What is the difference between explicit and implicit costs?
Explicit is often tangible and regards expenses while implicit is often opportunity costs
What is the difference between accounting profit and economic profit?
Accounting profit is just total revenues - explicit costs and considers the face value of profit, while economic profit is total revenue - explicit costs - implicit costs (OC), and considers what choices you should make for the most profit.
What does it mean when your accounting/economic profit is positive and negative?
When your economic profit is positive, it means you should continue to do what you do
When your economic profit is negative, it means you should do something else with your time
Which market structure has a kinked demand curve?
Oligopoly starts off elastic, hits a kink, then ends inelastic
What are all the market structures? What are 2 features of each? What are real-world examples?
Pure Monopoly: when a single company -has total control over a market
-(no competition)
-Has total control over prices
-Impossible to enter
E.g. Canada post
Duopoly: when two major companies have control over a market
-Actions of one firm will influence the actions of the other
-Prices are competitive
E.g. Apple vs Samsung
Oligopoly: when a few companies have control over a market
-Around 3-5 companies having over 75% of the market
-High barriers to entry for new competitors
E.g. telecoms
Monopolistic competition: when multiple companies are competing but have somewhat different products
-Low barriers to entry/exit
-Products are differentiated somewhat, however, competition is still in place
E.g. Jeans: gap, levis, guess
Perfect competition: many firms producing the same product
-Products are almost identical
-No barriers to entry/exit
-many buyers can control price
E.g. banana producers
What is the marginal analysis/maximizing profit, and how is it useful?
To keep operating until the Marginal benefit/revenue = the Marginal cost
How do you get marginal revenue/benefit?
Change in Total revenue/Change in Quantity sold
How do you get marginal cost?
Change in Total costs/ Change in Quantity produced
What does the numbers mean when it comes to maximizing profits?
When MR > MC produce more
When MR < MC produce less
When MR = MC, that’s when profit is maximized
What is an artificially scarce resource?
Usually, a digital resource that isn’t actually scarce, but is charged as if so for access. E.g. netflix
What is excludability in terms of public and private goods?
Public goods are non-excludable, meaning that anyone can use them regardless of whether they pay for them. Private goods are excludable, meaning that you need to pay to use that service.
What is a White market?
An officially and legally regulated market where everything abides the law. E.g. grocery store
What is a Grey market?
Between a white market and a black market, meaning that the goods and services are legal, but are sold through unofficial/unauthorized dealers. E.g. selling i phones specifically for china to canada.
What is a Black market?
Completely illegal market where these goods and services are traded illegally, these transactions are also illegal and avoid taxes, regulations, and are often illegal goods
Why should you privatize?
-private companies often have a profit incentive, meaning innovation and efficiency is higher
-Companies are less influenced by politics
-Has visions based on future, not just 4 year intervals like politics
-Less wait times for private services
Why shouldn’t you privatize?
-Firms will try to maximize profits by increasing prices and lowering costs
-When you privatize, the profit incentive may cause inequality in a workspace
-Private sectors often have lower wages and benefits than public
How does the Lorenz curve work?
Your y is income, and your x is population.
The graph shows how income or wealth is distributed across a population. A way to measure inequality.
A vertical line at 45degrees is perfect inequality.
The closer to y=x, the more equal the income distribution is
The farther from y=x, the less equal the income distribution is.
How does the gini coefficient tell us inequality?
Area of a/area of (a + b)
If the answer is 0, it is perfect quality
If the answer is 1, then it is a perfect inequality
What are the types of taxes?
- Progressive tax: the more you make, the more you get taxed
- Regressive tax: regardless of how much you make, a fixed % is taxed, which affects the poor more
- Flat tax: just a flat number tax, not a percentage
In a shortrun/longrun, which has more fixed costs, which has more variable?
In the short run, you often have more fixed costs, such as machinery; however, in the long run, you often have more variable costs since you have the money to do so.
What is Equity and what is Equality
Equity: everyone having the resources for a healthy life
Equality: everyone getting the same treatment
What is GDP
Gross domestic product shows the measure of total goods and services produced by an economy, taking into account of price fluctuations.
Do you believe that the ceo of RBC makes too much ?
No, i believe that the CEO of RBC does not make too much money:
1. Not everybody can just walk into that job and do what it takes to run RBC the same, I believe that your salary should reflect how tough your job is. There is a reason why minimum wage workers have simple jobs that anybody can do. The more people that can do your job on the fly, the less you should be paid.
2. The ceo’s salary is just the rewards from taking the risks it took to build the company, ontop, the ceo wasnt nepo’d growing up either.
Should you unionize?
Yes:
When theres a union, there is more bargaining power
Treatment is often unfair and needs to change and what you want is often obtained, if not, just go on strike
Human rights for certain things
Fair pay and wage equality if there is
Workers rights and benefits
Without proper health, productivity would go down so you should unionize for this
