Economic Reasoning, Please Choose Any

¶ … economic reasoning, please choose any 10 of the following 12 discussion questions.

What are some of the methods by which you might obtain data on fixed and unit variable costs? (N/A)

#2 Assuming that price and quantity remain constant, what happens to the break-even quantity, revenue, and profit if fixed costs increase?

If fixed costs, like the cost of raw materials, rent, or labor, increase, then it costs the manufacturer more to produce each individual unit of a product. The break-even quantity (the amount the manufacturer must produce to cover total costs), the revenue generated over the break-even quantity, and the profit will decrease.

#3 Assuming that price and quantity remain constant, what happens to the break-even quantity, revenue, and profit if there is an increase in unit variable cost?

If unit variable costs, like the added cost of producing certain goods during a certain season because of utility bills, increases, then it again costs more to produce each individual unit, and the break-even quantity (the amount one must produce to cover total costs), revenue generated over the break-even quantity, and overall profit will decrease, at least in the short-term, until there is a shift in the variable cost.

#4 Assuming that fixed and unit variable costs remain constant, what happens to quantity, break-even quantity, revenue, and profit if there is an increase in price? (Assumptions regarding elasticity are necessary.)

Assuming demand is elastic, that is responsive to price, more revenue will be generated from still-constant demand, and thus the quantity needed to be produced to break even will decrease, revenue will increase from the same amount of goods produced, and profit as well. However, if prices are too high, and demand dips correspondingly in the presence of substitute goods, the immediate surge in profits may soon be canceled out.

#5 How might different cultures be a determinant of demand?

Certain cultures may demand more of particular goods than others as part of daily life -- like there is more of a demand for rice in Asia, and corn in Latin America. Also, climate can cause certain fabrics to be more in demand or 'necessary' than others in different regions. The idea of perfect substitutes may also vary, as in largely non-pork consuming Israel, chicken may be seen as a perfect substitute for beef, but in the United States pork, chicken, and hot dogs might be seen as a perfect substitute for beef that has increased in price.

#6 How might the method of delivery (e.g., the Internet) affect the perceived attributes of a product or service?