Class notes
International Economics
- Course
- Institution
This document contains all notes from the course of international economics, including a number of practice questions that may be useful for the exam.
[Show more]
Seller
Follow
JHoogsteen
Content preview
International EconomicsLecture 1
Q. What is economics?
A. The study of the Economy
Q. What is Economy?
A. Deals with everything we produce, consume, buy, sell. People, companies, governments.
Prosperity, wealth, money, work. Products/goods. Scarcity. Prices. Trade.
It’s hard to think of something to which an ‘economic dimension’ cannot be attached
Law of supply and demand
- The price of a product is determined by Supply and demand
- Demand ↑ è Price ↑ (and Demand ↓ è Price ↓)
- Supply ↑ è Price ↓ (and Supply ↓ è price ↑)
Economy cont’d Two main issues
1. Size What determines our total prosperity?
2. Distribution How is the total prosperity divided?
Business
- Internal environment
-> Can be controlled (to some extent)
- External environment
-> Maybe some influence, but cannot be controlled. So the company can only adapt
-> The impact of external/economic developments can be very serious and drive
companies out of business!
Two opposites of the market
, 1. Free market
2. Market with much government intervention (Former soviet union, Cuba, North Korea, former
China)
* And in ‘between markets’ with some selective government intervention.
Demand curve
The relationship between price and the quantity demanded can be expressed as an equation, for
instance:
q = -2p + 600
Where: q = The quantity demanded
p = the price
Price elasticity (of demand) (Epq)
The % of the change in quantity demanded in response to a 1% change in price
Epq = %Δq / %Δp
Where: %Δq = the % change in quantity demanded
%Δp = the % change in price
Basic Goods 0 < Eqy < 1
Luxury Goods Eqy > 1
Inferior Goods Eqy < 0
Epq is NOT constant, but changes along the curve!
Elastic Epq< -1 (-2 / +2)
Inelastic -1 < Epq < 0 (-0,,5)
Example:
Q = -2p + 600 and price is raising with 1 %
First stade Second stade
p = 200 p = 200 * 1,01 = 202
q = 200 q = -2*202 + 600 = 196. So -2%
Epq = -2% / 1% = -2%. So in conclusion the demand is elastic
Income elasticity (of demand) (Eqy)
The is the income elasticity of the demanded
Epy = %Δq / %Δy
Where: %Δq = the % change in quantity demanded
%Δy = the % change in income
Company cost (individual)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller JHoogsteen. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.96. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
77254 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now