Econ100B Lecture7 - 4-24

Econ100B Lecture7 - 4-24 - Economics 100B: Lecture 7 S....

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Economics 100B: Lecture 7 S. Nageeb Ali April 23, 2008
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Economics 100B: April 23, 2008 Administrative s Midterm grades: available on Friday on webct.ucsd.edu b Change grading option / drop / withdraw deadline without W b Each midterm is worth 25%; final 50% b Midterms follow problem set and lectures closely s Master these and you’re all set.
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Economics 100B: April 23, 2008 Where we are… s Efficiently combining inputs at lowest cost only half the story s Major question for firm: how much do we produce? When and how will this affect my prices? s Depends on type of market and firm b If firm is small, it has little or no effect on market prices (Pricetaker) b If firm is large, it has a large effect on market prices (Pricesetter)
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Economics 100B: April 23, 2008 Application: Diamonds s Worldwide sales of $11.2 billion in 2004 b Single company, DeBeers sold $5.7 billion worth (48%) s Managing Supply: Scarcity creates value b After discovery in South Africa in 1867, Cecil Rhodes created diamond syndicate to restrict supply b In 1950s as other countries discovered diamonds, DeBeers quickly joined forces or punished competitors s When Zaire reneged, DeBeers flooded markets and reduced price
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Economics 100B: April 23, 2008 Application: Diamonds s Managing Demand b “A diamond is forever.” b Told buyers: spend several months salary
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This note was uploaded on 07/22/2008 for the course ECON 100B taught by Professor Rauch during the Spring '07 term at UCSD.

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Econ100B Lecture7 - 4-24 - Economics 100B: Lecture 7 S....

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