Topics: Economics, Supply and demand, Price elasticity of demand Pages: 12 (2339 words) Published: February 17, 2013
Economics for business; David Begg and Damian Ward

Chapter 1
What is economics?
The problem between the wish list, which is very long and a resources list, which is very short. recognizes difference between infinite wants and finite resources

Finite resources are the limited amount of resources that enable the P and Purchase of G&S Infinite wants Limitless desires to consume G&S
Opportunity the benefits forgone from the next best alternative make these costs as low as possible

Factors of production resources needed to make goods and services * Land ability of individual to work (‘pacht’)
* Labour (wages)
* Capital (rent)
* Enterprise (profit, rent)

Two distinctions in economics; macro & micro
Macro how the entire economy works (what creates a recession etc) Micro how individuals make economic decisions within a company (why do consumers prefer some sort of product, income changes influence consumer patterns) interested in the motives for supplying products

Planned economy government decides how resources are allocated to the production of particular products. economic plan for next five years

Pure / market economy government plays no role in these decision markets take control Two important groups: 1. Consumers that buy products, and 2. firms that sell products

Why study economics?
Focus on functioning of markets. Why are markets important?
* generates revenue where y sell your products
* firms inputs are purchased through markets influence firm’s level costs

Government intervention can seek to influence firms’ costs and revenues, boosting them when firm operates in the interest of society & decrease profits when activities are against public interest. * increase taxes

Globalization successful firms need to understand how macro economic events and global change will impact on their current and future operations * How questions, think of EU, different taxes

Models / theories frameworks for organizing how we think about an economic problem. Positive economics studies objective or scientific explanations of how the economy works technical and objective pursuit of economic understanding Normative economics offers recommendations based on personal value judgements. more direct version, can only reply with similar or alternative value statement

Diagrams are an effective way of communicating complex ideas

* equations of lines : y= a+b*X
* Gradients and turning points measure of the slope of a line Differentiation: means of understanding the gradient
* Economic data time series: one variable on different times & cross-sectional: one variable at same point in time under different individuals & Panel: mix of the above mentioned ones * Using data n-o/o *100 % = change over time

* Index numbers set one year to 100, and calculate the index numbers for previous/upcoming years Why using I.N ? 1. Easy to calculate the change and 2. Facilitate averaging

Arithmetic mean = summing up and diving by the amount
Geometric = summing up and set to the power of 1/the amount

Chapter 2
Firms’ objectives, mainly commercial objectives:
* maximize profits
* maximize market share
* maximize firms’ total revenues

Consumer behaviour demand curve is needed
Factors influencing this demand:
* substitutes (rival products), complements products that are purchased jointly * consumer income
* Normal goods when income increases demanded more and vice versa * Inferior goods other way around
* Tastes, role of advertising (provides info & developing the T&P.) * price expectations

ceteris paribus when price fall, demand will increase

determinants of elasticity
* number of substitutes substitutes up, elasticity goes up, consumers switch more...
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