The purpose of such intervention is in the established market equilibrium. Government intervention in market equilibrium
Market pricing according to the laws demand And offers, the formation of equilibrium market prices on this basis underlies the self-regulation of a market economy, its ability to solve economic problems more effectively than other systems.
Forms of government intervention in pricing
Modern reality market economy are such that there are practically no countries where one or another form of government intervention in the pricing process is not carried out. The most common options for such interference with market competitive forces include government price controls, as well as the introduction of taxes and subsidies. In the first case, violations of the competitive pricing mechanism are quite obvious. In the second case, the indirect impact through taxation and subsidies does not outwardly disrupt the effect of market pricing, but usually significantly deforms it. Does the market need such intervention? And if so, why and to what extent?
Let us consider both directions of government intervention in more detail.
State control over prices
The established equilibrium prices, due to various circumstances, do not always suit society. State intervention in this case can take the form of forced (legislative) establishment fixed prices.
Such fixed prices can be of two types.
1. When equilibrium prices seem too high to society, the government sets prices below equilibrium prices (maximum prices, or price ceiling).
2. When equilibrium price seems too low, then prices are legally established above the equilibrium price (minimum prices, or lower price level).
Consequences of price fixing
While solving the tasks assigned to them with varying degrees of success, fixed prices simultaneously lead to already known market imbalances (see Fig. 4.6):
If the fixed price is below the equilibrium price, deficit goods;
· If the forced price is higher than the equilibrium price, the consequence will be a surplus of goods.
In both the first and second cases, with free pricing, the market could develop a mechanism for exiting the disequilibrium state. When the price is fixed by law, this blocks the actions of competitive market forces and government intervention is again necessary to solve emerging problems.
In Fig. 4.20 provides a detailed graphical interpretation of the case of establishing a price ceiling. Based on fixed prices in a market economy, the state, as a rule, tries to solve certain social issues. Thus, the state is forced to resort to establishing a maximum price (price ceiling - P A) when the equilibrium price (P 0) is so high that it excludes a given product from consumption by the majority of the population, and the product is an essential item (bread, sugar, milk ). Most often, such a situation is likely during periods of war, crisis, crop failure, etc.
Rice. 4.20. Setting a fixed price
Due to the introduction of fixed prices, a persistent shortage arises (Q A – Q B). This means that while setting a low price for the benefit of the population, the state does not at the same time guarantee all its citizens the opportunity to receive this product. If we are talking about a socially significant product, then the consequences can be no less negative than with high prices. In the end, people don’t care for what reason they will not consume bread: because of the high price or because it is not available in the store. In both cases, the blame will be placed on the government, which does not know how to manage the economy.
Black market
Another negative consequence of imposing a price ceiling is the black market, which is a concomitant of shortages. The reasons for its existence are clear - some citizens are ready to overpay above the price set by the state for goods that are not in official trade. This can be driven by various circumstances - from high incomes, when life according to the principle “time is money” becomes a reality, to emergency events that happen in everyone’s life (illness, holidays, etc.), when people with relatively small incomes are ready to pay for scarce the goods are big money.
And then an inevitable chain of consequences arises. Let us assume that state-controlled producers do not dare to exceed the marginal price P A, but then they will limit the volume of production to the level Q B corresponding to the supply curve S.
It is this fixed volume of production that will fall into the hands of shadow traders, who ensure the “extraction” of scarce goods. Accordingly, the supply curve S will be replaced by a new vertical supply curve S 1, which reflects the behavior of intermediaries. And its intersection with the demand curve will set the price and quantity that characterize the equilibrium on the “black” market. It is clearly seen that the final equilibrium point on the black market is achieved at a significantly higher price than the equilibrium price of the free market (P 2 > P 0). But the purpose of government intervention was precisely the overestimation equilibrium price. In other words, black market- this is a sure sign of the failure of the state policy of limiting prices.
Black market in the USSR
Only those who did not live in Russia in pre-reform times did not encounter the black market. Buying meat, shoes, clothing, and building materials “from hand” was commonplace in the Soviet economy. The overwhelming majority of scarce goods never went on open sale, but were immediately distributed to “their people,” who later resold them at inflated prices.
Of course, with " speculation“An army of controllers fought, but their efforts yielded almost zero results. Trade workers simply took more precautions. In addition, controllers are people too; they were constantly tried (and often successfully) to bribe them.
The punishability of speculation also forced people who tried to buy scarce goods to be wary. It was obvious that the seller would not accept a bribe directly from an unknown person. Therefore, in order to have meat, you had to be “friends” with the butcher (that is, not just give money, but give gifts, express your respect in every possible way, etc.), in order to drive a working car, you had to be “friends” with the auto mechanic.
Quantitative estimates of the prevalence of the black market in the USSR are highly unreliable, but according to experts, 20–30% of all consumer goods passed through it in the 1970s.
Abstractions
Normative approach
10) On the graph, the initial market equilibrium corresponds to point A. If the price rises to the level P=33, then the surplus of goods will be ...
approximately 10
7 = 31-24 = s2-d2
11) The graph shows the “AD-AS” model (aggregate demand - aggregate supply).
Reduction in aggregate demand in the long run...
Has no price
Will reduce real output
Will reduce prices
12) The graph shows the “AD-AS” model (aggregate demand - aggregate supply).
If the aggregate demand curve intersects the aggregate supply curve at an intermediate point, then an increase in aggregate demand...
