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Episode 2: Economics is Demanding
Episode 2 - Economics is Demanding
Warning! The MBA Hole podcast is not intended for children. The explicit tag is there for a reason. It is only intended for adults that are masochistic enough to consider taking on an MBA program. If you like the show, please give us a five star rating and review on apple podcasts. This helps us fool our robot business overlords that we are, in fact, more important than we actually are. Follow us on the Twitter box @mbaholepodcast.
My first MBA Course
Get ready for HBR case studies
Get ready for group projects!!
Market Structure
Monopoly
Competitive Market
Market Power
Econo mies of Scale
Supply and Demand
Supply and demand curves only shift right or left
Quantity demanded rises as price falls
Substitution effect: price changes relative to another similar good
Income effect: change in price effectively changes disposable income
Demand can shift for many reasons, substitutes, income, demographics, consumer tastes, etc.
Qd=a-b(P)
Quantity supplied increases with price
Qs=c+d(P)
Supply can shift when productivity increase, costs decrease, etc.
Equilibrium - NO PRESSURE TO CHANGE PRICE
Surplus vs. Shortage
Break Even - Marginal Cost=ATC - where marginal cost equals change in total cost/change in quantity & ATC = TC/Q
Elasticity
Sensitivity of demand due to price changes
Ep=(%changeQ)/(%changeP) Elastic if E>1elastic, less than 1, means inelastic. Basically, if something is elastic, it means customers are price sensitive. You will make more money with a decrease in price. In this case, there are a lot of substitutes. An inelastic product has customers that are not price sensitive. If you cut the price, you’re leaving money on the table.
Other elasticities; income, arc, cross/price, etc. Price elasticity of supply basically a percentage change in quantity that comes from a 1% change in price.
Disclaimer:
The opinions and views expressed in this show are that of the host only. They do not represent their children, wives, dogs, employers, co-workers, neighbors, inlaws, friends, acquaintances, or esteemed university faculty.
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By MBA Hole Podcast
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66 ratings
Episode 2 - Economics is Demanding
Warning! The MBA Hole podcast is not intended for children. The explicit tag is there for a reason. It is only intended for adults that are masochistic enough to consider taking on an MBA program. If you like the show, please give us a five star rating and review on apple podcasts. This helps us fool our robot business overlords that we are, in fact, more important than we actually are. Follow us on the Twitter box @mbaholepodcast.
My first MBA Course
Get ready for HBR case studies
Get ready for group projects!!
Market Structure
Monopoly
Competitive Market
Market Power
Econo mies of Scale
Supply and Demand
Supply and demand curves only shift right or left
Quantity demanded rises as price falls
Substitution effect: price changes relative to another similar good
Income effect: change in price effectively changes disposable income
Demand can shift for many reasons, substitutes, income, demographics, consumer tastes, etc.
Qd=a-b(P)
Quantity supplied increases with price
Qs=c+d(P)
Supply can shift when productivity increase, costs decrease, etc.
Equilibrium - NO PRESSURE TO CHANGE PRICE
Surplus vs. Shortage
Break Even - Marginal Cost=ATC - where marginal cost equals change in total cost/change in quantity & ATC = TC/Q
Elasticity
Sensitivity of demand due to price changes
Ep=(%changeQ)/(%changeP) Elastic if E>1elastic, less than 1, means inelastic. Basically, if something is elastic, it means customers are price sensitive. You will make more money with a decrease in price. In this case, there are a lot of substitutes. An inelastic product has customers that are not price sensitive. If you cut the price, you’re leaving money on the table.
Other elasticities; income, arc, cross/price, etc. Price elasticity of supply basically a percentage change in quantity that comes from a 1% change in price.
Disclaimer:
The opinions and views expressed in this show are that of the host only. They do not represent their children, wives, dogs, employers, co-workers, neighbors, inlaws, friends, acquaintances, or esteemed university faculty.