Disney Marginal analysis

Marginal analysis is a decision-making tool that examines the additional or marginal costs and
benefits of a specific course of action. In the case of Disney's decision to lay off 28,000 employees
despite a net loss of $18.7 billion, marginal analysis would involve evaluating the additional costs and
benefits of retaining these employees versus laying them off.
The decision to lay off employees may have been driven by the need to reduce costs in response to
the significant net loss experienced by Disney. By conducting marginal analysis, Disney could have
compared the marginal cost of retaining each employee (including salaries, benefits, and other
associated expenses) with the marginal benefit of their continued employment. If the marginal cost of
retaining an employee exceeded the marginal benefit they provided to the company, then laying off
those employees would be a rational decision from a financial perspective.
Additionally, given that streaming media has become the focus of Disney's business, the company
may have also considered the potential impact of the layoffs on its streaming operations. Marginal
analysis would have involved assessing how the reduction in workforce would affect the company's
ability to produce and distribute content for its streaming platforms, and whether the potential
benefits of cost savings outweighed the potential negative impact on its streaming business.
Ultimately, conducting marginal analysis would have allowed Disney to make a data-driven decision
regarding the layoffs, weighing the financial implications against the potential impact on its
operations and strategic focus.

The reason for Disney's net loss of 2.832 billion U.S. dollars in fiscal year 2020 is due to several factors.
Firstly, the pandemic has had a significant impact on the company's business. With the closure of
theme parks and the shift to online streaming, Disney's revenue has decreased significantly. Secondly,
the company has had to lay off around 28,000 employees as a result of the pandemic, which has
increased costs. Lastly, Disney has also invested heavily in its streaming platform, Disney+, which has
increased expenses.

To better understand the reasons for the net loss, we need to perform a marginal analysis. This
involves comparing the change in revenue and expenses between the current period and the previous
period. For Disney, we can see that revenue has decreased by around 7% from the previous year,
while expenses have increased by around 15%. This means that the net loss is due to a combination of
decreased revenue and increased expenses.

In summary, Disney's net loss in fiscal year 2020 is due to a combination of the pandemic, layoffs, and
increased expenses related to its streaming platform. The company has had to adapt to the changing
market conditions and shift its focus to online streaming, which has led to decreased revenue from
theme parks and other sources.

Does a change in consumers’ tastes lead to 1a movement along the demand curve or 2 a
shift in the demand curve? Does a change in price lead to a movement along the demand
curve or a shift in the demand curve?

A change in consumers' tastes leads to a shift in the demand curve, not a movement along the
demand curve. When consumers' preferences or tastes for a good or service change, it affects their
willingness and ability to purchase that good at any given price. This results in a shift of the entire
demand curve to the right or left, reflecting an increase or decrease in the quantity demanded at
every price level.

On the other hand, a change in price leads to a movement along the demand curve, not a shift. When
the price of a good changes, it directly impacts the quantity demanded, causing a movement along
the existing demand curve. If the price decreases, the quantity demanded increases, and if the price
increases, the quantity demanded decreases, resulting in a movement along the demand curve.

Popeye’s income declines, and as a result, he buys more spinach. Is spinach 1 an inferior or 2 a
normal good? What happens to Popeye’s demand curve for spinach?
Popeye’s income declines, and as a result, he buys more spinach. Is spinach 1 an inferior or 2 a
normal good? What happens to Popeye’s demand curve for spinach?
In this scenario, if Popeye's income declines and he buys more spinach, it indicates that spinach is an
inferior good for him. An inferior good is one for which demand increases as consumer income
decreases.
When Popeye's income declines, his demand for spinach increases, and this would cause a shift in his
demand curve for spinach. Specifically, the entire demand curve for spinach would shift to the right,
reflecting an increase in the quantity demanded at every price level due to the decrease in Popeye's
income. This shift represents the change in Popeye's willingness and ability to purchase spinach at any
given price level.