Will not change real production volume
Will not change the price level
Will increase the price level
Will increase real output
will not change production volume
will reduce production
will reduce the price level
will not change the price level
Task 20.1 The graph shows the supply and demand function in a certain national market. It is known that the government decided to set the maximum possible price level.
The purpose of such intervention in the established market equilibrium can be....
Increasing product availability for consumers
Reducing the likelihood of sellers going bankrupt
Increasing the volume of product consumption
Limiting the volume of consumption of goods
Rear 20.2. Examples of markets that require such intervention in the established market equilibrium include markets...
Of bread
Products made of precious metals
Public transport services
Grains
Rear 20.3. The result of the introduction of a price ceiling of 40 cu. less than the equilibrium price, there will be a shortage of goods equal to 7 thousand pieces (d-s= 11-4=7)
19) The figure shows a graphical model of the income and costs of a monopolist company
Then the degree of its monopoly power (Lerner coefficient) will be:
- 0,5385 L =(P – MC)/P = (130-60)/130 = 0.5385
- 1,1667
Solution: Most often, to characterize the degree of market power, the Lerner coefficient is used, defined as the ratio of the excess of the price of a product over the marginal costs of its production and the price of the company: 
, where P is the unit price, MC is the marginal cost.
It ranges from zero for perfect competition to one for monopoly. In this case, the optimal production volume (Q) for the company is 35 thousand units, since marginal revenue (MR) and marginal costs (MC) become equal (60 monetary units) at a given Q. This volume of production will be sold at a price 130 den. units
19.1) The figure shows a graphical model of the income and costs of a monopolist firm (see above)
Then the monopoly profit at the optimal production volume will be equal to ____thousand. monetary units
+ 2450 = (200-130)*35
55) The figure shows a graphical model of the income and costs of a monopolist firm.
Then the degree of its monopoly power (Lerner coefficient) is ...
+ 0,4375
- 0,125
55.1) The figure shows a graphical model of the income and costs of a monopolist firm.
Then the monopoly profit at the optimal production volume is equal to___ thousand monetary units.
- 1600
55) The figure shows a graphical model of the income and costs of a monopolist firm:
Then the monopoly price at the optimal production volume is equal to = 60 Solution:
Any firm, including a monopoly, optimizes production volume from the standpoint of maximizing profits with equality of marginal revenue (MR) and marginal costs (MC). The optimal production volume and selling price are determined finding the intersection point of the MR and MC graphs, but the price (P) is determined by restoring the perpendicular from this point upward to the demand line, which is identical in this case to the price, and the volume of production (Q) is determined by lowering the perpendicular from this point down to the horizontal coordinate axis.
In this case, the optimal price level for the company is 60 den. units, since marginal revenue and marginal costs become equal at Q = 20 thousand pcs.
113) Based on data on the inflation rate for three years, which amounted to 6.4 and 5.6 and 3.6%, respectively, we can conclude that inflation for the specified period was equal to ________%. = (1+0.064)*(1+0.056)*(1+0.036)-1=16.4%
+ 16,4
- 124, 7
5,2
10) Based on data on the inflation rate for three years, which amounted to 3.4, 2.8 and 1.6%, respectively, we can conclude that inflation for the specified period was equal to ________%.
- 8
13) Based on data on the volume of production and prices of goods, we can say that the consumer price index in 2012 amounted to _________ monetary units. , if in 2011 we take it as the base
0,998
1,035
1,077
1,113
114) In the early stages of economic development of society, when a person was completely dependent on the environment, there was a local... technological method of production
Producing
Appropriator
Simple
Constant
oligopoly
monopoly
monopolistic competition
monopsony
6) In the factor market, a capital good is understood as...
A. profit
b. income-generating value
V. physical capital
d. money capital
The market price was set at 131 thousand rubles. per unit of goods. A company is characterized in a calendar period by the relationship between production volume (pieces), variable and fixed costs (thousand rubles) (data in the table)
This figure refers to this type of structure as 
Oligopoly
Monopoly
Monopolistic competition
Perfect competition
The market price was set at 131 thousand rubles. per unit of goods. A company is characterized in a calendar period by the relationship between production volume (pieces), variable and fixed costs (thousand rubles) (data in the table)
According to the table, the maximum possible profit of the company is
Answer: 1179 – 100 – 780 = 299
62) National economic systems have much in common with each other, but at the same time they differ in many ways. The development of economic systems is largely determined by scientific and technological progress, which is reflected in the level of development of productive forces. Accordingly, countries are distinguished between pre-industrial, industrial and post-industrial.
Industry is the leading sector of the economy in _____________ economic systems.
Closed
+ industrial
Open
Post-industrial
63) National economic systems have much in common with each other, but at the same time they differ in many ways. The development of economic systems is largely determined by scientific and technological progress, which is reflected in the level of development of productive forces. Accordingly, countries are distinguished between pre-industrial, industrial and post-industrial.
In post-industrial economies, the main production resources are...
Capital
- information
+ knowledge
64) National economic systems have much in common with each other, but at the same time they differ in many ways. The development of economic systems is largely determined by scientific and technological progress, which is reflected in the level of development of productive forces. Accordingly, countries are distinguished between pre-industrial, industrial and post-industrial.
Establish a correspondence between the types of national economic systems and countries, depending on the level of development of their production forces.
