Teoria econamica

Evoluţia formelor de organizare ale activităţii economice

Conţinutul proprietăţii. Tipurile şi formele de proprietate

Una din problemele - cheie în teoria economică este problema proprietăţii. Proprietatea asupra mijloacelor de producţie determină în mâinele cui se află atât puterea economică, cât şi cea politică în societate. Proprietatea, ca categorie economică, reprezintă un ansamblu de relaţii dintre oameni în legătură cu însuşirea bunurilor existente în societate, relaţii guvernate de norme sociale, specifice diferitor perioade istorice. Categoria “proprietate” poate fi examinată în trei aspecte: juridic, economic şi filosofic.

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Piaţa

Piaţa reprezintă un aranjament prin care cumpărătorii şi vanzătorii se întalnesc sau comunică, în scopul tranzacţionării unor produse sau servicii, astfel încat şi unii şi ceilalţi să fie satisfăcuţi. Acest aranjament nu presupune neapărat existenţa unui loc fizic în care cumpărătorii şi ofertanţii să se afle faţă în faţă.

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Geoeconomia marilor spaţii ale Terrei

Noţiuni şi tendinţe de regionalizare economică.

In literatura economică şi geografică se utilizează astfel de noţiuni apropiate intre ele ca „raion” şi „regiune”. Noţiunea de „raion” a fost utilizat mai mult in literatura ştiinţifică rusă din sec. XIX in sens de raion agricol. Sub noţiunea de „raion” se subinţelege o complexitate de elemente ( naturale, economice ) a unui anumit teritoriu, care il deosebeşte de alt teritoriu din apropiere. Insă in prezent termenul de raion tot mai mult este inlocuit cu termenul de regiune, care are o semnificaţie cu mult mai largă şi se utilizează pentru a evidenţia nu numai teritorii din cadrul ţării, dar şi spaţii cu mult mai mari, care pot cuprinde chiar intregi continente, sau unele părţi ale lor.

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Introducere în Java

Limbajul Java împreuna cu mediul sau de dezvoltare si executie au fost proiectate pentru a rezolva o parte dintre problemele actuale ale programarii. Proiectul Java a pornit cu scopul declarat de a dezvolta un software performant pentru aparatele electronice de larg consum. Aceste echipamente se definesc ca: mici, portabile, distribuite si lucrând în timp real. De la aceste aparate, ne-am obisnuit sa cerem fiabilitate si usurinta în exploatare.

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Utilizarea claselor StringTokenizer si StreamTokenizer

Biblioteca Java.uitl defineste clasa StringTokenizer care faciliteaza separarea unui sir de caractere in simboluri. Pentru a separa un sir de caractere, trebuie sa cream un obiect StringTokenizer, specificand sirul si caracterul special, utilizat de sir pentru a indica(delimita componenetele). Constructorii acestei clase sunt:

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Liberalizarea economică prin zonele economice libere

Conţinutul geoeconomic al zonelor economice libere ( ZEL) şi clasificarea lor.

La etapa contemporană de dezvoltare un rol deosebit il capătă procesul de integrare economică, multe state işi deschid economiile naţionale şi mizează să pătrundă pe piaţa mondială, să-şi intensifice activitatea relaţiilor economice externe şi să ocupe o nişă in diviziunea internaţională a muncii. Legăturile stranse cu lumea externă conduc la apariţia unor forme avansate de organizare a spaţiului geoeconomic, ca urmare statul iese la un nivel calitativ nou de dezvoltare.

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Evidenţa creanţelor privind decontările cu bugetul

Creanţele bugetului faţă de întreprindere apar ca urmare a achitării impozitului pe venit în rate la buget pe parcursul anului conform art. 84 al Codului Fiscal, a achitării impozitului pe venit în cazul plăţii prealabile a dividendelor conform art. 80 al Codului Fiscal, a achitării impozitului pe venit în străinătate pe venitul din investiţii şi pe venitul financiar conform art. 82 al Codului Fiscal, a reţinerii impozitelor la sursa de plată conform art. 90 al Codului Fiscal în cazul în care întreprinderea este beneficiarul plăţii, a depăşirii sumei TVA trecută în cont asupra sumei TVA calculate şi ca urmare a supraplăţilor efectuate în buget.

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Economiile naţionale

Economiile naţionale reprezintă, incă, una dintre cele mai importante categorii de actori din economia mondială., atat sub aspectul funcţionării lor ca entităţi, cat şi sub aspectul interacţiunilor dintre ele sau cu ceilalţi actori.

