income than what I was getting while working at retail store. Having gave up my full-time job and went back  to me was an opportunity cost; which eventually resulted in loss of income in order for me to gain some knowledge and head out for better future.

Difference between microeconomics and macroeconomics

Difference between microeconomics and macroeconomics

I would define Microeconomics as study of how individuals, businesses and governments make decision on how wealth should be distributed among people at lower levels. And Macroeconomics deal with decisions made at national level by the governments and big firms.