1. Pre-industrial economy
2. Industrial economy
3. Post-industrial economy
3) Netherlands
Greenland
1) Tanzania
2) Azerbaijan
112 National defense is an example of a _____ good.
Mixed private
Pure public
Mixed public
Purely private
113) The impossibility of satisfying the needs of all members of society simultaneously and in full is defined in economic theory as...
1) limited resources
2) excessive needs
3) dominance of pseudo-needs
4) lack of natural resources
39) The inability of sellers to increase or decrease the amount of sales in a situation of shortest equilibrium when demand changes is explained by the fact that supply is...
Elastic
Inelastic
+ absolutely inelastic
Absolutely elastic
Immovable character is a characteristic of a factor of production...
+ Earth
- Capital
40) Undefined market barriers to entry into the industry are typical for...
Monopolies
Oligopolies
Monopolistic competition
+ Perfect competition
41) Insurmountable market barriers to entry into the industry are typical for...
Monopolistic competition
Oligopolies
+ monopolies
Perfect competition
87 Unanticipated inflation leads to a redistribution of wealth from...
States to business
+ Spheres of production to the sphere of trade
Borrowers to lenders
Lenders to borrowers
13) The inverse indicator of the economic efficiency of using fixed capital is….
Capital productivity
Materialism
Material efficiency
Capital intensity
18) The general pattern of sectoral shifts in the economy is a noticeable...
Declining share of the service sector
Increasing the share of extractive industries of the economy
- reducing the share of extractive industries of the economy
- increasing the share of the service sector
19 A society in which production relations are based on the use of information as a factor of production is called ...
Humanistic
Industrial
Instrumental
Post-industrial
132) Social relations that develop in the process of reproduction manifest themselves in the form..
Logistical connections
Organizational and economic relations
+ socio-economic relations
Material-energy sacred
123) The common subject of study of mercantilists, physiocrats and classics is...
Achieving general macroeconomic equilibrium
Study of Economic Institutions
Finding the Causes of Society's Wealth
Money circulation and the fight against inflation
132) The object of purchase and sale on the financial capital market is...
Securities
Machinery and equipment
Raw materials
Rights to dispose of valuables
133) The volume of investment directly depends on..(at least 2 options)
+ real national income
+ real interest rate
Euro exchange rate
Rent values
75) The volume of investment does not depend on...
Expected rate of net profit
Economic expectations
Real interest rate
+ national currency exchange rate
123) The volume of family savings in the year before last amounted to 6,400 den. units, in the past – 6800 den. units If it is known that the marginal propensity to consume is 0.6, then the increase in disposable income was ______ den. units = (6800-6400)/(1-0.6) = 1000
124) The volume of savings last year amounted to 500 monetary units. At the end of the current year (for the same period), savings increased by 150 monetary units. If the average propensity to save is 50%, the disposable income is ____ monetary units.
300
1300
78) The object of the modern labor market is...
Ability to work
Employer
Wage
Worker
58) The volume of savings last year amounted to 460 den. units At the end of the current year (over the same period), savings increased by 49 den. units If the average propensity to save is 40%, then the disposable income of the current period is equal to ___________ monetary units.
+ 203,6 аps=s/y
- 1027,5
94) One of the reasons for the existence of a natural rate of unemployment is
Developed labor market infrastructure
Wage stability
Lack of structural changes in the economy
a) costs of production and sales of products
b) fixed and variable costs
c) expenses for the purchase of equipment
Fixed costs are the costs of
a) salaries of management personnel, security, interest on loans, depreciation
equipment
b) wages of workers, security, cost of raw materials and equipment
c) wages of employees, depreciation of equipment, rent
d) raw materials, electricity, loan interest
An increase in a firm's variable costs may result from an increase in
a) interest rates on bank loans
b) local taxes
c) prices of raw materials
d) rent for company equipment
Average total cost is minimum when
a) they are equal to marginal cost
b) total output is minimal
c) total output is maximum
d) variable costs are minimal
Option No. 8
Exercise 1.Describe the structure of production. Present your answer in the form of a table.
Task 2. Solve a problem.
The costs of a monopolist firm are described by the function The demand function for the firm's products is presented in the form , then the degree of its monopoly power (Lerner coefficient) is...
Task 3. Solve a problem.
During the reporting period, the volume of savings increased by 400 den. units, while disposable income increased by 1,300 den. units Under these conditions, the autonomous expenditure multiplier is...
Task 4. Case assignment.
The graph shows the supply and demand function for a certain national market. It is known that the government decided to set the maximum possible price level.
a) The purpose of such intervention in the established market equilibrium can be….
Increasing product availability for consumers
Reducing the likelihood of sellers going bankrupt
Increasing the volume of product consumption
Limiting the volume of consumption of goods
b) Examples of markets that require such intervention in the established market equilibrium include markets...
Products made of precious metals
Public transport services
Task 5.
