Microeconomics - Analysis of Necessities

Microeconomics

1.  Analysis of Necessities: Why are anti-diabetes drugs likely to have inelastic demand? Define elasticity and provide graphical support to your explanation. Why elasticity is so important to forecast market trends? (20%).

2.  Explain the different market structures using graphs and verbal explanations. Provide an example of each market. Why monopolies arise and wha governments can do in face of monopolies?

3.  Markets and wellbeing: Why we want markets that make consumer and producer surplus bigger? Explain the concept of surplus and the relationship between price and consumer surplus. Please, build your argument trough an example (it can be fictitious). (20%).

4.  What does it mean (in microeconomic terms) that basic research is a public good? Define a public good and an externality and relate that to the existence of patents in basic research.

5.  Costs: Imagine that you run a bar in the Barcelona city centre and your number of clients falls dramatically because of mobility restrictions. Using your microeconomic concepts explain the decision to shut down in the short run and to leave the market in the long run (20%).