In consecinţă, studierea lor reprezintă una dintre temele de cercetare fundamentale ale economiei mondiale. Pornind de la această constatare, am considerat necesar să prezentăm in acest capitol reperele medodologice de analiză ale oricărei economii naţionale, pe baza cărora pot fi evidenţiate caracteristicile majore ale lor, cele care definesc specificitatea fiecăruia, ca sistem economic unic, dar şi prin comparaţie cu altele.

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Probleme macroeconomice

Analiza macroeconomică se concentrează asupra economiei naţionale, a elementelor de structură ale acesteia sau asupra economiei mondiale. Fenomenele şi procesele economice sunt rezultatul interacţiunii dintre deciziile milioanelor de agenţi economici (întreprinderi, menaje, administraţii, instituţii financiare etc.) care trebuie să ierarhizeze şi să aleagă din multitudinea de variante pe care le au la dispoziţie pentru cheltuirea (utilizarea) resurselor lor. De asemenea, deciziilor unor agenţi economici pot influenţa în mare măsură deciziile altor agenţi economici, pot orienta activitatea economică dintr-o ţară sau regiune.

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Întreprinderea de stat şi întreprinderea municipală

Întreprinderea de stat

Activitatea de întreprinzător a statului” este o novaţie şi reprezintă un fenomen social-economic complex. А. Businin menţionează că „activitatea de întreprinzător a statului” este acea formă a activităţii de întreprinzător care se desfăşoară prin intermediul întreprinderilor constituite de:

  • organele de stat, care conform legislaţiei sunt împuternicite să gestioneze proprietatea statului (întreprinderea de stat);
  • organele autoadministrării locale (întreprinderea municipală).
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Obiecte Java

În primul rînd sa observam ca, atunci cînd scriem programe în Java nu facem altceva decît sa definim noi si noi clase de obiecte. Dintre acestea, unele vor reprezenta însasi aplicatia noastra în timp ce altele vor fi necesare pentru rezolvarea problemei la care lucram. Ulterior, atunci cînd dorim sa lansam aplicatia în executie nu va trebui decît sa instantiem un obiect reprezentînd aplicatia în sine si sa apelam o metoda de pornire definita de catre aplicatie, metoda care de obicei are un nume si un set de parametri bine fixate. Totusi, numele acestei metode depinde de contextul în care este lansata aplicatia noastra.

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Contribuţiile lui David Ricardo la dezvoltarea gîndirii economice

David Ricardo (1772-1823) se numără printre continuatorii cei mai de seamă ai ideilor Avuţiei naţiunilor a lui Adam Smith. A fost al treilea din cei 17 copii a lui Abraham Israel Ricardo, evreu spaniol, iniţial agent de schimb la Bursa din Amsterdam şi stabililit ulterior, pe la 1760 în Anglia, unde ocupă un loc fruntaş în activitatea bursei londoneze ca şi în viaţa comunităţii evreilor spanioli de aici. La 11 ani tînărul este trimis de părinţi la şcoala Talmud Tora de pe lîngă sinagoga portugheză din Amsterdam spre a-şi ridica instruirea. După doi ani Ricardo revine la Londra unde se lansează în lumea afacerilor.

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Ce este Java

Java este o tehnologie inovatoare lansată de compania Sun Microsystems în 1995, care a avut un impact remarcabil asupra întregii comunitati a dezvoltatorilor de software, impunandu-se prin calitaţi deosebite cum ar fi simplitate, robustete si nu în ultimul rând portabilitate. Denumita initial OAK, tehnologia Java este formata dintr-un limbaj de programare de nivel înalt pe baza caruia sunt construite o serie de platforme destinate implemenrârii de aplicaşi pentru toate segmentele industriei software.

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Tipuri de date si variabile

Tipuri de date

In Java tipurile de date se impart în doua categorii: tipuri primitive şi tipuri referinţa. Java porneşte de la premiza ca ’’orice este un obiect”, prin urmare tipurile de date ar trebui sa fie de fapt definite de clase şi toate variabilele ar trebui sa memoreze instanţe ale acestor clase (obiecte). In principiu acest lucru este adevarat, însa, pentru usurinta programarii, mai exista si asa numitele tipurile primitive de date, care sunt cele uzuale :

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Problema economică şi proprietatea

Cine speră intr-o economie socialistă raţională, va fi nevoit să-şi supună concepţiile unei revizuiri, işi incheia economistul austriac Ludwig von Mises devastatorul rechizitoriu1, redactat in 1920, impotriva a ceea ce avea să devină, pentru o bună parte a secolului XX, poate cel mai dureros şi umilitor experiment pe oameni din istorie – socialismul.