An example of a natural monopoly is
b) Kommersant publishing house
c) Moscow metro
d) company "Red October"
Unlike a competitive firm, a monopolist
a) can set any price for his product
b) maximizes profit when marginal revenue and marginal cost are equal
c) can produce any volume of output and sell it at any price
d) given a market demand curve, can choose a combination of price and quantity
output that gives maximum profit
A single seller facing many buyers
a) trades only homogeneous goods
b) focuses on customer needs
c) dictates prices
d) does not take into account the behavior of its customers
Antimonopoly legislation is aimed primarily at ensuring
a) prohibition of monopolies
b) economic freedom
c) equal conditions of competition
d) price regulation
In the market of monopolistic competition
a) an individual buyer can influence the price of a product
c) the goods differ in design and terms of sale
d) there is only one manufacturing company
Option No. 9
Exercise 1. Describe the forms and types of ownership. Present your answer in the form of a table.
| Types of ownership forms | Character traits | Owners of property and forms of management | |||
| Private property | |||||
| Individual property (private-labor) | |||||
| Capitalist private property | |||||
| Collective ownership | |||||
| Cooperative ownership | |||||
| Share ownership | |||||
| Partnership property | |||||
| Public property | |||||
| State property | |||||
| Property of public organizations | |||||
Task 2. Solve a problem.
The consumer's income, expenses and savings for two years are presented in the table.
Based on the data presented, we can say that the average propensity to save in 2009 was
Task 3. Solve a problem.
If nominal GNI increased from 3500 billion den. units up to 3850 billion den. units, and the price level over the same period increased by 4%, then real GNI...
Task 4. Case assignment.
In the market of fitness services, the functions of individual demand of two corporate consumers for subscriptions to a fitness club have the following form: Qd1=90-2P; Qd2=210-3P.
The function of the market supply of subscriptions has the form Qs = -20+35P, where Qd1 and Qd2 are the demand of the first and second corporate consumers for a subscription per month (pcs.), Qs is the supply of subscriptions per month (pcs.), P is the price of a subscription (thousands). rub.).
The market demand function Q D for fitness club memberships will be...
Task 5. Tests. Choose the correct answer.
Microeconomics Cases
3.1. What is a market? Topic 7
1. Systematic analysis of forms of cooperation based on the evolutionary series: mutual assistance → gift exchange → market. Indicate the specifics of the subsequent one in comparison with the previous one (mutual assistance is the simplest form of cooperation, selfishness is mutual assistance based on barter, market is barter based on competition).
2. Explain the transition from a metaphorical to a theoretical explanation of the essence of the market based on the following meanings of this word:
Etymology of the word - area
Ordinary meaning – sphere of circulation
The strict meaning is cooperation based on competitive imputation of benefits.
3. The development of practice requires constant updating of terminology (economic categories). Different words were used to name market cooperation: barter, commodity production, market relations. Which of them should be considered the most general and which of them should be considered the main one at the present time? Is the market called only the sphere of circulation or all social production based on competition?
4. Define and explain the evolutionary series of main forms of market cooperation: cooperation - barter - barter (exchange of goods) - circulation of goods - trade - commerce - marketing.
5. Is a monopolistic market a market in the strict sense of the word?
3.2. WHAT IS THE “SHADOW ECONOMY”? Topic 7
Based on all sources, give an interpretation of the economic sectors. Use the explanation of the technology of system analysis “Methodology of Theoretical Science” on the MIIT–IEF portal \ distance learning \ educational materials.
The relevance of the problems of the shadow economy coexists with the lack of its theory - a monistic systemic explanation. There is a variety of terminology for naming this phenomenon, and there is no taxonomy of the forms of economic sectors. Hypothesis of systemic interpretation of the main forms of economic sectors.
Economy
┌─────┴────┐
Criminal - legitimate
┌─────┴────┐
home - formal
┌─────┴────┐
Natural – market
┌─────┴────┐
Shadow – legal
The criminal economy is a manifestation of ongoing inhumane brutal relations in society. It is opposed by legitimate sectors of the economy. Their initial version should be considered households. In them, labor is not taken into account and does not accept a monetary value. It is often considered an informal sector of the economy. The natural economy, for example of monasteries, should be considered more developed. They must keep records of labor and products. But all this is not aggregated by macroeconomic indicators. The market economy arose before the state and did not initially assume that society would take it into account, which arose along with the formation of the state. Accordingly, the modern shadow economy is not taken into account administratively, but is usually determined statistically, indirectly, and estimated.
Exercise. Study the literature on the problem, determine the degree of validity of the proposed hypothesis. Add additions, clarifications to its interpretation, or offer an alternative.
3.3. ROLL-UP CALENDARS. Topic 8
The functions of industry supply and demand for desk calendars are known.
Qd =126–5P Qs = –6+P
Qd – volume of demand (thousand calendars)
Qs – supply volume (thousand calendars)
P – price (rubles per calendar)
Draw a graph gradually (largely) and use it to consistently explain the conditions of the problem and the direction of their solution
1. Determine the equilibrium number of desk calendars in thousand pieces
126–5Р= – 6+ Р 126+6 = Р+5Р 132 = 6 Р Р = 22
Qd = 126– 5 x 22 = 16
2. Consumer and producer surplus will amount to .....and ... thousand rubles, respectively
25.6 128 222 256
Qd=Qs Qs = –6 +P = –6+22 =16
Hint: set Qd Qs equal to zero and get two prices (indicate them on the chart)
If Qd = 0. 0=126–5Р 5Р=126 Р =25.2 (max. Buyer price) 25.2–22 = 3.2
If Qs = 0 0=–6+P P =6 (minimum seller price) 16 x 3.2 / 2 = 25.6 consumer surplus
22–6 = 16 16 x 16 / 2 =128 producer surplus
3. If the state sets a guideline price on the desk calendar market at 16 rubles per piece, then the amount of producer surplus will change by ... thousand rubles
Hint: indicate on the graph what needs to be determined
Two methods of solution: determine the area of a trapezoid and the difference of two triangles
16–6 = 10 (the market price exceeds the seller’s price)
Qs = –6 + P –6+16 10
10 x 10 / 2 =100/2 = 50 128 –50 = 78 amount of change in Qs
3. 4. WAFFLES. Topic 8
The functions of supply and demand for the wafers produced by the company are known: Qd = 450 – 3P and Qs = P+100, where Qd is the volume of demand, thousand kg, Qs is the volume of supply, thousand kg, P is the price of rubles per 1 kg.
