Microeconomics - Standards M11 and M12 - Assignment #5 - Due 9/17/2010

What is Microeconomics?

1.  Using  the typical 'Facebook' lingo, write a definition for Microeconomics and then provide a standard English translation for your 'Facebook' definition.

The way I would use it on facebook I would say The flow of money yo on a small scale

Title:  Role of Money - M11

1.  Using what you learned about the three functions of money, explain how 'play money' differs from 'real' money?

Money is the medium of exchange, as a store of value, and as a unit of account

Medium of Exchange allows for greater efficiency in the economy and creates more trade in the economy. In a traditional barter system, trade between two parties could only occur if one had and wanted what the other party had and wanted, and vice versa

Store of Value- Any form of commodity, asset, or money that has value and can be stored and retrieved over time

Unit of account-Accounts that carry funds provided by entities of the U.S. Government.

2.  Money has no actual value other than the value we attach to it. The barter system would still be practiced today if the participants did not agree to set a value on a piece of printed paper that represented the value of the goods and services they had to offer.  What would you accept in place of money, if someone wanted to 'buy' your most prized material possession?

       First my most prized possesion is an 1930-1950 barbie dolll if someone wanted to trade for either a life time supply of my favorite ceral or food

Circular Flow Model - M11

1.  What does a circular flow model tell us?
The ciscular flow model tells use the flow of goods& services and factors of production between firms and households in a market

2.  What is the role of households in the three sector circular flow model?
purchase goods and services from business(supply labor) also pay taxes to the government

3.  What is the role of businesses in the three sector circular flow model?
Use households money to purchase from the four factos of production supplied by households

4.  What is the role of government in the three sector circular flow model?
receives revenue from the households who pay taxes to the government. Also recieves money from business through corparte income taxes
5.  What role do households have in the factors or resource market (inputs)?

Title:  Law of Demand and Law of Supply - M12

1.  For each event described below, explain what happens to either the demand or supply curve. (increase/decrease?  Shifts left or right?)

(a) What happens to the demand for chicken if concerns about mad cow disease lead to widespread euthanizing of  cows on U.S. cattle farms?
the demand for chickens would increase because its a fall back on beef


(b) What happens to the supply of orange juice if Florida is hit with very severe weather?
The supply of orange will decrease

(c) In the market for coffee, severe global weather systems destroy 30% of the coffee bean crop.
The quanity of cofee will decrease while price increase

(d) In the market for cereal, if the price of cardboard material used to package cereal increases.

Quainity will increase while price increase


2. For each part below,  EXPLAIN what happens to equilibrium quantity and price (increase or decrease?).

a)  In the market for doughnuts, if they were found to be a major contributor to high cholesterol in adults.
Quainity decrease

b)  In the market for doughnuts, if widespread unemployment continues.


c) In the market for doughnuts, if Krispy Kreme introduces a new whole wheat 'low-calorie' doughnut.


3.  What are two factors that can change the quantity demanded?  Provide an example for each.


4.  What are two factors that can change the quantity supplied.  Provide an example for each.

How different economic systems answer the three basic economic questions?

-Standard:SSEF4


What are the three basic economic questions that every society must answer?

- What to produce

- How to produce

- For whom to produce

What is an economic system? and what are four economic systems? Give an example of each

An economic system is the system of production, distribution and consumption of goods and services of an economy

Traditional Economy- Based on traditions and customs

Command Economy- Government officials control everything

Market Economy- Individuals( Buyers& Sellers)

Mixed Economy- has a combination of economic systems


Write a detailed explanation of how each of the four economic systems answers the three basic economic questions?

In a traditional economy the 3 basic economic questions is determined by the older genertation of the society.The command economy government officials/higher authority answer the 3 basic questions. The market economy the buyers and sellers answer the 3 basic questions. The mixed economy is unknown because it's an mix of all of the three economic systems
How does the united states reflect a combination of economic systems?




The United States reflect the market economy because the 3 basic questions is answered by the buyers and sellers and everything is based on supply and demand







The Inuit tribe in Alaska teach their children that they must always do their best at every task. The child begins by observing the adults working on a task. When the time comes for the child to do the task, the task is first divided into smaller tasks. The adults praise the child at each stage the child successfully completes. When all stages have been complete, the child is ready takes full responsibility for the task. What economic system is used by the Inuit? Explain.

This is an tradtioanl economy because it shows that they are being taught by an tradtion or an custom that has  been passed down from generations.


How do market, command and traditional economics systems compare and contrast with each other in terms of profit motive, private ownership, consumer sovereignty, competition and government regulation?
They are all similar due to profit motive. In order for a business to be successful it's bases upon supply and demand upon any business

Explain why Adam Smith would oppose government intervention in a market economy. Give a specific example of why you support Adam Smith’s theories of laissez faire and the ‘invisible hand’ in a market economy and one example of why you would oppose his theory? Explain.

I support Adam Smith theory because what's going to attract people is lower prices