Economics Assignment Example | Topics and Well Written Essays - 500 words - 4

Economics - Assignment ExampleThe policy will become costly because the government will be forced to implement the same policy of buying up the surplus of wheat to prevent scathe from falling.Moreover, the policy 2 is costly than the policy 1 when the government faces a problem in dealing with the excess wheat it bought. The policy is costly because if government opts to purchase the wheat, but it sells it to developing countries at a rock bottom prices. The government can also sell the surplus to farmers by feeding animals or offering it at a reduced price prices to those in need of it, in other countries. However, the policy of paying the farmers the tack on price is costly than that of buying the surplus because the price paid to farmers in unavoidably higher than the price received from the sale of surplus.1f) both Policies will produce equal net economic benefit because the cost associated with both policies affect the indian lodge directly, and are subtracted from the produ cer and consumer surplus. From the graph, the net economic benefit is shown by the triangle Q1P1QE.a) In the real world environments, firms are not identical because technology changes continually and diverse firms have different histories. The change in technology will cause the firm to reduce the cost of production, and in turn causes downshift of in individually firms marginal cost curve. Meanwhile, the short run supply curve that is the total of the firms marginal cost curves will shifts downwards. accord to Lipsey and Chrystal (2007, 146), the firms produces economic profits and output at which price equals marginal cost. In the perfect competition, the marginal cost curve is greater and stiffer than honest cost curve. Meanwhile, there will be no new entrants attracted to the industry because the average cost minimizing output is greater. In the short run, the entry of new firms shifts the supply curve to the right. Each firm old and new will cover its total cost by producin g at a