1. The equilibrium market price for waffles will be established at the level of... rubles per kilogram
87.5 150 1000 75.7
450 – 3P = P+100 450–100 = P+3P 350 =4P P =87.5
2. Due to the emergence of new brands of waffles produced by competing firms, the demand for “Spring” brand waffles decreased by 50 kg at each price level. The new equilibrium price will be equal to .... rubles
Qs = P+100 = 87.5+100 =187.5
Qs = 187.5 – 50 = 137.5
137.5 = P + 100 P = 137.5 –100 = 37.5
3. Establish the sequence of effects of the expected decrease in market prices for wafers.
1 reduction in waffle sales
3 Reduction in production volume
2 Decrease in the market supply of wafers
4 Increase in the market price of wafers
4. The media have spread information about the dangers of excessive consumption of wafer products due to the threat of diabetes. This event will affect the demand curve and the equilibrium price of waffles as follows:
– the demand curve will shift to the right
– the equilibrium price will fall
– the demand curve will shift to the left
3.5. SUPPLY AND DEMAND. Topic 8
The table shows the functions of supply and demand in the market. The government decided to establish the maximum possible price level (price ceiling)
rubles thousand Unit thousand rubles
10 100 40
1. The purpose of such intervention in the established market equilibrium can be
1. Increasing the volume of consumption of goods
2.Increasing product availability for consumers
3. Limiting the volume of consumption of goods
4.Reducing the likelihood of sellers going bankrupt
2. Examples of markets that require such intervention in the established market equilibrium include markets...
1. Bread
3. Public transport services
4. Products made of precious metals
3. The result of the introduction of a price “ceiling” of 40 den. less than the equilibrium price, there will be a shortage of goods equal to ... thousand pieces
3.6. SELLERS OF LICENSED DVDs
AGAINST PIRATES. Topic 8
According to the Russian Anti-Piracy Organization, in Russia in 2009, 70 million DVDs were sold for approximately $70 million, of which about 10 million were sold legally. Warner Home Video and Universal Pictures International decided to reduce the price of licensed DVDs -discs sold in Russia, from 300 - 350 to 199 rubles. per disc. Due to this, the leaders in video sales hoped to squeeze out pirates selling illegal copies for 150 rubles. and below. DVD sellers believed that the new price would have a beneficial effect on sales of licensed products. They predict a 30% increase in DVD sales in the legal market.
Questions for the case
1. Analyze the situation on the video market from the perspective of the theory of supply and demand.
2. Provide a substantive economic justification for the expectations of sellers of licensed video products.
3. Why will sellers of licensed video products be able to squeeze out pirates, since the price of licensed DVDs will still be higher than the price of pirated discs?
3.7. MILK PRODUCTS. Topic 9
The enterprise-manufacturer of dairy products "Sergeevsky" launched a new technological line for the production of yogurt with fruit filling "Slastena". Among potential competitors in this market segment, the management of the Sergeevsky enterprise singles out Bififrukt and Vital yoghurts. The planned market price at which Slastena yogurt will be sold is 30 rubles. The supply function has the form Qs=0.4P+20, where Qs is the volume of supply (thousand 1-liter bottles of yogurt), P is the price (rubles per 1-liter bottle of yogurt).
1. After the product entered the market, the functional relationship between the price of “Slasten” and the volume of demand for yogurt took on the following form: Qd = 80–2p where Qd is the volume of demand (thousand 1-liter bottles of yogurt), P is the price ((rub. for a 1-liter bottle of yogurt) Then the equilibrium market price of “Slastena” yogurt will be ... rubles
0.4P+20 = 80–2p 2.4 Р = 80–20 2.4 Р = 60 Р = 60: 2.4 = 25
2. In order to fill the budget deficit, the state decided to introduce a commodity tax on dairy producers. At the same time, the equilibrium parameters in the Slastena yogurt market could change as follows
1.The supply curve has shifted to the left
2. The equilibrium price has decreased
3. The equilibrium price has increased
4.The demand curve has shifted to the right
3. Establish the sequence of results of the government’s introduction of a commodity tax on yogurt production
2.Reduction in sales volume
1.Increase in market price
3.Reducing production volume
4.Increased production costs
4. As a result of unsuccessful organization of business activities, the yogurt manufacturer “Vital” announced the termination of its activities and exit from the industry, therefore the main competitor producing a substitute product became the manufacturer “Bififruct”. Based on the results of market research of the industry, it became known that with an increase in the price of “Bififruct” by 2%, the volume of demand for “Slastena” increases by 4%. Based on the available data, the coefficient of cross elasticity of demand for “Slastena” at the price of “Beeffruit” will be equal to.. 4: 2 = 2
3.8. ICE CREAM. Topic 9
The company's marketing department collected data on the volume of demand and supply for ice cream depending on its price
Price Demand Volume Supply
rubles thousand portions thousand rubles
10 100 40
1. The equilibrium price for ice cream on the market will be
30 40 60 50
In the table the equality Qd = Qs at a price of 30
2. It is expected that the market price for ice cream will be set at 20 rubles. Indicate a possible market situation: shortage or surplus. Determine the amount of this deficit or excess
30 thousand pieces
50 thousand pieces
Shortage
Qd = 80 QS = 50 80–50=30
3. Establish the sequence of results of the expected increase in the market price of ice cream
2 reduction in ice cream sales
3 reduction in the volume of market supply of ice cream
1 increase in the market price of ice cream
4 reduction in production volume
4. The value of the arc elasticity coefficient of demand for ice cream when its price decreases from 50 to 40 rubles
We proceed from the table data:
We substitute them into two formulas for dug elasticity
Based on the first formula. In this case, P is defined as the average of the two.
