Economics
Economics
Economics
Kartei Details
| Karten | 17 |
|---|---|
| Sprache | English |
| Kategorie | VWL |
| Stufe | Universität |
| Erstellt / Aktualisiert | 24.07.2017 / 24.07.2017 |
| Weblink |
https://card2brain.ch/box/20170724_economics
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| Einbinden |
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Microeconomics vs Macroeconomics
Microeconomics: Individual behaviour under the assumption of rational behaviour
Macroeconomics: Behaviour of the whole economy
Efficient Market Hypothesis
Opportunity cost
Efficient market hypothesis: market prices reflect fully all available information
Opportunity cost is the value of the best alternative you must give up
Demand curve (axis, definition) and influences
Demand curve: relationship between price and quantity demanded
Demand influenced by: prices of substitutes and complements, income, tastes and preferences and expectations
Elasticity (definition) and influences
Elasticity of demand (formula) - description of elasticity
Consumer surplus
Responsiveness of demand = Elasticity
Elasticity determined by number of substitutes, time, definition of the market
Elasticity = %-change in quantity demanded / % change in price
Consumer surplus: price you are willing to pay - actual price
Income elasticity
Cross price elasticity
Price discrimination (3 levels)
Income elasticity = %-change in quantity demanded / %-change in income
Cross price elasticity = %-change in quantity demanded x / %-ch. in quantity demand y
Price discrimination
- 1st degree: different for each customer (not possible)
- 2nd degree: e.g. by volume (bulk)
- 3rd degree: grouping (business, economy)
Factors of production (short vs long term)
Total Product, Marginal Product
In short run, one factor of production is fixed
In long run, all factors of production are variable (capital and labour)
Total product = total output produced
Marginal product = additional output after adding one more unit of input
Short Run:
SATC, SAVC, SAFC, SMC
SMC - SATC intersection
SATC = STC / Output
SAVC = SVC / Output
SAFC = SFC / Output
SMC = Change in STC / Change in output
SMC always intersect with SATC in the minimum of SATC
Supply curve represents ...
The supply curve represents the positive relationship between the price of a product and the willingness of a firm to supply it
Long run (productivity and costs are driven by ...)
Productivity and costs are driven by return to scale (measures change in output for a given change in input)
- Increasing returns = output grows at a faster rate than input
- Decreasing returns = input grows at a faster rate than output
- Constant returns = input and output grow at same rate
Economies of scale and Diseconomies of scale
Economies of scale: production techniques, indivisibilities, geometric relations (storage tanks)
Diseconomies of scale: bureaucracy, decreasing labour motivation
Minimum efficient scale (MES)
lowest point in LATC curve
Cost advantage over rivals, firms may merge to achieve MES
Equilibrium
cross of supply and demand (unique)
Externalities
occur when production or consumption of a good results in costs or benefits being passed onto individuals not involved in production or consumption (doing something, w/o bearing all the cost or consequences)
- Neg. cost externalities: marginal social cost > marginal private cost (e.g. production pollution)
- Neg. benefit externalities: marginal private benefit > marginal social benefit (e.g. banker, minimum wage)
- Pos. cost externalities: marginal private cost > marginal social cost
- Pos. benefit externalities: marginal social benefit > marginal private benefit
Separating Equilibrium
Pooling Equilibrium
Pigs cycle
Separating Equilibrium: good and bad products are sold in different markets
Pooling Equilibrium: good and bad products are sold in the same pooled market
Pigs cycle = Input price changes over time (e.g. market for IT-specialists); x=quantity, y=wage, price
AR, MR, Profit Maximization
MR<MC ?
MR>MC?
AR = Total revenue / output
MR = change in total revenue / change in output
Profit Maximization: Marginal revenue = Marginal cost
MR > MC = increase output
MC > MR = reduce output
Perfect competition assumptions
Many buyers, many sellers
Firms have no market power
Homogeneous products
No exit / entry barriers
Perfect information
Normal profits, Supernormal profits, Economic costs, Productive/Allocative efficiency
Normal profits are required to keep the firm in the industry
Supernormal profits = Profits in excess of normal profits
Economic costs are accounting profits + return to shareholders
Allocative efficiency = only use resources for production of goods that are actually demanded (no overproduction)