A change in which of the following will NOT shift the demand curve for hamburgers? a. the price of
hot dogs
b. the price of hamburgers c. the price of hamburger buns
d. the income of hamburger consumers
The change in the price of hamburgers will not shift the demand curve for hamburgers.
The demand curve for hamburgers is determined by various factors, including the price of related
goods (such as hot dogs and hamburger buns), consumer income, consumer preferences, and other
factors. However, the price of the good itself (in this case, hamburgers) does not shift the demand
curve. Instead, a change in the price of hamburgers would lead to a movement along the demand
curve, resulting in a change in the quantity demanded.
Therefore, the correct answer is: b. the price of hamburgers

answer to this questio for my economic exam. Consumers want consumer surplus as higher as
possible, or as lower as possible? Why?When the consumer surplus is highest？Can this be
achieved？And why？
Consumers want consumer surplus to be as high as possible. Consumer surplus is the difference
between what consumers are willing to pay for a good and what they actually have to pay. A higher
consumer surplus means that consumers are getting more value from their purchases.
Consumer surplus is highest when the price of a good is low and the quantity purchased is high. This
occurs when the market price is lower than the maximum price that consumers are willing to pay.
When consumer surplus is highest, it means that consumers are able to purchase a larger quantity of
the good at a lower price, resulting in greater overall satisfaction and benefit.
Consumer surplus can be achieved when there is competition in the market, which leads to lower
prices and higher quantities available for consumers. Additionally, policies that promote competition
and prevent monopolistic pricing can help achieve higher consumer surplus. When there is healthy
competition, producers are incentivized to offer lower prices and better quality to attract consumers,
leading to higher consumer surplus.
In summary, consumers want consumer surplus to be as high as possible because it means they are
getting more value from their purchases. This can be achieved through market competition and
policies that promote fair pricing and availability of goods.

2. Good X is produced in a competitive market using input A. Explain what would happen to the
supply of good X in each of the following situations:a. The price of input A increases.b. An excise tax
of $1 is imposed on good X.c. An ad valorem tax of 5 percent is imposed on good X.
d. A technological change reduces the cost of producing additional units of good X.
2. Good X is produced in a competitive market using input A.
a. The price of input A increases. - If the price of input A increases, then the cost of producing good X
will also increase. This will lead to an increase in the supply of good X as firms will have an incentive to
produce more to recover their higher costs.
b. An excise tax of $1 is imposed on good X. - If an excise tax of $1 is imposed on good X, then the
price of good X will increase by $1. This will lead to a decrease in the demand for good X as consumers
will have less willingness to pay for it. At the same time, the supply of good X will remain the same as
firms will still have an incentive to produce good X at the higher price.
c. An ad valorem tax of 5 percent is imposed on good X. - If an ad valorem tax of 5 percent is imposed
on good X, then the price of good X will increase by 5 percent of the original price. This will lead to a
decrease in the demand for good X as consumers will have less willingness to pay for it. At the same
time, the supply of good X will remain the same as firms will still have an incentive to produce good X
at the higher price.
d. A technological change reduces the cost of producing additional units of good X. - If a technological
change reduces the cost of producing additional units of good X, then the supply of good X will
increase. This is because firms will be able to produce good X at a lower cost, and therefore have an
incentive to produce more to sell at the same price.
Firms want producer surplus as higher as possible, or as lower as possible?
Why?When the producer surplus is highest？
Can this be achieved？And why？
Producer surplus is the difference between the maximum price that consumers are willing to pay and
the cost of production. Firms want their producer surplus to be as high as possible because it
represents the profit they make on each unit sold.
When the producer surplus is highest, it means that the firm is earning the most profit possible. This
can be achieved when the demand for the product is high and the cost of production is low. In this
case, the firm can charge a high price and still sell all of its products, resulting in a high producer
surplus.
However, it is not always possible for a firm to achieve its maximum producer surplus. This can be due
to factors such as competition from other firms, limited resources, or regulation. In some cases, firms
may need to sacrifice some of their producer surplus in order to remain competitive or comply with
regulatory requirements.
In summary, firms want their producer surplus to be as high as possible because it represents their
profit. When the demand for a product is high and the cost of production is low, firms can achieve
their maximum producer surplus. However, there may be factors that limit a firm's ability to achieve
its maximum producer surplus.
answer to this question for my econimic exam. Why the government would ever impose price
ceilings ??
The government may impose price ceilings in order to control the prices of goods and services in a
market. Price ceilings are a type of price control that sets a maximum price that a seller can charge for
a good or service. This is done in an effort to protect consumers from excessive price increases and to
prevent monopolies or cartels from charging exorbitant prices. However, price ceilings can also have
negative effects such as reducing the quantity of goods supplied, limiting innovation, and creating
shortages.
Suppose demand and supply are given by Qd=60-P and Qs=P-20
What are the equilibrium quantity and price in this market?Determine the quantity demanded, the
quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in this market?
Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a
price ceiling of $32 is imposed in this market?
Given the demand function Qd = 60 - P and the supply function Qs = P - 20, we can set them
equal to each other: 60 - P = P - 20 Simplifying this equation, we get: 2P = 80 Dividing both
sides by 2, we find: P = 40 So the equilibrium price in this market is $40. To find the
equilibrium quantity, we can substitute this price back into either the demand or supply
function. Let's use the demand function: Qd = 60 - P Qd = 60 - 40 Qd = 20 Therefore, the
equilibrium quantity in this market is 20 units. Now, let's determine the quantity demanded,
the quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in
this market. With a price floor of $50, the price cannot fall below this level. To find the quantity
demanded, we substitute this price into the demand function: Qd = 60 - P Qd = 60 - 50 Qd =
10 The quantity supplied can be found by substituting the price floor into the supply function:
Qs = P - 20 Qs = 50 - 20 Qs = 30 To find the magnitude of the surplus, we subtract the
quantity supplied from the quantity demanded: Surplus = Quantity Demanded - Quantity
Supplied Surplus = 10 - 30 Surplus = -20 Therefore, with a price floor of $50, the quantity
demanded is 10, the quantity supplied is 30, and there is a surplus of 20 units. Next, let's
determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if
a price ceiling of $32 is imposed in this market. With a price ceiling of $32, the price cannot
exceed this level. To find the quantity demanded, we substitute this price into the demand
function: Qd = 60 - P Qd = 60 - 32 Qd = 28 The quantity supplied can be found by substituting
the price ceiling into the supply function: Qs = P - 20 Qs = 32 - 20 Qs = 12 To find the
magnitude of the shortage, we subtract the quantity supplied from the quantity demanded:
Shortage = Quantity Demanded - Quantity Supplied Shortage = 28 - 12 Shortage = 16
Therefore, with a price ceiling of $32, the quantity demanded is 28, the quantity supplied is
12, and there is a shortage of 16 units.
1. Market Demand Curve:
- The Demand Function: The demand function is a mathematical relationship that shows the
quantity of a good or service that consumers are willing and able to purchase at different prices. It is
typically represented as Qd = f(P), where Qd is the quantity demanded and P is the price.
- Determinants of Demand: These are factors that can shift the entire demand curve. They include
changes in consumer income, preferences, prices of related goods (substitutes and complements),
and expectations about the future.
- Consumer Surplus: Consumer surplus is the difference between what consumers are willing to pay
for a good and what they actually pay. It represents the benefit that consumers receive from
purchasing a good at a price lower than their maximum willingness to pay.

