Elasticity of Demand and Supply
1. There has been a fall in the prices of raw materials that are
used as inputs by all producers of a manufactured product that is
sold in a perfectly competitive market for the finished product.
Consumer demand: utility and
News story in FT
Sugar surges as blaze in Brazil destroys up to 300,000
Sugar prices surged to the highest level in a year after
a fire engulfed at least four warehouses at the Brazili
Production and costs: determinants of
Key topics today
Nature of the firm and concept of profit
The likely structure of costs
very long run
Implications of short-run cost structure for supply curves
Perfect competition and monopoly
Market Structure and Firm Behaviour
Competitive behaviour refers to the extent to which
individual firms compete with each other to sell their
Competitive market struct
Introduction to Economics
Introduction to the course
10 weeks of lectures
1 class per week starting next week
One piece of coursework each term
One 3 hour exam in May on the work of this term and
The exam carries 80% and th
Perfect Competition provides the optimal resource
A perfectly competitive economy is allocatively
efficient because it produces where price, which
measures the value consumers place on the last unit
Markets for inputs
Outline of todays lecture
Determinants of firms demand for divisible and
homogeneous inputs, i.e. can be bought in small units
in current time period and quality of input is known and
all are the same.
1. According to the following findings, we can assume that these are connected with a self-interest that
is a part of a human behaviour. The self-interest means a focus on the individual needs and desires. It
plays an important role in psychological and e
a) If I were the top partner at a major accounting firm at that time of Andersens
collapse, I would probably let the government to be involved in examining all other
companies in the market. According to BD Dictionary (no date) a government
1. Juans utility function: U = FC, F food and C clothing.
a) levels of utility: 100, 200, and 300
The Tables 1,2 and 3 shows the calculations for the indifferences curves showing in the Table 4.
U = FC
F = U/C
According to Miller (2015) Many companies like Bear Stearns and Lehman, want to maximise
employee productivity and efficiency. One of the way to motivate workers to perform better is using
monetary incentives. However, there are some advantages and disadv
4.17 P1 = $10, P2= $12; Q1=100, Q2=90.
a) According to the formula: n = (
Q 1+Q 2
10+12 )/2, n = 0.03/0.05 , n= 0,6 the elasticity
P 1+ P 2 )/2, n =
b) Demand is inelastic as we can see in a) n=0.6 that the elasticity is l
Individual Report: Danone in France and in Egypt.
Danone is a French multinational company specialized in food product. It is based in
Paris but is operating in about 140 countries (Danone, 2016)
Danones turnover is over 21 billion euro
Strategies under almost perfect competition:
Hard to differentiate so one thing that we could do is to lobby on the
Corporate Political Activities: influence political activities:
Companies that are heavily regul
Low-carbon economy. (UK example).
1. decarbonisation needs a solid legal basis. (to limit global warming to 2C).
LT commitment and ST targets.
Although action is required immediately, low-carbon economy will take decades. Creates problem
Demand and Supply
Aim is to understand drivers of market prices (and quantities).
These are in the headlines all the time.
Chinese steel traders are short on good news these days. Prices for
steel are falling, demand is poor, loans