$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Evaluation Of Economic Decisions

tag 0 Download6 Pages / 1,462 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT


1.Economic Models are False and so Government should Ignore their Predictions. Explain, discuss and evaluate the accuracy of this statement.

2.Using the Economics or Other Literature (but not the textbook) to Identify Estimates of the Price Elasticity of Demand for at least three different Products. Provide full Citations for the Employed Literature. Comment on the magnitudes of these estimates in relation to the standard economic determinants of the Price Elasticity of Demand.


Economic Models

1.Today, economic models have become a major component in decision making in the modern economy. Generally, these models are used by the federal and local governments for analysis and evaluation of economic decisions. Particularly, these models are useful in making forecasts about the performance of various activities in the country. They also enable agents in the economy to carry out simulations of different economic scenarios to achieve specified results.    Furthermore, they are useful in forecasting the implications of economic policies initiated by the government to the performance of the general economy. For this reason, it is imperative for one to argue that economic models are an essential component in the functioning of the general economy, and their predictions should be implemented by governments to attain economic efficiency.  

2.Primarily, economic models offer a useful foundation for governments to formulate production decisions. Particularly, models such as the production possibility frontier (PPF) provides useful information on the possible combination of two products that can be produced within the country, given the available set of factor inputs (“PPF,” n.d.). Using this model, government agents can determine the production tradeoffs of the economy. Also, using its resources it can establish the optimal point of production. In the process, they can discern the different combinations products that can be produced within the economy. This way, the nation can attain production efficiency given a particular production set amidst the scarcity of resources. In this regard, the use of the PPF in making predictions about production is useful as it allows the country to produce efficiently and use its resources in the best way possible.

The Production Possibility Curve


Source: (Khan, n.d.).

In addition to this, economic models help the government in making decisions about international trade. To be specific, the concept of comparative advantage is applied by economic agents to determine the country’s area of specialization (Beggs, 2014). Basically, this model allows decision makers to determine which product to specialize production on, given that it has a comparative advantage over its trading partners. As such, a country has a comparative advantage over another if it can manufacture the commodity at lower cost others. Therefore, given the economy’s natural resources and factor endowments, policymakers can determine the products to specialize in for international trade (“Comparative Advantage,” n.d.). Likewise, the model enables decision makers to determine which products the country has a comparative disadvantage in, and thus decide to import. By specializing in a product, the nation can reap more benefits from trade. In turn, this highlights the usefulness of economic models in making viable predictions for government implementation.

Furthermore, these models are useful in the determination of a state’s absolute advantage. Predominantly, absolute advantage pertains to the capability of one country to produce higher quality products at a faster rate than others. For this reason, a nation’s absolute advantage or disadvantage plays a significant role in the type of products that it produces. Specifically, this concept is adopted by the government to determine commodities that it can produce better and faster than its trading partners in the international community (Khan, n.d.). Consequently, the country can devote resources and manpower in the production of goods that it has an absolute advantage and import those products that it has an absolute disadvantage. Consequently, this saves time and resources. Besides, the nation benefits more from trading in a good that it has an absolute advantage than when it trades in a commodity that it has an absolute disadvantage. 



Country A

Country B







Source: (Beggs, 2014).

In this example, country A can produce 20 cars or 5 trucks while country B can produce 25 cars or 10 trucks. In this case, B has an absolute advantage in producing both products but a comparative advantage in producing trucks since it is relatively better in producing trucks (Beggs, 2014).

Above all, economic models are important in making predictions about the effects of economic policies implemented by the government. From the model of the circular flow of income, economic agents can understand the extensive coordination and interconnectedness between households, firms, and the economy in general. Through this model, one can establish that any changes in tax policies, interest rates, investments affect the entire economy. With this in mind, it can implement policies that have minimal effects on the households and firms. Therefore, economic models are vital and should not be ignored. Instead, the government should adopt them in decision making to achieve efficiency in the economy.

Price Elasticity of Demand

Typically, price elasticity relates to the sensitivity of consumers to variations in the price of a commodity. According to the law of demand, as the price of a commodity rises, its demand declines ceteris paribus (Khan, n.d.).  

Estimating PED

PED = Percentage change in quantity demanded

                     Percentage change in price

Price Elasticity of Luxury Goods

Typically, luxury goods have a relatively elastic demand. Thus, a proportionate change in the price of the good results in a greater change in its demand (Moffatt, 2016).


Suppose the price of a refrigerator changes by 20 percent and the demand changes by 40 percent.

PED = 40/20

ep= 2.0.


A slight increase in its price brings about a substantial decline in its demand. The magnitude of the elasticity is 2. Hence, every time the price of the product changes by one unit, its demand changes by 2.0 units. Consequently, it can be deduced that the product is relatively elastic.


Price Elasticity of Essential Products

Markedly, basic goods and services have a relatively inelastic price elasticity. Explicitly, a unit change in the price of the product results in a less than proportionate variation in its demand (Mulugeta et al., 2013).


Assume that the price of salt increased by 20 percent. Despite the increase in price, the demand for the commodity declined by 10 percent only.

PED = 10/20

ep= 0.5


The magnitude of consumers’ responsiveness to changes in the prices of salt is 0.5. Therefore, when the price of salt increases by one unit, its demand drops by only 0.5 units. For this reason, it can be concluded that the product has a relatively inelastic demand.

Unitary Price Elasticity of Demand

A product has unitary elasticity if a unit change in its price results in a unit change in its demand (Russo et al., 2013). In reality, there are no products that have a unitary elasticity. However, a close example is clothing, whose supply and demand changes proportionately to variations in price.


Assume the price of a shirt changes by 20 percent. Likewise, its demand changes by 20 percent.

PED = 20/20

ep = 1


The magnitude of the elasticity is 1. Thus, a change in the price of a shirt by one unit will result in a variation in its demand by 1 unit. Therefore, the shirt has a unitary elasticity of demand.



Beggs, J. (2014). Absolute and Comparative Advantage. Retrieved from

Comparative Advantage. Library of Economics and Liberty.  Retrieved from

Khan, S. Comparative Advantage and Absolute Advantage. Khan Academy. Retrieved from

 Khan, S. Price elasticity of demand. Khan Academy. Retrieved from

Moffatt, M. (2016). Price Elasticity of Demand. Retrieved from

Mulugeta, D., Greenfield, J., Bolen, T., & Conley, L. (2013). Price- and Cross-Price Elasticity Estimation using SAS. SAS Global Forum.  Retrieved from

Production Possibility Frontiers. Economics Online.  Retrieved from

Russo, C., Green, R., & Howitt, R. (2013). Estimation of Supply and Demand Elasticities of California Commodities. Department of Agricultural and Resource Economics University of California, Davis.  Retrieved from
Download Sample

Get 100% money back after download, simply upload your unique content* of similar no. of pages or more. We verify your content and once successfully verified 100% value credited to your wallet within 7 days.

Upload Unique Document

Document Under Evaluation

Get Credits into Your Wallet

*The content must not be available online or in our existing Database to qualify as unique.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). Evaluation Of Economic Decisions. Retrieved from

"Evaluation Of Economic Decisions." My Assignment Help, 2018,

My Assignment Help (2018) Evaluation Of Economic Decisions [Online]. Available from:
[Accessed 13 July 2020].

My Assignment Help. 'Evaluation Of Economic Decisions' (My Assignment Help, 2018) <> accessed 13 July 2020.

My Assignment Help. Evaluation Of Economic Decisions [Internet]. My Assignment Help. 2018 [cited 13 July 2020]. Available from: is one of the noted service providers that deliver essay help. We provide tailored essay assistance to make sure that student gets online essay help exactly in the way they want it to be written. We at have built teams of consultants, who readily attend every query related to help me writing my essay. We provide essay writing help in forms of tips and steps in order o assist students with tough essay assignments.

Latest Economics Samples

SBLC4004 Economics For Business Specification

Download : 0 | Pages : 11
  • Course Code: SBLC4004
  • University: University Of Wales Trinity Saint David
  • Country: United Kingdom

Answer: Introduction The analysis of housing market of UK is an interesting aspect for several reasons. Housing market in UK holds a pivotal position in the economy. As compared to other European nations UK has a much higher owner occupation rate. In 2011, UK’s owner occupation rate was 70% as compared to a rate of 45% in Germany and 56% in France. The housing price in UK has constituted a steady upward trend in the last few years. The ...

