Study Guides (238,085)
Canada (114,909)
Commerce (378)
COMM 295 (10)

COMM 295 - Final Exam Review

22 Pages
Unlock Document

University of British Columbia
COMM 295
Mariano Tappata

Week 1 Reading Saturday September 07 2013 806 PM 11 Managerial Decision MakingManagers allocate limited resources available to them to achieve the firms objectivesCEO focuses on maximizing profit by instructing individual departmentsdivisions o How is a firm positioned in the market compared to competitorsMarginal reasoning considering the effect of a small change o How to produce what prices to charge etc 22 12 Economic ModelsModel description of a relationship between two or more variablesIncludes only the vital info leaving out less important informationEconomic theory development and use of a model to test hypotheses o Theories are used until the evidence is refuted or a better model is developedPositive statement a testable hypothesis about facts causeandeffect relationshipsNormative statement the belief that something is good or bad should maybe could etc 21 DemandDemand determinants price income alternatives compliments tastes info government other factorsIndividual demand curves are summed in order to determine the market demand o22 SupplySupply determinants production costs technological advances government rulesregulations 23 Market EquilibriumDisequilibrium quantity demanded is not equal to the quantity supplied o Either excess demand or excess supplyMarket makers act to adjust the price and bring the market into equilibrium quickly 24 Shocks to the EquilibriumA change in price of one good forces the shift of a demand curve for a substitutecomplimentA change in the price of an input will shift the supply curveSome events may cause both the supply and demand curves to shift o Genetically modified foods shifted the supply curve right and the demand curve leftTechnology change supply shift change in taste demand shift 25 Effects of Government InterventionsGovernments could put in place policies that shift either the demand or supply curveGovernments use price ceiling and floors to control prices o Price floor beneficial to the producer supply surplus o Price ceiling beneficial to the consumer demand surplusshortage o Binding price floorceiling actually has an effect on the market o Both can create blackparallel markets that do not follow the price controlsSales taxes typically increase the price consumers pay and lower the price suppliers receiveCommon sales tax specific tax the tax is collected per unit of output Equilibrium does not change depending on if the consumer of producer is taxed o Consumers and producers absorb a different fraction of the tax depending on elasticity 26 When to Use the SupplyandDemand ModelPerfectly competitive all firms and consumers are price takers no one can affect the market price 1Many buyers and sellers transact in a market2All firms produce identical products3All market participants have full information about price and product characteristics4Transaction costs are negligible 5Firms can easily enter and exit the market over time Transaction costs expenses over and above the price of the producto Cost of finding a trading partner and making a trade for the productFirms part of oligopolies or monopolies are price setters o Supplyanddemand models may not be right for these types of markets 31 ElasticityPercentage change in one variable divided by the associated percentage change in the other variableArc price elasticity price elasticity of demand calculated using two distinct pricequantity pairsPoint elasticity elasticity evaluated at a specific pricequantity combinationConstantelasticity demand each point on the demand curve has the same elasticityHorizontal and vertical demand curves have the same price elasticity at every pointElasticity of demand is a more negative number the higher the price
More Less

Related notes for COMM 295

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.