2. Market Supply Curve:

- The Supply Function: The supply function shows the quantity of a good or service that producers
are willing and able to offer at different prices. It is typically represented as Qs = f(P), where Qs is the
quantity supplied and P is the price.
- Supply Shifters: These are factors that can cause the entire supply curve to shift. They include
changes in input prices, technology, expectations, and the number of sellers.
- Producer Surplus: Producer surplus is the difference between what producers receive for a good
and what they are willing to accept. It represents the benefit that producers receive from selling a
good at a price higher than their minimum willingness to accept.
3. Market Equilibrium: Market equilibrium is the point where the quantity demanded by consumers
equals the quantity supplied by producers. At this point, there is no excess supply or demand in the
market, and the market clears.
4. Price Restrictions:
- Full Economic Price: This refers to the total cost of a good or service, including both monetary and
non-monetary costs.
- Price Ceiling: A price ceiling is a legal maximum price set by the government, typically to protect
consumers from high prices.
- Nonpecuniary Price: Nonpecuniary price includes non-monetary costs associated with a good or
service, such as time, effort, or inconvenience.
5. Comparative Statics: Comparative statics is an analysis of how changes in exogenous variables (such
as prices, income, or technology) affect equilibrium outcomes in a market. It involves comparing two
different equilibrium states before and after a change in an exogenous variable to understand its
impact on market outcomes.
Chapter 2 covers fundamental concepts in microeconomics. Here's the specific content of each
section:
1. Law of Demand:
The law of demand states that, all else being equal, as the price of a good or service increases, the
quantity demanded decreases, and vice versa. This relationship between price and quantity
demanded is the basis for understanding consumer behavior in response to changes in prices.
2. Change in Quantity Demanded:
A change in quantity demanded refers to a movement along the demand curve in response to a
change in price, holding all other factors constant. It represents a change in the quantity of a good
that consumers are willing to purchase due to a change in its price.
3. Change in Demand:
A change in demand refers to a shift of the entire demand curve, resulting from factors other than
price, such as changes in consumer preferences, income, prices of related goods, or expectations. It
represents an overall increase or decrease in the quantity demanded at every price.
4. Normal Goods:
Normal goods are goods for which demand increases as consumer income rises and decreases when
consumer income falls. They have a positive income elasticity of demand, meaning that as income
increases, the quantity demanded also increases.
5. Inferior Goods:
Inferior goods are goods for which demand decreases as consumer income rises and increases when
consumer income falls. They have a negative income elasticity of demand, indicating an inverse
relationship between demand and income.
6. Substitutes and Complements:
Substitutes are goods that can be used in place of each other, such that the increase in the price of
one leads to an increase in demand for the other. Complements, on the other hand, are goods that
are consumed together, so an increase in the price of one leads to a decrease in demand for both
products.
7. Inverse Demand Function:
The inverse demand function expresses price as a function of quantity demanded, enabling
economists to calculate the quantity demanded at different price levels. It is commonly used in
economic models and analyses.
8. Change in Quantity Supplied:
Similar to change in quantity demanded, change in quantity supplied represents a movement along
the supply curve in response to a change in price, holding all other factors constant.
9. Change in Supply:
A change in supply refers to a shift of the entire supply curve due to factors other than price, such as
changes in production technology, input prices, or government regulations. It represents an increase
or decrease in the quantity supplied at every price.
10. Supply Shifters:
Supply shifters, also known as determinants of supply, are factors that can change the quantity of a
good supplied at every price level. These factors include input prices, technology, expectations,
number of suppliers, and government policies.
11. Full Economic Price:
The full economic price of a good or service includes not only the monetary price paid by the
consumer but also any nonpecuniary costs and benefits, such as time, effort, and psychological
factors associated with the transaction.
12. Price Ceiling:
A price ceiling is a government-imposed maximum price that can be charged for a good or service. It is
intended to benefit consumers by keeping prices low, but it can lead to shortages and reduced quality
if set below the market equilibrium price.
13. Nonpecuniary Price:
Nonpecuniary price refers to the non-monetary costs and benefits associated with consuming a good
or service. It encompasses factors such as convenience, comfort, prestige, and emotional satisfaction
that contribute to the overall value of a product beyond its monetary price.