∆ Q = 40–20= 20 P = (50+40) \ 2 = 45
∆ P = 50–40 = 10 Q = (20+40) ^ 2 = 30
(20 x 45) : (10 x 30) = 3
We check similarly using the second formula
(40–20) x (50+40) : (20 + 40) x (40–50) = 20 x 90: 60 x 10 = 1800: 600 = 3
FOOD
According to monitoring data from the Institute of Food Security, over the past two months, prices for buckwheat in the country on average have increased by 25%, for sugar and flour - by 16%, potatoes - 18%. And this situation is observed for most food products of “basic demand”
Analysts have determined that the elasticity coefficient of demand for these food products is less than one, which indicates that demand...
2. inelastic
3. elastic
4.Has unit elasticity
The elasticity of demand coefficient, which is less than one, is also typical for such goods as...
salt
tablet computers
Dishwasher
Let's say the elasticity of demand for sugar is 0.5, the price per kilogram of sugar has increased by 16%. The relative change in the quantity demanded of sugar is…. 8
3.10. FOOD SECURITY–2
Sales of cereals, sugar, butter, vegetables - almost the entire non-perishable product line - increased by 20-30% this fall. For some positions even by 40%. More and more every month. People are stocking up on bags.
According to monitoring data from the Institute of Food Security, over the past two months, prices for buckwheat in the country on average have increased by 25%, for sugar and flour - by 16%, potatoes - 18%. Price increases are observed for most food products of “basic demand”
The increase in sales volumes of cereals, sugar, oil, vegetables, despite the rise in prices for them, is due to the fact that the demand for them..., and as a result of the increase in prices, the revenue of sellers...
2. increases
3.inelastic
4. will decrease
The items listed refer to the items…. necessity
2.Zero
4.absolute
Let's say the demand for potatoes has decreased by 2% over the past two months. The coefficient of price elasticity of demand will be... (round the answer received to the nearest hundredth)
3.11. MOBILE OPERATORS. Topic 9
Many analysts predicted an increase in ruble tariffs for mobile operators in 2009. Due to the devaluation of the ruble, cellular companies will be forced to increase tariffs, since they are interested in maintaining dollar revenue, says an analyst at Troika-Dialog. The main question, he says, is how elastic is the demand for their services? He assumes that tariffs from cellular operators will increase by about 30%, while the use of cellular networks will decrease by 10%. Renaissance Capital analysts predict that cellular tariffs will increase by 10–15%. They will be increased over several months in small steps so as not to create an obvious price imbalance between players, they say
1. According to an analyst at Troika-Dialog, the main issue that arises in the above situation is the degree of elasticity. We are talking about (about)…
1. price elasticity of supply
2. income elasticity of demand
3. cross price elasticity of demand
4. price elasticity of demand
2. The analyst assumes that tariffs for cellular operators will increase by approximately 30%, while the use of cellular networks will decrease by 10%. Based on the available data, determine the coefficient of price elasticity of demand (write down the answer obtained to the nearest hundredth) ..... 0.33
3. In addition to tariffs, the volume of demand for the services of mobile operators can be influenced by factors such as...
1. consumer income
2. number of subscribers of cellular operators
3. tax policy in relation to mobile operators
4. cost of commissioning cellular networks
3.12. SNOB CONSUMPTION. Topic 10
The FEPO test assumes knowledge of the specific consumption patterns of a snob. R.M. Nureyev explained this phenomenon in the “Course of Microeconomics,” 2nd ed., M., 2012, CC 125–126. He used a classification of forms of consumption.
1. explain the general taxonomy and classification (hierarchy) and the difference between taxonomy and classification (classification based on development)
2. give a systemic analysis of forms of consumption based on Porfiry’s dichotomous model?
Use the explanation of the technology of system analysis on the MIIT-IEF portal \ distance learning \ educational materials \ “Methodology of Theoretical Science”.
3.13. TOO MUCH BAD COFFEE. Topic 11???
In the Colombian city of Cartagena, coffee producers and consumers from more than 50 countries were looking for ways to overcome the crisis in the coffee market. The crisis in the global coffee trade has been going on for several years. Its origins should be sought in the rejection of the quota system that regulated supply and demand in the coffee market. In 1989, this measure was insisted on by the World Bank, the IMF, and the WTO, which began to promote the ideas of trade liberalization and a common export policy for all. As a result, the growth rate of coffee production significantly exceeded the growth rate of demand. The income of coffee exporting countries has declined catastrophically. If in the late 1980s. they received 10-12 billion dollars a year, today only 5 billion. Revenues from coffee exports make up a significant share in the GDP of developing coffee-producing countries: in Colombia - 2%, in El Salvador - 2.5%, in Guatemala - 4.2%, in Nicaragua - 7.2%, in Honduras - 8.2%. The economy of many producing countries, and especially the industries related to coffee production - trade, transport, and the financial system - suffered from the crisis in the coffee market.
