Economy And Market Theory Questions

By: Lok, Johnny Ch

What does economic efficiency mean?Economic efficiency consists of these three components. Allocative efficiency is measured using superiority or optimality. Optimal is that allocation where no person could be made better off without inflicting harm on another. Superior is that allocation where the benefit received by one person is more than the harm inflicted no another.Cost and benefit approach, technical efficiency is for a given level of output, minimizing costs of alternatively for a given level of costs maximizing output. Full employment efficiency is for a system to be economically efficient, then full employment is also required. When, it has relationship between allocation resources and economic efficiency.In simplicity, allocation of resource imply that decisions must be made by choice. Every choice is costly, there is always the cost alternative to bring opportunity cost, it means the next best alternative that must be foregone as a result of an particular decision. Hence, product manufacturer needs to consider how to raise economic efficiency in order to achieve spending the least resource expenditure to earn the maximize output. For example, when one good manufacturer needs to decide to manufacture either beer or pizza, he /she must need to assume how much is current limited resources ( production possibilities) to achieve the efficient manufacturing output, either beer or pizza . The production beer of pizza choice will follow these requirements to make decision: efficiency, fixed resources, fixed technology, beer and pizza both food manufacturing choice.So, opportunity cost will cause, either manufacturing more pizza and giving up large amount of beer manufacturing or either manufacturing more beer, and giving up large amount of pizza. Because food manufacturing resource and manufacturing technology and time efficiency and labor number factors and limited for this food manufacturing. So, he/she must need to make economic efficient decision to choose either pizza and beer is the most benefit maximization manufacturing food output decision finally. It is one ease for economic efficient food manufacturing example.Why is economic theory function?It is one interesting question concerns whether economic theory can assist businessmen to research consumer behavior or how economic environment influences consumer behavioral change. For theory has a role in economic. It plays an essential part in economic research. How economic theory can be applied to contribute to research, I shall explain as below: Economic aims to research how to improve peoples lives in social science policy aspect. I believe that economic theory is useful in policy aspect. For example, businessmen want to determine how a market price will respond to a tax. He can estimate this effect by run a regression of market price against tax rates. Controlling for as many other variables and possible. This would give the businessmen an equation that he would use to product how prices respond to changes to taxes. Taxes don't change enough, but if people only care about the total price of a product, include of tax, a theory. Then, the business can use estimated price elasticities to forecast how the response of price to the product when sale tax is raised.This uses a economic theory about how consumers behaviors, consumers will respond to a increasing sale tax in the same way that they respond to a sale price increase in order to allow data on price responses to be useful. So, the businessmen can use the theory to forecast the outcome of an experiment that has never been done.

• Format: Paperback
• Language: English
• ISBN: B08KH132N6
• ISBN13: 9798692494023
• Release Date: January 1
• Publisher: Independently Published
• Length: 42 Pages
• Weight: 0.23 lbs.
• Dimensions: 0.1" x 8.0" x 10.0"