1st Chapter
1. The Nature of Profits:
Understanding the nature of profits is crucial in economics. Profit is the financial gain realized from a
business's operations, calculated as total revenue minus total costs. In a broader sense, it represents
the reward for entrepreneurship and risk-taking in the business world.
2. Incentives:
Incentives are factors that motivate individuals or entities to take certain actions or behave in specific
ways. In economics, understanding incentives is vital, as they drive decision-making and influence
people's choices in the marketplace. This understanding helps in analyzing how individuals and firms
respond to various economic stimuli.
3. Marginal Analysis:
Marginal analysis involves studying the effect of a one-unit change in an economic variable on
another. This includes concepts such as the benefit function, net benefit, marginal cost, marginal
benefit, marginal net benefit, and marginal profit. The benefit function calculates the total benefit
gained from a specific level of an activity or decision. Net benefit is the difference between total
benefits and total costs. Marginal cost and marginal benefit represent the additional cost or benefit
incurred from producing one more unit of a good or service. Marginal net benefit is the difference
between marginal benefit and marginal cost. Marginal profit is the additional profit earned from
producing one more unit.
4. Marginal Principle:
The marginal principle states that to maximize net benefits, the manager should increase the control
variable up to the point where marginal benefits equal marginal costs (MB=MC). This level
corresponds to the point at which marginal net benefits are zero, indicating that no further gains can
be achieved by making additional changes in that variable.
1. What is Economics?
Economics is the social science that studies the production, distribution, and consumption of goods
and services. It explores how individuals, businesses, governments, and societies make choices when
faced with limited resources to satisfy their unlimited wants and needs. Economics is concerned with
the allocation of scarce resources to fulfill competing demands, and it analyzes patterns of human
behavior, interactions, and decision-making in the realm of production and exchange.
2. Why Do We Need to Study Economic Theory?
Studying economic theory is essential for several reasons:
- Understanding Human Behavior: Economic theory provides insights into how individuals and groups
make decisions in response to incentives, constraints, and available alternatives. It offers a framework
for comprehending human behavior in the context of scarce resources and competing priorities.
- Rational Decision Making: Economic theory equips individuals with the tools to make rational
choices, considering trade-offs, costs, and benefits. It provides a systematic approach to analyzing
decision-making in diverse settings, such as consumer behavior, firm strategies, and public policy.
- Predictive Insights: Economic theory helps in predicting and understanding real-world phenomena,
such as market behavior, business cycles, inflation, and unemployment. By studying economic
theories, individuals can gain a better understanding of the forces that shape the economy and
society.
- Policy Formulation: Economic theory serves as the foundation for the formulation of public policies,
as it enables policymakers to assess the potential impacts of various interventions, regulations, and
fiscal measures. It provides a basis for evaluating the consequences of policy changes on different
stakeholders and the overall economy.
- Resource Allocation: By studying economic theory, individuals can gain an understanding of how
resources are allocated, distributed, and utilized within an economy. This knowledge is crucial for
designing efficient production systems, improving resource allocation, and fostering economic
development.
1. What is Marginal Benefit?
Marginal benefit refers to the additional satisfaction or utility that an individual gains from consuming
one more unit of a good or service. It represents the extra benefit derived from a small increase in the
quantity consumed. In economic terms, marginal benefit helps individuals make decisions about the
allocation of resources, as they seek to maximize their overall satisfaction or utility.
2. What is Marginal Cost?
Marginal cost is the additional cost incurred from producing or consuming one more unit of a good or
service. It reflects the change in total cost resulting from a small increase in output or consumption.
Understanding marginal cost is crucial for businesses and individuals, as it guides decisions related to
production levels, pricing strategies, and resource allocation.
Based on the Marginal Principle, How to Find the Point That Maximizes Total Benefit:
The marginal principle states that to maximize total benefit, one should continue to adjust the level of
an activity or decision until the marginal benefit equals the marginal cost (MB=MC). This principle
guides decision-making by ensuring that resources are allocated in a manner that maximizes overall
satisfaction or benefit. The point that maximizes total benefit occurs where the marginal benefit
equals the marginal cost, signifying an optimal allocation of resources.