Read More arrow Tags: United Kingdom London Management Business & corporate finance University of London 

ECF3120 Consumer Economics

Download : 0 | Pages : 7
  • Course Code: ECF3120
  • University: Monash University
  • Country: Australia

Answer: Background of the study The topic for the proposal is the apparel consumption in Australia. The rise in online apparel retailing is taking away the profits of the local retail apparel shops in Australia. The apparel retail comprise of the sale of women’s, men’s and infant’s wear. The revenue growth from the online retail business is about 15.1 percent which is a threat for the local retailers as customers are shiftin...

Read More arrow Tags: Australia 6 Consumer Economics Monash University 

HI5003 Economics For Business 34

Download : 0 | Pages : 3

Answer: 1. (A) Name of point B is inefficient. Name of point A is efficient. Name of point D is unattainable. 10 units of machinery is the opportunity cost of producing 10, 000 more tons of rice when the economy of Nepal is operating at point T. (B) (B1) Discovery of fertilizer would increase the output of rise given the amount of other things will take the economy of Nepal to PPF2. (B2) Discovery of steel would increase the production of ...

Read More arrow Tags: Australia 6 economics for business Holmes Institute 

POLI1095 Evidence Policy And Practice

Download : 0 | Pages : 6
  • Course Code: POLI1095
  • University: Royal Melbourne Institute Of Technology
  • Country: Australia

Answer: Impact of COVID-19 on the Australian economy Australia is renowned as the fourteenth largest economy in the world that has the total Gross Domestic Product of about 1.69 trillion Australian dollars in 2019. It follows a mixed market economy which is one of the most developed in the world. The economy has already faced an economic loss due to the bush fire that took place in the beginning of 2020 and had been struggled to balance its e...

Read More arrow Tags: Australia 6 Evidence  Policy and Practice Royal Melbourne Institute of Technology 

MAE203 The Global Economy

Download : 0 | Pages : 6

Answer: 1a.   Figure 1: Trend in monthly cash rate in Australia (Source: 2020) The trend in monthly cash rate target of Australia shows that there is an overtime declining trend. In order to give the economy necessary stimulus through monetary policy, Reserve Bank of Australia continuously lowered the cash rate with cash rate declines sharply from 14.00 in August 1990 to 0.75 in January 2020. RBA adjusted the cash rate with...

Read More arrow Tags: Australia 6 the global economy Deakin university 

Save Time & improve Grade

Just share Requriment and get customize Solution.

We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits




Overall Rating



Our Amazing Features


On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.


Plagiarism Free Work

Using reliable plagiarism detection software, only provide customized 100 percent original papers.


24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.


Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.


Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

265 Order Completed

97% Response Time

Ken Campbell

MSc in Electrical Engineering

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 4/5

248 Order Completed

100% Response Time

Lloyd Bernabe

MSc in Accounting

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

752 Order Completed

100% Response Time

Hugh Cleave

Masters in Human Resource Management (MMgt, HRM)

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2109 Order Completed

99% Response Time

Emma Zhong

Ph.D in Project Management with Specialization in Project Communications Management

Singapore, Singapore

Hire Me

FREE Tools


Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.


Essay Typer

Get different kinds of essays typed in minutes with clicks.


GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.


Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.


Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability




Your Approx Earning

Live Review

Our Mission Client Satisfaction

The paper was well written, although there some changes needed to be made , overall im satisfied.


User Id: 438520 - 13 Jul 2020


student rating student rating student rating student rating student rating

It was a perfect work. Nice analysis and organized. I also appreciate that they were very fast.


User Id: 341163 - 13 Jul 2020


student rating student rating student rating student rating student rating



User Id: 234292 - 12 Jul 2020


student rating student rating student rating student rating student rating

Always fast and efficient. They seem to care about delivering good work to the students. My powerpoint was nice and well put. I will continue to use your services.


User Id: 451381 - 12 Jul 2020


student rating student rating student rating student rating student rating
callback request mobile
Have any Query?