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Proiectarea cercetărilor de marketing

După parcurgerea acestui capitol va trebui să înţelegeţi rolul fundamental al activităţii de cercetare de marketing în cadrul procesului decizional al organizaţiei;

  • Să înţelegeţi care este conţinutul cercetărilor de marketing;
  • Să definiţi principalele tipuri de cercetări de marketing;
  • Să fiţi în măsură să alegeţi tipul de cercetare corespunzător în funcţie de natura problemei decizionale;
  • Să cunoaşteţi ce etape se parcurg în cadrul procesului complex al cercetărilor de marketing.
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Robert Thomas Malthus şi teoria sa demo-economică

Robert Thomas Malthus (1776 - 1834), cleric şi profesor de colegiu, îşi desăvîrşeşte studiile la Universiatea Cambrige. În 1798, la 32 de ani publică lucrarea "Eseu asupra principiului populaţiei" iar în 1820 îi apar şi lucrarea intitulată "Principii de economie politică", aceasta din urmă fiind precedată de numeroase studii privitoarea la legea grîului, a rentei şi a săracilor.

Lucrarea care l-a consacrat drept reprezentant marcant al liberalismului clasic este "Eseu asupra principiului populaţiei". Faţă de gînditorii vremii, el are o optică aparte în ceea ce priveşte analiza realităţilor economico-sociale existente la acea dată. Este vorba de faptul că, a urmărit să surprindă impactul pe care-l poate avea asupra societăţii creşterea populaţiei. Teoria malthusiană asupra creşterii populaţiei a avut consecinţe analitice ce au facut-o să devină parte integrantă a economiei clasice, mult timp după ce "viziunea" sub care a fondat-o Malthus a fost lăsată la o parte.

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Componenţa, caracteristica, clasificarea recunoaşterea şi evaluarea investiţiilor

Componenţa investiţiilor, modul de evaluare şi contabilizare a acestora sînt reglementate de S.N.C. 25 “Contabilitatea investiţiilor”, S.N.C. 27 “Rapoartele financiare consolidate şi contabilitatea investiţiilor în întreprinderile-fiice” şi S.N.C. 28 “Contabilitatea investiţiilor în întreprinderile asociate”.

Investiţia reprezintă un activ deţinut de întreprinderea-investitor în scopul ameliorării situaţiei sale financiare prin obţinerea veniturilor (dobînzilor, dividendelor, redevenţelor etc.), majorarea capitalului propriu şi obţinerea altor profituri (în special, ca rezultat al operaţiilor comerciale). (SNC 25, § 8).

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Zonele economice libere

Conceptul de zonă economică liberă

O zonă de liber schimb este un ansamblu geografic şi economic în care nu există nici un obstacol al schimburilor de mărfuri şi servicii, nici taxe vamale, nici obstacole tarifare. Formarea unei zone de liber schimb poate să fie considerată ca un prim pas spre unificarea economică a regiunii respective.

Prin zonă economică liberă se desemnează un „port liber”, „un depozit liber”, „un aeroport liber”, aflate pe teritoriul unei ţări sau în zona de frontieră a două sau mai multe state, în care sunt eliminate o serie de taxe şi restricţii vamale.

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Instituţionalismul

Instituţionalismul s-a dezvoltat în Statele Unite ale Americii la sfârşitul secolului al XIX-lea şi în primele trei decenii ale secolului al XX-lea. Format sub influenţa Şcolii istorice germane, el a preluat şi a dezvoltat orientările teoretice şi metodologice ale acesteia, pe care le-a aplicat la problematica social-economică din SUA.

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Geoeconomics

The legacy of the discipline of geopolitics

The disciplines of geoeconomic and geopolitics are closely intertwined. The discipline of geopolitics has a burden full past and can only progress through self-critique: that is through criticism of the discipline itself. For instance, it must be made clear what in geopolitics is objective and what is normative. So far this criticism has come mostly from outside, from its opponents, whether they represent critical geopolitics, political geography, or mainstream political science.