Diminishing Marginal Utility:

Diminishing marginal utility is a fundamental concept in economics, stating that as an individual
consumes additional units of a good or service, the satisfaction or utility derived from each additional
unit decreases. This principle reflects the idea that as consumption increases, the marginal benefit
diminishes, leading to a decline in the additional satisfaction gained from each successive unit
consumed.

Increasing Marginal Cost:

Increasing marginal cost occurs when the production of additional units of a good or service leads to
higher per-unit production costs. This reflects the idea that as the level of production increases, the
marginal cost of producing each additional unit rises. Understanding increasing marginal cost is crucial
for businesses and policymakers, as it influences decisions related to production levels, pricing, and
resource allocation.
International trade is crucial for international firms due to several reasons:
1. Access to Larger Markets: International trade allows firms to access much larger markets than they
would have in their domestic countries. This enables them to boost their sales and revenue potential
significantly.
2. Diversification of Market Risk: By operating in multiple countries, international firms can spread
their market risk. Changes in economic conditions, consumer preferences, or regulations in one
country are less likely to have a catastrophic effect on the overall business.
3. Access to Resources: International trade allows firms to access resources and inputs that may not
be available or may be more expensive in their domestic markets. This can lead to cost efficiencies
and improve the quality of their products.
4. Competitive Advantage: Operating in different countries allows firms to gain a competitive
advantage by utilizing their expertise in technology, marketing, or management that may not be
available in other markets.
5. Economies of Scale: International trade enables firms to achieve economies of scale by increasing
their production volumes and spreading fixed costs over a larger output, which can lead to lower
costs and greater efficiency.

Now, let's analyze the importance of international trade for an international firm using marginal
analysis:
1. Marginal Benefit: When engaging in international trade, the marginal benefit for an international
firm can be seen as the additional revenue or market share gained by serving one more international
market. By expanding into new markets, the firm can capture additional customers, leading to higher
revenues and potentially increased brand value.
2. Marginal Cost: The marginal cost in international trade analysis would encompass the additional
costs incurred from entering a new market, such as marketing expenses, distribution costs, legal and
regulatory compliance costs, and any other market-specific investments. It's important to consider
both explicit costs and opportunity costs.
3. Marginal Analysis: By comparing the marginal benefit against the marginal cost of entering a new
market or engaging in international trade, the firm can make informed decisions about the expansion.
If the marginal benefit exceeds the marginal cost, it may be economically sound to enter the new
market.
4. Dynamic Marginal Analysis: International firms also use dynamic marginal analysis to continuously
evaluate the marginal benefit and marginal cost of staying in a particular international market. This
involves considering changing market conditions, competitive landscape, and regulatory environment.
In conclusion, through marginal analysis, international firms can carefully assess the costs and
benefits of engaging in international trade, and make strategic decisions to expand into new markets
or optimize their existing international operations.