Thursdays meeting!

Those who were there

Yuki

Dong

Ken

We talked about market failure, government intervention and government failure.

Attendance

Monday (23.11.2009)

Yuki

Vasilisa

Attendance

Thursday (19.11.2009)

Rustam 

Hasan

Ramzan

Attendance

Monday (16.11.2009)

Dmitry

Attendance

Thursday (12.11.09)

Yuki

Miss Dong

Tuan

Fanny

Today we went through the main topics in market failure including the main causes and what can be done to correct it.

The meeting lasted for one and a half hour.

Attendance

 Monday (09.11.2009)

Dmitry K

Miss Dong

Yuki 

Ken

Todays meeting

What we did today:

-Elasticities

-Extensions and contractions

-externalities on production and consumption

Seems like people is getting a hang of this now.

Attendance

Thursday (05.11.2009)

Amina

Tuan

Yuki

Mis Loo

Mis Dong

Todays meeting

Here is some of what we went through in the meeting today:

Efficiency:

Efficiency is concerned with how well resources, such as time, talents or materials, are used to produce an end result. In economics, efficiency occurs when best use is made of available resources; the market is operating in such way most benefit consumers. There are a number of different forms of efficiency which need to be considered:

Allocative efficiency is where consumer satisfaction is maximised. Scarce resources are used to produce those goods and services that consumers actually demand. To achieve this, the quantity supplied must be equal to the quantity that is demanded.

Allocative efficiency is the one mentioned in the book, but there are several other types of efficiency:

Static efficiency: This is efficiency that exists at a point in time. An example of static efficiency would be whether a firm could produce 1 million cars a year more cheaply by using more labour and less capital.

Dynamic efficiency: Efficiency that is concerned with how resources are allocated over a period of time. For instance, would there be greater efficiency if a firm distributed less profit over time to its shareholder and use the money to finance more investment?

Productive efficiency: exists when production is achieved at lowest cost.

Productive efficiency will only exist if there is technical efficiency. This exist if a given given quantity of output is produced with the minimum number of inputs. For example, if a firm produces 1000 units of output using 10 workers when it could have used 9 workers, then it would be technically inefficient.

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We also looked at what the different elasticities can be used for:

PED:

Used by businesses when pricing their products. In theory it is beneficial for a firms to increase prices where the demand is inelastic or to decrease the price where the demand is elastic.

YED:

Firms who produce goods and services with a positive, and particular, high positive income elasticity of demand can expect to do well in the future.

XED:

often used where firms are operating in markets that are very competitive. For, instance where there are close substitutes and also a positive cross elasticity of demand with other products, then firms are likely to be tempted to cut their own prices on order to steal market share from their rivals.

PES:

Usually, firms will try to make their supply as elastic as possible, in the hope that they can cash in on a rise in prices by selling more of their product.

PS: Remember to do the working sheets handed out by Chris in the class today. Hopefully we can start market failure next week!

Watch this and try to remember))

Our first lesson!

Attendance (03.11.2009)

Alexandr

Vasilisa

Amina