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Information Processing

Accounts, Debits, and Credits

The previous chapter showed how transactions caused financial statement amounts to change. “Before” and “after” examples, etc. was used to develop the illustrations. Imagine if a real business tried to keep up with its affairs this way! Perhaps a giant chalk board could be set up in the accounting department.

As transactions occurred, they would be called in to the department and the chalk board would be updated. Chaos would quickly rule. Even if the business could manage to figure out what its financial statements were supposed to contain, it probably could not systematically describe the transactions that produced those results. Obviously, a system is needed.

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Introduction to Marketing Mix

In this lesson, we will introduce you to the activities that comprise a firm’s marketing program. These activities are popularly referred to as the 4 Ps – product, price, place and promotion. After you work out this lesson, you should be able to:

  • Understand the major product decisions in marketing planning
  • Know the pricing objectives and the factors that influence the pricing decisions
  • Appreciate the role of marketing channels and understand the important channel decisions to be taken
  • Comprehend the Promotion Mix of marketing and the different elements in the promotion mix
  • Learn how the 4 Ps combine to create effective marketing programs
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Market Segmentation, Targeting and Positioning

In this lesson, we will introduce you to the activities, viz., segmentation, targeting and positioning, that are collectively referred to as marketing strategy. After you work out this lesson, you should be able to:

  • Segment the markets based on several segmentation variables
  • Target a segment by identifying the fit between segment profitability and organizational capability
  • Position your product/service so that it occupies a distinct and valued place in the target customers’ minds
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Buyer behaviour

In this lesson, we will introduce you to the process through which the ultimate buyer makes purchase decisions. After you work out this lesson, you should be able to:

  • Identify what stimulates a consumer to consider buying
  • Describe the buyer’s decision making process and the several factors which influence this decision
  • Understand the response of the buyer to the marketing and other stimuli
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Internal Marketing versus External Marketing

Abstract: International marketing orientation requires modern concepts of economic activities in accordance with the requirements and specific foreign markets (national, multinational, global) in order to meet their current and future needs with maximum efficiency. The need for knowledge of international marketing occurs when we have to realize, to sell and promote goods and services to consumers and users in other countries.

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Marketing Environment

In this lesson, we will introduce you to the forces that define marketing’s external environment. After you work out this lesson, you should be able to:

  • Identify, analyze and monitor external forces and assess their potential impacts on the firm’s goods and services
  • Understand how marketers formulate their strategy within the frame of reference provided by the forces in the external environment

In this lesson, we will discuss the following:

Marketing Process

Objectives of Marketing Process

In this lesson, we will introduce you to the activities that makeup the marketing process. After you work out this lesson, you should be able to:

  • Identify the parts of the marketing process
  • Understand the relationships among the parts of the marketing process
  • Explain how the marketing process creates, captures and sustains value for the customer
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Marketing Concepts

Objectives of marketing concepts

In this lesson, we will introduce you to the conceptual ideas that makeup the marketing function of a business. After you work out this lesson, you should be able to:

  • List out the concepts of marketing
  • Understand how these concepts are interconnected
  • Explain how marketing is changing in a connected world
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Introduction to Marketing

In this lesson, we will introduce you to the business function of marketing. After you work out this lesson, you should be able to:

  • Define marketing and the utility (value) it creates for the customer
  • Trace the origin of marketing and explain how it has evolved
  • Describe the elements of a marketing strategy
  • Understand the scope of marketing
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Definition and trends within Purchasing Management

The aim of this chapter is to provide the reader with an introduction to Purchasing Management in order to fully appreciate the book. The chapter presents the book's definition of Purchasing Management as well as briefly presenting the potential benefits with working at a strategic level with purchasing activities for a corporation.

Furthermore trends and historical developments within the area of Purchasing Management will be presented.

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Purchasing Organization

The structure of the purchasing department is especially important in external and internal networks. The organizational model must facilitate activities in different strategic levels as well as cope with changes in external environment. By adjusting formalization and centralization levels, the organization can be positioned to best support the organization.

However, no universal solution exists, as the right structure is highly company specific and dynamic over time. Therefore, this is one of the major challenges that Purchasing Management confronts within business networks.

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Purchasing management and internal collaboration

Strategic purchasing is most often associated with external relations. However, purchasing integration and internal collaboration are the enablers of every corporate strategy. The aim of this chapter is to explain the connections between purchasing and the company's competitive priorities as well as emphasize the need for interdepartmental collaboration.

