Core-009 Price
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About Core-009 Price
About the Teacher
Jay Moulton
Jay Moulton is a business veteran. In short:
- Corporate finance and turnaround expert in U.S. and Canada
- CEO or operator of numerous companies in many industries
- 30 years of actually applying business economics principles
- Successfully led and invested in several leveraged buyouts
- Director or advisor to 30+ different companies
- Experience in both for-profit and not-for-profit sectors
- Producer of 700 professional videos and several TV shows
- Author of six economics and business strategy books
- Graduate of Harvard Business School MBA program
- Graduate of The Royal Military College of Canada
- Professional electrical engineer
- Governor of the Harvard Club of British Columbia
Price
MODULE 1
Market equilibrium occurs when the market price reaches a level at which quantity supplied equals quantity demanded. At this point, the price is called “equilibrium price” and quantity is called “equilibrium quantity.”
Elasticity of Supply
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In this lesson, you will learn to: Describe the concept of opportunity costs using the examples of guns and butter.
This video reviews the concept of elasticity of supply, and describes price elasticity of supply including: perfectly inelastic supply, inelastic supply, unit elastic supply, elastic supply and perfectly elastic supply.
For goods with perfectly inelastic supply, a change in price leaves the quantity supplied unchanged. An easy way to remember this is that the supply curve looks like the I in “inelastic.”
Goods with inelastic supply have elasticity less than one. Remember that the price elasticity of supply equals the percentage change in supply divided by the percentage change in price.
Goods with unit elastic supply have elasticity equal to one. In other words, any increase in price is matched by a similar increase in quantity supplied and any decrease in price is matched by a similar decrease in quantity supplied.
Goods with elastic supply have elasticity greater than one. In other words, a small increase or decrease in price leads to a dramatic change in quantity supplied.
For goods with perfectly elastic supply, at a given price an infinite quantity is supplied.
Price Intervention
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In this lesson, you will learn to: Describe the concept of opportunity costs using the examples of guns and butter
Price controls are often proposed as an effective and efficient way to regulate market outcomes. In this video, we explore the true impact of price controls, using several examples.
As an example of the unintended effect of price controls, consider government price controls for cigarettes.
The video introduces disequilibrium prices caused by price ceilings and price floors. He describes the price floor as a price level, fixed above the equilibrium, such that it benefits the producer and is detrimental to the consumer.
In free market equilibrium we have a downward sloping demand curve and an upward sloping supply curve. The point of intersection gives us the equilibrium and price and quantity.
Price Discrimination
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In this lesson, you will learn to: Describe the differences between public goods and private goods
The video examines how price discrimination works using "Wings Night" as an example. Low prices for wings create a consumer surplus that the restaurant owner then captures by selling a complementary good, beer.
As an example of how price discrimination can benefit producers, consider what happens to the sale of beer when a restaurant drops the price of chicken wings on Wing Night.
The video uses the example of a movie theater to show how price discrimination can be used to maximize revenues depending on whether movie audience demand is elastic or inelastic.
As an example of why producers would engage in price discrimination, let's take a look at a movie theater with 500 seats.
This assessment will test your knowledge of Public Goods.
Price Collusion
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Learning Objectives - Price Collusion
This video uses a demand and supply analysis to show that, when firms collude on price to imitate a monopolist, the collusive price is higher than the competitive price, and the collusive quantity is lower.
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