Microeconomics – Consumers, Producers & Efficiency of Markets

WELFARE ECONOMICS Welfare economics is the study of how the allocation of resources affects economic well-being. Participation in market leads to buyers receiving benefit consumer surplus and sellers receiving benefit producer surplus. Equilibrium maximises total welfare. CONSUMER SURPLUS Willingness to pay measures the buyers’ value of a good or service as the maximum amount that … Continue reading Microeconomics – Consumers, Producers & Efficiency of Markets

Microeconomics – Application & International Trade

EQUILIBRIUM WITHOUT INTERNATIONAL TRADE Assume: an isolated country only produces steel. Imports and exports of steel are prohibited. Results: domestic price adjusts to clear market. The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive. If country begins international trade, will it be an importer or exporter of steel? … Continue reading Microeconomics – Application & International Trade

Microeconomics – Elasticity & Its Applications

Elasticity measures how much buyers and sellers respond to changes in market conditions. Price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. Determinants … Continue reading Microeconomics – Elasticity & Its Applications

Microeconomics – Comparative & Absolute Advantage

This article follows on from the previous gains from trade article. People consume goods produced domestically and overseas. Interdependence and trade mean more goods and services are available in increased variety. Differences in costs determines the value of trade. Production costs -> absolute advantage. The producer that requires a smaller quantity of inputs to produce … Continue reading Microeconomics – Comparative & Absolute Advantage

Redesigning Family Tax to Benefit Low Income Households

The total approximate savings from scrapping both the FTB Part B and the Schoolkids Bonus would be $5.9 billion each year. Therefore, the abolishment of Family Tax Benefit (FTB) Part B and the Schoolkids Bonus, while redesigning Family Tax Benefit Part A to reduce middle-class welfare and insulate low-income families from the former. The plan … Continue reading Redesigning Family Tax to Benefit Low Income Households