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Economics - Coggle Diagram

- - - - relatively elastic
      - relatively inelastic
      - unitary elastic
      - perfectly elastic
      - perfectly inelastic
      - Factors
        
        substitutes
        
        necessity
        
        many uses
        
        time period
        
        proportion of income
        
        individual habits
      - applications
        
        manager - pricing the product
        
        import - export
        
        govt tax
        
        agricultural product
      - Total revenue
        
        elastic price inverse to TR
        
        inelastic price direct to TR
    - - normal good +ve
      - giffen good -ve
    - - substitute - +ve
      - complementary -ve
      - independents zero
- - - - Economies of scale
      - dynamic efficiency - higher profit for R&D
      - innovation - reward of patent
      - efficient successful innovative
      - Govt - economies of scale, fair prices
    - - High price for customers
      - less incentive to cut costs
      - less inventive to innovate
      - allocative inefficiency
      - Decline in consumer surplus
      - Productive inefficiency
      - Monopsony
      - less choice for customers
      - gain political power
    - - Single Seller = Firm = Industry = MR = D
      - Barriers to entry
      - No close substitutes
      - Downward sloping demand curve = Price or Quant control
      - sources
        
        natural monopoly
        
        patent
        
        govt license
        
        exclusive posession
        
        Brand loyalty
        
        customerr lockin
    - - excess profit
      - loss
        
        cost
        
        competitor threat
        
        govt policy
    - - excess profit
        
        Optimal scale
        
        entry blocked
    - - technology
      - govt deregulation - Canada prairi plants - marijuana
    - - 2-part pricing
      - bundle pricing
        
        pure bundling - ms word ppt
        
        mix bundling - together or separately
      - peak load pricing
      - condtions
        
        price control
        
        transfer of ownership - separate market
        
        different elasticity
      - degrees
        
        first degree
        
        second degree
        
        price based on quntity
        
        third degree
        
        global/local tourist
      - consumer surplus - price willing to pay and eq point
      - internationa price d
        
        dumping
        
        china dumping
        
        shrimp dumping india
        
        japan dumping steel in us
  - - - allocative efficiency
      - productive efficiency
      - normal profit in long run
    - - notice period to labor
      - local tourist vs foreigners
    - - MR = MC
      - MC should cross from below
    - - Short
        
        Profit
        
        Loss
        
        normal
        
        shutdown
      - Long
        
        normal profit
    - - difficult to make profit unless productive efficeincy
      - early entry = supernormal profit
      - spotting such opportunity = manager
      - risk that long run supply is high and no one makes any profit
  - - - many firms, easy entry, product diferentiation, easy entry, close substitutes, selling costs, highly elastic demand
      - large number of firms, no market dominance, small market share, compettion
      - differentation could be real or imaginiary
        
        monopoly power = degree of differnetation
      - selling expenses above production cost
    - - Short
        
        Excess
      - Long
        
        Normal
    - - Advertising cost
      - excess capacity - min cost output - monoplistic output
  - - - pure oligopoly
      - differentiated oligopoly
    - - smaller sellers, large capacity of market demand
      - competition thru advertisement, differentiation
      - barriers to entry - economies of scale, strong brand image
      - interdependce / rivalry of firms
      - non-price competition
        
        celebrity promotion
        
        superior quality - switss watch
        
        lock-ins
        
        finance terms
        
        number of buyers
      - price rigidity
        
        kinked demand curve
        
        price war in cigerrete industry
      - cartels
        
        OPEC
        
        destroys competitive sprits
- - - - negatively sloped
      - not intersect
      - convex
      - higher IC
    - - perfect substitutes - parallel ICs straight line
      - perfect complements
- - - - principal-agent problem
    - - universal health insurance
      - product liability law
      - medical screening, test driving etc.
  - - - Floor
      - Ceil
  - - - social pressure
      - privatization
      - patents
- - - - Spain - fruits Sweden - pulp, wood
    - - govt tax
      - consumer - cheaper goods
      - producer - economies of scale, large revenue
      - economy - efficeint use of resources
  - - - For
        
        Specialization
        
        producers, consumers, govt, economy benefit
        
        international cooperation
      - Against
        
        Too much dependence on others
        
        domestic industry suffers
        
        penetration of hamrful goods
    - - For
        
        domestic industry
        
        Strategic importance
        
        Dumping/environment protection
        
        things of hisorical importance
      - Against
        
        less competent firms may be protected
        
        consumers will pay high price
        
        Market distortions
      - Modus Operandi
        
        Tariffs
        
        Quotas
- - - - Short
        
        TP, AP, MP
        
        stages
        
        Stage I - MP +, TP +
        
        Stage II - MP -, TP +
        
        Stage III - MP dec , TP -
        
        managerial implication
        
        Stage-I underutilization
        
        Stage-II overutilization
        
        Stage-II Best to be in
      - Long
        
        returns to scale
        
        Increasing
        
        Indivisibility
        
        Specialization
        
        constant
        
        limits to economies of scale
        
        diminishing
        
        managerial problems
        
        L, K both variables
- - - - SRAC
        
        U-Shaped
        
        Constant fixed cost
    - - LRAC
        
        U -shaped
        
        Economies of scale
        
        Finance power
        
        Specialization
        
        Training and education
        
        Bulk buying
        
        Diseconomies of scale
        
        Managment problems
        
        Motivation
        
        Monitoring
        
        cocentration of firms
        
        Labor inefficiency overcrowing
        
        economies of scope
        
        efficiency due to production of 2 or more