slides1 - Economics for Managers Prof Steven Allen NC State...

Info icon This preview shows pages 1–18. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics for Managers Prof. Steven Allen NC State and NBER Fall 2005
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
1. Topics for 8-18-05 Course overview Supply and Demand Elasticity
Image of page 2
2. You will learn Determinants of prices What does cost really mean Incentives within organizations Determinants of size, scope What determines profitability
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
3. Differences in profitability Return on stockholders equity All industries 14.1 Pharmaceuticals 29.1 Electronic equipment 16.5 Savings institutions 5.4
Image of page 4
4. Differences in profitability Differences are just as striking within industries 1989-99 return on investment   Southwest 26 UAL 10 AMR   9 Delta    5
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
5. Why such a difference? Protected market Sustainable advantage in product Sustainable advantage in cost If everyone else can do it as well as you,  you cannot make money on it!
Image of page 6
6. Course overview Prerequisites; intended audience Objectives Assignments Academic integrity Students with disabilities Texts
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
7. Laws of supply and demand Laws of demand Laws of supply Equilibrium, shortage, and surplus Algebraic approach Shifts in supply, demand Examples/applications
Image of page 8
8. Laws of demand Why quantity demanded rises as prices  fall Substitute another good Change in disposable income This price-quantity relationship can be shown  by the equation: ) ( P Q Q D D =
Image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
9. The Supply and Demand Model Quantity Vertical axis measures price (P) paid per unit in dollars Horizontal axis measures quantity (Q) demanded in number of units per time period Price ($ per unit) The demand curve slopes downward demonstrating that consumers are willing to buy more at a lower price as the product becomes relatively cheaper and the consumer’s real income increases.
Image of page 10
10. Shifts in Demand Demand shifts when there are changes in: Prices of related goods - Substitutes - Complements Income Expectations Population Consumer tastes & advertising
Image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
11. When demand curves shift Suppose disposable  income increases. P Q P 1 Q 1 D
Image of page 12
12. Shift in Demand Demand Response : At  P 1  consumers  now take  Q 3  off the  market. At  P 2    consumers  now take  Q 2  off the  market. These changes yield  a new demand  curve. P Q P 1 Q 2 Q 3 Q 1 D P 2
Image of page 13

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
13. Shift in Demand Demand Response : The movement of the  demand curve to the  right from  to  D’  is  an increase in  demand. The new demand  curve shows that  more will be  purchased at a given  price or a higher  price will be paid for  a given quantity. P Q P 1 Q 2 Q 3 Q 1 D P 2 D’
Image of page 14
14. Laws of supply Why quantity supplied increases with price Law of increasing costs Incentives This price-quantity relationship can be shown  by the equation: ) ( P Q Q S s =
Image of page 15

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
15. The Supply and Demand Model Quantity S The supply curve slopes upward demonstrating that at higher prices firms will increase output Price ($ per unit)
Image of page 16
16. Shifts in Supply
Image of page 17

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 18
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern