Micro Notes #11
-How to move a demand curve:
1. change in tastes and preferences
2. change in knowledge
3. changes in the price of related goods or services (compliments or substitutes)
4. change in income
-demand for normal goods shifts out when income g
- All of your business should be by word of mouth.
- The more they advertise, the worst they are.
Any form of communication used by a firm to inform, persuade, or remind consumers, channel
members or important stakeholders
Setting the Promotion Mix
Companies will gravitate to a promotion mix that is most efficient and effective.
Effectiveness is determined by the market places.
The market place is always changing.
- Company is always changing, the product, the consumers,
Chapter 4 - Ethics and Business Decision-Making
The Importance of Ethical Leadership
An in-depth understanding of business ethics is important to the long-run viability of any
corporation today. It is also important to the well being of individual office
Principles of Economics
14 December 2012
People often put the tag, priceless on pieces of art, but we know that in the
world of economics, nothing is priceless or free. There is equilibrium between the
Micro Notes #10
o Know the relativity of elasticity, know how to relate the four elasticities to
o The question of the price ceiling on the midterm, instead of the price
ceiling make it a tax
o Price control
Micro Notes #9
Price floor: A minimum price set for a good to be sold. An example of a price
floor is minimum wage. In this case the government is saying that it is illegal to
pay people below the set price.
Price ceiling: A maximum price set for a good.
Micro Notes #8
Transaction costs: A cost incurred in making economic exchange. For example,
when buying or selling stock, you have to pay a commission to the stockbroker;
this would be a transaction cost.
Positive v. Normative science: A positive science
Micro Notes #7
Cooperation: explicit, we will work together and cooperate as the same firm.
Example at the beginning of class was not cooperation.
Diminishing marginal value: Reason the demand curve slopes downward. The
quantity demanded of that homogeneo
Micro Notes #6
Rational irrationality: Caplins notion that yes you are systematically biased and
you have no reason to become better informed. Because the benefits of being right
are concentrated and the consequences of being wrong are shared. Ppl think t
Micro Notes #5
Intellectual property a juridical concept which refers to creations of the
mind for which exclusive rights are recognized. Under intellectual
property law, owners are granted certain exclusive rights to a variety of
Micro Notes #4
Common pools: the type which is rivalrous but not excludable i.e. keg beer.
Some resource which everyone has access to. We dont have a way to keep nonpayers from consuming. No marginal costs. A tragedy of the commons at play.
Micro Notes # 3
Game theory- Game Theory involves the modeling of interactions among
agents. Game theory is used in a variety of economic models to examine
various different potential outcomes. Game Theory usually involves
looking at events where the deci
Micro Notes #2
Absolute advantage: refers to the ability of a party (an individual, or firm, or
country) to produce more of a good or service than competitors, using the
same amount of resources.
Tragedy of the commons: explains how individuals acting ind
Micro Notes #1
o Positive: taxing pollution
o Negative: bees and honey
Moral hazard: inspired by tragedy of commons. Forms of response or action can
invoke a specific action from other people. Neighborhood effects, shelling points.
Principles of Microeconomics Midterm Study Guide:
1st and 2nd Law of Demand
1: Other things equal, when the price of a good rises, the quantity demanded of the good falls,
and when the price falls, the quantity demanded rises
-economic law that states tha