In a number of countries, the coffee crisis even went beyond “economic” limits: for example, in Guatemala it caused political instability, and in Ethiopia it turned into a humanitarian crisis.
At the meeting in Cartagena, the delegates tried to find effective ways out of the crisis. However, it was not possible to reach an agreement. The European Union, which accounts for 46% of all coffee imports, refused to support the proposal of exporting countries to establish fixed minimum prices for coffee. The resolution of the conflict, according to the President of the European Coffee Federation, Joppe Vanhorik, is connected “not with issues of price, but with issues of quality.” And artificial price mechanisms in such a situation will only contribute to the overproduction of coffee.
Questions for the case
1. Explain why the abolition of quotas led to a decrease in the income of coffee exporting countries, because, it would seem, they could freely increase the supply of coffee for export.
2.What conclusion can be drawn about the elasticity of demand for coffee based on the data given in the case?
3.What is a fixed price for a product? Do artificial price mechanisms always contribute to the overproduction of goods? Illustrate your reasoning graphically.
4. Why, in your opinion, did the European Union refuse to support the proposal of exporting countries to establish fixed minimum prices for coffee?
5. Explain the concepts of “buyers’ gain” and “sellers’ gain” and provide a graphic illustration. Analyze how the gains for coffee buyers and sellers would change if minimum fixed prices were established.
Leon Walras(1834–1910) Franco-Swiss economist, founder of the mathematical direction of economic analysis.
This approach considers direct demand (supply) functions:
Q d =Q d (P)
Q s =Q s (P)
This means studying the dynamics of demand volumes and supply volumes at given prices. Let the real market price be higher than the equilibrium price P e , as shown in Figure 5. At this price, the quantity demanded will be Q d 1, and the volume of supply Q s 1.
Q s 1 > Q d 1
There is an excess supply, and the market tends to lower prices.
Rice. 5. a) Equilibrium of supply and demand according to Walras.
On the contrary, if the market price () is established below the equilibrium price, a shortage of goods will arise and the price will tend to rise.
b) Equilibrium of supply and demand according to Walras.
Thus, Walrasian equilibrium condition, this is the equality of the quantity of demand to the quantity of supply.
Q d (P) = Q s (P)
Alfred Marshall(1842–1924) English economist, professor at the University of Cambridge, founder of the Cambridge School of economic theory.
An alternative approach explores inverse functions demand (supply).
that is, the emphasis is on demand prices and supply prices for a given volume.
Let the real sales volume be below the equilibrium level, then the demand price, reflecting the willingness of buyers to purchase this product, will be higher than the supply price. This will encourage sellers to increase sales.
Conversely, if sales volume is above the equilibrium level, then the demand price will be less than the supply price.
Such a market situation will force sellers to reduce sales to the equilibrium point.
Rice. 6. a) Market equilibrium according to Marshall.
Market equilibrium according to Marshall (sales volume is higher than market volume)
b) Market equilibrium according to Marshall.
Marshall equilibrium condition represents the equality of the demand price to the supply price:
P d (Q) = P s (Q)
Modern economic theory operates with functions of supply and demand according to Walras, that is, direct functions, and their graphs are depicted according to Marshall. Meanwhile, duality in approaches has virtually no effect on the results of the analysis of supply and demand.
The stability or instability of market equilibrium can be analyzed using the so-called web model.
This model makes the following assumptions:
· the quantity of demand depends on the prices of the current period, the quantity of supply depends on the prices of the previous period.
Q d = Q d (P t)
Q s = Q s (P t - 1)
where is the time period
· the demand and supply functions are linear,
Q d = a - dP t - 1
Q s = c+dP t – 1
Where a,b,c,d- positive coefficients;
· the demand and supply functions do not change over time.
Depending on the ratio of the absolute value of the tangent of the angle of inclination of the demand curve and the angle of inclination of the supply curve (the angle is determined in relation to the OP axis), the stability or instability of market equilibrium will be determined.
Three cases are possible:
if , then any deviation from equilibrium will lead to increased fluctuations in prices and volumes, moving the initial position further and further away from the equilibrium point.
Fig.7. a) Stability of market equilibrium
if , then any initial deviation leads to price and volume fluctuations of the same amplitude;
b) Stability of market equilibrium
if , then the fluctuations will gradually die out, and market equilibrium will be restored
c) Stability of market equilibrium
The web-like model of market equilibrium can be sufficiently applied only to certain products, since it does not take into account a number of important factors (climatic conditions, changes in consumer demand). However, it shows the dependence of market functioning on the supply response time and the shape of the supply and demand curve. Achieving a stable equilibrium does not mean stopping the development of production, therefore the stability of the market equilibrium is relative.
Established equilibrium prices do not always suit society. Government intervention may take the form of forced legislative fixation of fixed prices. The consequences of government intervention in market prices depend on whether prices are fixed above or below the equilibrium point below the equilibrium price(for socially significant goods, in order to prevent their excessive growth) - as a result, a shortage arises, above the equilibrium price(protection of producers of any industry, agriculture) - excess supply, since the amount of demand is less than the amount of supply. This surplus is covered by government purchases, ultimately financed by taxes).
