SHORT ANSWER. Write the phrase that best completes each statement or answers the

Question

SHORT ANSWER. Write the phrase that best completes each statement or

answers the question.

41) Explain three ways we can use microeconomics analysis. 41) _____________

42) What is an export? 42) _____________

43) Is supply more elastic in the short run or the long run? Why? 43) _____________

44) Comment on the following statement: "The more inelastic the demand, the greater is the deadweight loss caused by

any given tax rate." 44) _____________

45) What is the law of diminishing marginal utility? 45) _____________

Explanation / Answer

41. One reason for studying microeconomics is to better understand how markets work. Once you know how markets operate, you can use economic analysis to predict how various events affect product prices and quantities. On the personal level, we use economic analysis to decide how to spend our time, what career to pursue, and how to spend and save the money we earn. As workers, we use economic analysis to decide how to produce goods and services, how much to produce, and how much to charge for them. Although societies use markets to make most of the decisions concerning production and consumption, the government has several important roles in a market-based society. We can use economic analysis to determine how well the government performs its roles in the market economy. We can also explore the trade-offs associated with various public policies.

42. Any oral, written, electronic or visual disclosure, shipment, transfer or transmission outside of the United States to anyone, including a U.S. citizen, of any commodity, technology (information, technical data, or assistance) or software/codes Such exports include transfers of such items or information to foreign embassies, overseas corporate affiliates, and contractors.

43. Supply is normally more elastic in the long run than in the short run for produced goods, since it is generally assumed that in the long run all factors of production can be utilised to increase supply, whereas in the short run only labor can be increased, and even then, changes may be prohibitively costly. For example, a cotton farmer cannot immediately (i.e. in the short run) respond to an increase in the price of soybeans because of the time it would take to procure the necessary land.

44. When demand is inelastic , means no change in demand if price changed. Therefore, in this situation, if Taxes increases, manufacturer just increase the prices , which increase the burden on the consumer , which comes under deadweight loss.

45. The law of diminishing marginal utility states that the amount of additional utility decreases as successive units of a product are consumed.

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