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Sourcing Strategies of Purchasing Management

Sourcing Strategies of Purchasing Management

Sourcing is the activity of securing external components or services needed within the own internal organization. Companies employ different kinds of sourcing strategies and no one is declared to be the optimum solution. Outsourcing which is the foundation to choice of sourcing strategies also intends to align with a company's core competence focus.

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International Financial Reporting Standards

A reporting entity (which we will call “entity” from here onwards) is either a company or a group of companies, which are all controlled by the same decision maker, i.e. normally the same board of directors. This occurs when the board of directors of a company controls directly or indirectly a number of other companies, by holding directly or indirectly the absolute or relative majority of the voting rights of other companies.

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We begin our study of microeconomics by looking at a market with many buyers and sellers, i.e. a market where there is a large amount of competition. We will study such a market in more depth in Perfect Competition, as well as other market types, but starting here makes it easy to get a feel for how the subject works.

Demand

The Demand Curve

The demand curve shows what quantities of a good buyers are willing to buy at different prices. Note the expression “are willing.” It is not about how much they actually buy, but about how much they would want to buy if a certain price was offered. A demand curve is only valid if all other relevant factors are held constant (ceteris paribus: with other things the same). The most important other factors that can affect demand are:

The buyers’ income.

 

Prices and price changes on other goods. We will make a distinction between complementary goods and substitute goods. An example of complementary goods is right and left shoes. If the price of right shoes rises then the demand for right shoes will typically decrease. However, the demand for left shoes will also typically decrease. Consequently, the demand for left shoes partly depends on the price of another good: right shoes.

Substitute goods work in the opposite way. An example could be blue and green pens: If one cannot use blue, one can often use green instead. If the price of green pens rises, the demand for green pens typically decreases. However, if the price of blue pens is unchanged one can use these instead of the green ones, and then the demand for blue pens increases. Consequently, the demand for blue pens depends on the price of another good: green pens.

Note that for substitute goods, a rise in the price of the other good leads to an increase in the demand for the good we are analyzing, whereas for complementary goods it is the other way around; a rise in the price of the other good leads to a decrease in the demand for the good analyzed.

Preferences. What consumers demand is largely a matter of taste. If there is a change in taste, there is usually also a change in demand. Taste can change for many different, underlying, reasons. For example, changes in moral perception or in fashion.

If these factors are held constant, then the demand curve is valid and it usually slopes downwards. In other words, the lower the price is the higher is the demand, and vice versa. Demand is defined for a certain period. One can for example think of it as defined over a month, corresponding to a monthly salary. When drawing a demand curve in a diagram, the quantity demanded is on the X-axis and the price is on the Y-axis. This is slightly odd, since we often think of the quantity demanded as a function of the price, not the other way around. There are historical reasons for drawing it this way.

When do We Move along the Demand Curve, and When Does It Shift?

The relation between price and quantity that is described by the demand curve is valid only if it is the price of the good itself that changes. Look at Figure 2.1 and the demand curve D1. If, in the beginning, the price is p1, then the quantity demanded is Q1 (point A). If the price of the good falls to p2, then the quantity demanded changes to Q2 (point B). We, consequently, move along the demand curve when the price of the good changes.

The Demand Curve

Figure 2.1: The Demand Curve

If, instead, something else changes (e.g. income, the prices of other goods,consumer preferences, or anything that affects the demand on the good), then the demand curve shifts. Assume again that the price is p1 so that the quantity demanded is Q1 (point A). If the consumer’s income increases, she can buy more of the good than she could before. Consequently, the whole demand curve shifts from D1 to D2. If the price is still p1, the quantity demanded increases to Q3 (point C).

Supply

The Supply Curve

The producer counterpart to the demand curve is the supply curve. It shows how large quantities the producers are willing to sell at different prices, given that other factors that can affects supply are held constant. The supply curve is typically upward sloping or horizontal (but it could also be downward sloping).

The demand curve is also valid over a certain period. Later, we will distinguish between two time periods: short and long horizons. The most important factors, beside the price, that affect supply are:

  • Factor prices , i.e. wages, prices of machines and compensation to owners and lenders. In other words, changes in the cost of production.
  • Laws and regulations that apply to the production.
  • Prices of other goods the firm produces or could potentially produce. Perhaps the producer is producing blue and green pens. If the price of green pens rises, she is likely to shift over resources (workers and machines) to that production and there is less left with which to produce blue pens. Consequently, the supply of blue pens decreases, even though the price of blue pens is unchanged.

