Aman More

By

[FA-01
-

Economics

Handwritten notes
Short and Crisp Notes .

My Notes CFA Institute Notes

M
↳pageonly I
500
Pages long
 - . Topics indemand and suppy analysis Lesson 01

Los Calculate and interpret pe Income and cos-price elasticities of demand and describe
:
, ,

factors that a feet each measure,

Elasticity is when variable
changes in relation to another
* Price Elasticity =

change quantity demanded /change

in in
pare
,

➣ Goods go Sale
goods
/
= Buy more at
on .
➣ Formula :-- change in gly
in
change

·
Elasticity >1 Belastic To e

- Elasticity <I is inelastic E o &

* Az change in price

· Elasticity = 1 is called unitary elasticity. %

change
in price
total
➣ Elasticity is in absolute values , elasticity can be positive or
negative
,

E F

* Income Elasticity= change in quantity demanded/change in income

➣ Get
big raise
a buy goods ->
more aty aty

➣ Formula for Theme elasticity

ED changina a
,
:
come

*
Cross porceflasticity-change inquantly demanded good change in price of complem
ent or substitute
-
Y.
good
➣ Mosthy
➣ Moat
found in
goods with substitutes and compements
prices
go up - buy more fish
do demand for
Formula
De
where
:

price for Y

LOS : Compare substitution and income effects .

Substation
*
Effect :

increased demand in substitute goods.

A price increase in
good
·
mne causes a

➣ If price of steakgoes up demandfor chicken ,

rises and steakfalls.
* complement
-
consumption goes up or down together .

* Income Effect :

·
Increases in income cause increased demand in normal goods.
➣ If income
goes up demand for meat rises.
,
➣
➣

➣
➣
➣

➣
➣

➣
 02 The Firm and
.
Market Structures : Lesson 02

Los : Describe characteristics of perfect competition monopoletic competition , ,

oligopoly andpure
,

monopoly ,

* There are
four types of economic market structures : -
Monopoly ·
less competition
oligopoly
Monopolistic competition more competition

Perfect competition
* Monopoly * oligopolarimization is condition market e
profit marimizes
in this
·
A
monopoly is

·
Monopolies are price makers
·
Firm market structure set their own
under this
· There are very high barriers to entry for other firms . Prices although there is a great deal of
,
pricing
seller that controls the whole market interdependence .
· There is a
single Barriers to entry are high
PricedeliminationMonopolies change bothea
·
·
can
· make abnormal profits in the long run.
product may homogenious.
·
Puremonopolies are regulated by government. relatively number of firms supply the market.
small
Example- providers ofwater naturalgas telecommunications, A
·

Example-Industries like oil & gas airline automaker

, ,

and electricity often granted exclusive rights to service, , ,

are

, etc

* Monopolistic competition *
PerfectCompetition
·
Multiple buyers and sellers in the market
. ·
verylarge numberof buyers and sellers in .
the market
sellers
branding and differentation to
gain market share Homogeneous products
·
use --

Sellers have controlover perfect information

some
porcing
,
·
Few barriers ,
to entry Firms accepts prices I "Price takew").
.
etc No barriers to entry
Examples-Fast food chains
clothing
·
.

profit marimization of sellers

,
·
.

· No
single seller/producer is large enough to
influence
the market price .

.
Example-Agricultural products
Los : Explain relationships between price marginal revenue , ,
Marginal cost economic profit
, ,
and the

elasticity of demand under each market structure

,
read
This past

I
*
Monopoly -
:

from tree
*
oligopoly :
-

Maximizes profit at point where : Fin · some control overprises

.

Marginal cost Asymmetric demand elusticity

Price > Revenue =

Marginalmeet y .
p>1 .
The Firm can adjust price or quality to this condition
, ➣ Demand very elastic to price increases
.

➣ Demand inelastic to decreases

very inelastic demand
· , price .

marginalcoste cost
-

Revenue
- Marginal
➣
➣

➣
➣

➣
➣

➣
Lesson 03
Lesson 04
Lesson 05
Lesson 06
Lesson 07
Lesson 08
➣