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    Microeconomics by McConnell Bruce

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    1. Why is private property, and the protection of property rights, so critical to the sucess of the market system?

    2. Evaluate and explain the following statements:
    a. The market system is a profit-and-loss system
    b. Competition is the disciplinarian of the market economy

    3. What is meant by the term "creative destruction"? How does the emergence of MP3 (iPod) technology relate to this idea?

    4. Explain the law of demand. Why does a demand curve slope downward? How is market demand curve derived from individual demand curves?

    5. What are the determinants of demand? What happens to the demand curve when any of thes determinants change?

    6. Explain the law of supply. Why does the supply curve slope upward? How is the market supply curve derived from the supply curves of individual producers?

    7. What are the determininats of supply? What happens to the supply curve when any of these determinants changes? Distinguish between a change in the quantity between a change in supply and change in quantity supplied, nothing the cause(s) of each

    8. What effect would a rule stating that university students must live in university dormitories have on the price elasticity of demand for dormitory space? What impact might this in turn have on room rates?

    9.What is the purpose of charging different groups of customers different prices? Supplement the three broad examples in the Last Word with two additional examples of your own. Hint Think of prices discounts based on group characteristic of time of purchas

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    The response addresses the queries posted in 1884 Words, APA References



    A private property system gives individuals the exclusive right to use their resources as they see fit. The issue of property rights is coming to the countries moving toward a market economy. Such rights are at the heart of the privatization of state assets. In market economies, property plays a key role in helping individuals and corporations to obtain financing. It is critical because with this, the transfer of goods and properties will not be disorganized in the market system (McConnell & Brue, 2005). In a market system, private individuals and firms own most of the property resources. The right of private property gives the freedom to negotiate the legal contracts. It enables individuals and business organization to get, use and dispose property resources. The property right promotes investment, innovation, exchange, maintenance and economic growth (Reznik, 1996).

    (a) It can be explicated that the market economy is a profit and loss system. In general, profits are emphasized but it should be kept in mind that losses are equally necessary for an efficient economy. The nature of profits by the general public is sometimes misinterpreted. Profits are not an excess charge, neither an act of tightness by firms. For creating value, profits are an advantage to the capitalist-entrepreneur (Reznik, 1996). Profits are a signal to use resources in order to produce items highly valued by consumers, whereas losses are a signal to discontinue production of low-valued items. In an economy, losses are necessary to free up resources for use by those who are producing valued goods.

    (b) Among economic units, the market system usually depends on competition. The basis of competition is exemption of choice in pursuit of a monetary return. Competition helps to diffuse the economic power within the businesses that make up the economy (McConnell & Brue, 2005). When there are independent sellers and buyers in a market, no buyer or seller is able to prescribe the price of the product. Due to competition, a firm that raises its price will lose all of its business. Competition also implies that producers can enter or leave an industry; there are no barriers to an industry's entry and exit (McConnell & Brue, 2005). A firm that fails to exploit new technology will lose profits. In the market system, competition is the basic regulatory force.


    Creative destruction is a model that seems to fit the systematic destruction of old theological system. The old are replaced by the new at a reckless step in the evangelical world.
    It is a process of industrial variation that constantly overturns the structure of economic rather than destroying the old one and constantly creating a new (Creative Destruction, 2007). Creative destruction occurs when something new kills previous one. For example, personal computers, the industry led by Microsoft and Intel destroyed many mainframe computer companies but with this, ...

    Solution Summary

    The response addresses the queries posted in 1884 Words, APA References