Answer Both Questions: 1. Microeconomics Can Be Applied As A Set Of Conceptual Tools, In Empirical Analysis, Or As A Means Of Evaluating Policies. Explain And Distinguish Between These Sorts Of Applications And Provide Real-world Examples To Dem

LONG RUN AVERAGE CURVENationalized industries are usually uppercase intensive thus in the long run because of home base of economies they should enjoy falling medium greets . This attitude also ensures a falling borderline cost curve which creates a problem for the marginal cost is equal to wrong relationshipAccording to Philip Michael (1977 , at a certain price , the industry makes a going which would have to be financed out of tax revenues a situation creating two worries .

When because of scale of economies marginal cost rather than go up , continue to fall , the competitive rule of equating marginal cost with price or average revenue entrust result in a lossThere is redistribution of income from the tax payer to the consumer on no obvious criteria of equity , need or imaginativeness allocationPrice policy might become a facet of tax revenue policy which is a piece of economic irrationalityAverage fixed cost continually declines as create expandsBecause of the law of diminishing returns , twain average variable cost and average cost falling off at first then increase as to a greater extent output per week is produced in the plantIn this case , a cliff in the price of a variable input shifts both(prenominal) the marginal and average cost curves downward . Market allow for increases and the price of the product declines . As economic integration lowers average costs of production and increases competition , prices will fall and output will also increaseImprovements in technology lower the token(prenominal) possible average cost of producing an item . This results to magnification to expansion of the industry and a decline in market price until price equals the lower minimum possible average costReferencesPhilip , W .B Michael ,.T (1977 . Economic theory (1st edit .India...If you want to get a full essay, order it on our website: Orderessay

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