Microeconomics Practice Questions: Trade, Utility, and Externalities

Posted by on Sep 29, 2025 in Economics | 0 comments

Microeconomics Practice: Trade, Utility, and Market Failure

1. Comparative Advantage and Trade (Refer to Figure 1)

Refer to Figure 1. From the figure, it is apparent that:

  1. New Zealand will experience a shortage of wool if trade is not allowed.
  2. New Zealand will experience a surplus of wool if trade is not allowed.
  3. New Zealand has a comparative advantage in producing wool, relative to the rest of the world. (C)
  4. Foreign countries have a comparative advantage in producing wool, relative to New Zealand.

2.

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Market Structures: Perfect Competition vs. Monopoly Profit Analysis

Posted by on Sep 20, 2025 in Economics | 0 comments

Profit Functions and Market Differences

The general profit function is defined as Profit = Total Revenue (TR) – Total Cost (TC).

For a perfectly competitive firm, the profit function is: π = p · y – c(y). Here, p represents the market price, and y is the quantity produced. The firm is a price taker, meaning the price is independent of its output.

For a monopolist, the profit function is: π = p(y) · y – c(y). In this case, p(y) signifies that the price is a function of the quantity produced.

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Essential Economic Concepts: Supply, Demand, and Market Dynamics

Posted by on Sep 3, 2025 in Economics | 0 comments

Key Economic Concepts Defined

Economy: Basic Principles

The economy is the science that deals with the study of the satisfaction of human needs with scarce resources that have alternative uses, from which choices are made.

Economics: A Political Science

Economics is the political science that studies the laws governing the production, distribution, circulation, and consumption of material goods to satisfy human needs.

Bid: Buyer’s Willingness to Purchase

Bid: The amount of goods that buyers are willing

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R Programming Essentials: Data Manipulation & Visualization

Posted by on Aug 28, 2025 in Economics | 0 comments

R Data Handling Essentials

Importing Data

Importing CSV Files

  • Use read.csv() to import a Comma Separated Values file:

    df <- read.csv("filename.csv")

Importing Stata .dta Files

  • Requires the haven package:

    library(haven)
df <- read_dta("stata_file.dta")

Managing Your Environment

Setting and Checking the Working Directory

  • Set: setwd("your/path/here")

  • Get: getwd()

Data Frame Basics

Accessing a Column

  • Access a column using the $ operator: df$column_name

Calculating Column Mean

  • Calculate the mean of a numeric column:

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Market Structures: Competition, Monopoly, and Monopolistic Forms

Posted by on Aug 19, 2025 in Economics | 0 comments

Perfect Competition: Characteristics & Output

Characteristics of Perfect Competition

  • Many Buyers and Sellers: No single firm or consumer can influence the market price.
  • Homogeneous Products: All firms sell identical goods, making them perfect substitutes.
  • Free Entry and Exit: No barriers prevent firms from entering or exiting the market.
  • Perfect Information: Buyers and sellers have full knowledge of prices and product quality.
  • Price Takers: Firms accept the market price determined by industry supply
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Economic Production Functions and Cost Relationships

Posted by on Aug 16, 2025 in Economics | 0 comments

Key Relationships in Production and Costs

APL and AVC Relationship

If APL (Average Product of Labor) is growing, AVC (Average Variable Cost) and ATC (Average Total Cost) are decreasing. There is an inverse relationship between APL and AVC (and ATC). Specifically, you can check that:

AVC = w / APL

MC = w / MPL

Example Calculation: AVC = 2 / (0.25L) = 2 / (0.25 · 2Q0.5) = 4 / Q0.5

MPL and MC Relationship

If MPL (Marginal Product of Labor) is growing, MC (Marginal Cost) is decreasing. There is an inverse

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