Introduction of a commodity tax. This measure may cause the supply curve to shift upward to the left and establish a new higher equilibrium price, as well as a new lower equilibrium sales volume.
Government subsidies. They cause the supply curve to shift downward to the right, establishing a new lower equilibrium price and a new higher equilibrium quantity.
Solving typical problems:
Problem 1
The demand and supply of a company in the market are described by the equations: Q d = 200-5Р; Q s =50+R. Determine the parameters of market equilibrium.
Solution:
Market equilibrium is achieved when the volumes of demand Q d and supply Q s are equal:
Substituting the demand and supply functions into equality, we get:
200 - 5R = 50 + R
200 - 50 = P + 5P
P = 25
In order to determine the equilibrium volume, it is necessary to substitute the equilibrium price into the demand or supply equation:
200 – 5 × 25 = 75 units.
Thus, the equilibrium price is 25 den. units, and the equilibrium volume is 75 units.
Problem 2
Suppose that the demand curve is described by the equation Q d = 400 - P, and the supply curve by the equation Q s = 100 + 2 P. The government introduced a tax on producers of $15 per unit of production.
Define:
1. how the equilibrium price and volume of production will change;
2. what is the state’s income from the introduction of this tax;
3. to what extent consumers will suffer from the introduction of this tax.
Solution:
1. We determine the parameters of market equilibrium before the introduction of the tax:
400 - Pd = 100 + 2(Pd - 15)
3P d = 330
P d = 110 den. units
P s = 110-15 = 95 den. units
Q 1 = 400 - 110 = 290 units.
The parameters of market equilibrium after the introduction of a tax are determined using the equations:
Q d = 400 - P
Q s =100+ 2Р
Q d = Q s
P d - P s = 15
The introduction of a tax on producers will cause the net price they receive to decrease. The introduction of a tax on producers will not affect the purchase price P d , and the selling price will be equal to P s = P d – 15. Having made all the necessary substitutions, we get:
400- P d = 100 + 2(P d – 15)
3Pd = 330
P d = $110
P s = 110 - 15 = $95
Q 1 = 400 -110 = 290 units.
After the introduction of the tax on producers, the equilibrium quantity was 290 units, and the equilibrium price was $110. Thus, the equilibrium quantity decreased by 10 units, and the equilibrium price increased by $10.
2. For each unit of goods sold, the government will receive $15. The total amount of taxes received by the government will be:
D g = Q 1 × t = 290 × 15 = $4350
3. With a tax on producers, each unit of goods costs consumers $10 more (before the tax, the purchase price was $100, with the tax -$110). The portion of tax revenue paid by consumers will be:
Q 1 × 10 = 290 × 10 = $2900
Before the tax was introduced, the selling price was $100, and after the tax was introduced, it was $95, i.e. With the tax, producers receive $5 less for each unit of goods sold. The portion of tax revenue paid by producers will be:
Q 1 × 5 = 290 × 5 = $1450
Thus, when introducing a tax on producers, buyers pay 2 times more of the tax revenue than producers.
Problem 3
It is known that with free admission to the Friendship match, 30 thousand fans will come, and increasing the ticket price by every ruble reduces their number by 300 people. What ticket price should organizers set if they want to maximize revenue?
A) 10 rub. B) 30 rub. C) 50 rub. D) 100 rub.
Solution:
The demand for tickets depending on the price is expressed by the function Qd = 30000 – 300p. The organizers' revenue is equal to the number of tickets sold multiplied by the ticket price, it must be maximized: (30000 - 300p) p → max We calculate the derivative and equate it to zero. 30000 – 600p = 0, p = 50 rubles, q = 30000 – 300× 50 = 15000. Answer: C. The ticket price is 50 rubles, and 15000 fans will come to the match.
Problem 4
Rank the goods according to the price elasticity of demand - for which of them the elasticity in absolute value will be minimal, for which it will be greater, even greater and, finally, the largest: clothing, milk, salt, restaurant dishes. Explain your answer.
Solution:
Salt has the lowest elasticity in absolute value - it is an essential commodity; there are no substitutes at all; expenses for salt occupy an extremely small share in the family budget, so even a sharp increase in price will have virtually no effect on the volume of consumption. The elasticity of milk is slightly higher - since the share of expenses for milk is slightly higher. However, there are no adequate milk substitutes, and there will not be a significant reduction in consumption even with a significant increase in price. The elasticity of demand for clothing is even higher. As prices rise, many begin to buy clothes in cheaper stores or alter old items. Restaurant dishes have the highest elasticity. When prices rise, most people are able to refuse this benefit.
Answer: salt, milk, clothes, restaurant dishes.
Problem 5
Analyze the impact of the events described below on the apple market. Indicate how price and sales volume have changed.
1) Scientists have discovered that those who eat at least one apple every day never get sick.
2) The price of oranges has tripled.
3) Due to drought, the apple harvest has sharply decreased.
Solution:
1) The scientists’ statement stimulates an increase in demand for apples. The price and sales volume increase. 2) Since oranges and apples are substitute goods, after the price of oranges increases, many consumers switch to apples, hence the demand for them increases. Hence, the price and sales volume increase. 3) A crop failure means a decrease in the supply of apples. It follows that sales volume will decrease and the price will increase.
