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.