The Supply Curve

Figure 2.2: The Supply Curve

The supply curve behaves in a way that is similar to that of the demand curve. Look at Figure 2.2 and the supply curve S1. If the price isp1, then the producers are willing to sell the quantity Q1 (point A). If the price of the good falls to p2, we move along S1 to point B, where the quantity is Q2. If, instead, some other factor changes, e.g. if wages increase so that it becomes more expensive to produce the good, the whole supply curve shifts. For instance from S1 to S2. If the price is still p1, then the quantity supplied changes from Q1 to Q3 (point C).

Equilibrium

A market is in equilibrium when both of these conditions are fulfilled:

  • No agent wants to change her decision or strategy.
  • The decisions of all agents are compatible with each other, so that they can all be carried out simultaneously.

If we join the supply and demand curves in one diagram, we get an equilibrium point where the two curves intersect. At this point, the price the consumers are willing to pay is the same as the price the producers demand. In Figure 2.3, the equilibrium price (market-clearing price) is p* and the equilibrium quantity is Q*.

Equilibrium

Figure 2.3: Equilibrium

The equilibrium point has two important properties in that it is most often (but not always) stable and self-correcting. That it is stable means that, if the market is in equilibrium there is no tendency to move away from it. That it is selfcorrecting means that, if the market is not in equilibrium then there is a tendency to move towards it.

To see more clearly what this means, suppose the price is higher than in equilibrium, e.g. that it is p2. At that price, producers are willing to supply the quantity Q1 whereas the consumers are only willing to buy the quantity Q2. Therefore, there is an excess supply of the good. To get rid of the extra units the producers are prepared to lower the price. This will push the price downwards, closer to p*. At p*, there is no excess supply and the downward push on the price ends.

Then assume, instead, that the price is lower than p*, e.g. that it is p3. At this price, the consumers demand the quantity Q3 whereas the producers are only willing to supply the quantity Q4. Consequently, there will be a shortage of the good, and the consumers will be prepared to bid up the price to get more units.

This will tend to push the price upwards, closer to p* where, again, the push will end.

How to Find the Equilibrium Point Mathematically

Supply and demand can be written as mathematical functions, and in simple examples, they are often straight lines. They could, for instance, be:

 Supply and demand can be written as mathematical functions

Here, QD is the quantity demanded, QS is the quantity supplied, and p is the price. We now want to find the price, p*, that makes QD = QS. If the left-hand sides above are equal, the right-hand sides must also be so. Therefore, substitute p* for p and set the right-hand sides equal to each other:

85+ 30p* + 185+ 20p*

To get p* alone on the left-hand side, we add 20 p* on both sides and subtract 85 from both sides. Then we have that

50p* =100.

Dividing by 50 on both sides yields the result that

p* = 2

If we then want to know the equilibrium quantity, Q*, we substitute the result we got for p* into either the supply or the demand function above. (Note that they must yield the same quantity, since p*, by definition, is the price that makes QD = QS.)

 Supply and demand can be written as mathematical functions

Consequently, we have the equilibrium price, p* = 2, and the equilibrium quantity, Q* = 145.

Price and Quantity Regulations

Many markets are, for a number of reasons, regulated. The government could for instance decide about prices that the market is not allowed to go above or below, or about maximum quantities. Such regulations will benefit certain groups of people, but often have unintended negative side effects. These are often called secondary effects.

Minimum Prices

Minimum prices (also called price floors) are often used for wages (the price of labor) and for certain types of goods such as agricultural goods. The minimum price is usually chosen above the equilibrium price, as in the opposite case it would not have any effect. (The market participants would then choose p* instead.) Consumers and producers are consequently prevented from reaching the equilibrium price p*.

Look at Figure 2.4. The effect of the minimum price is that the consumers only demand the quantity Q2 whereas the producers supply the quantity Q1. Therefore, we get an excess supply of the good.

Note that consumers and producers are allowed to buy and sell at any price above the minimum price. A price higher then pmin will however result in an even larger excess supply, so typically the minimum price is chosen.

The situation described is not an equilibrium. To see that, note that point 2 in the definition of an equilibrium (see Section 2.3) is not satisfied: Given the price pmin producers want to sell the quantity Q1, but that is not possible since the consumers only want to buy the quantity Q2.

The Effect of a Minimum Price

Figure 2.4: The Effect of a Minimum Price

Maximum Prices

Maximum prices (also called price ceilings) are in several countries used for apartment rentals. For a maximum price to have any effect, it has to be below the equilibrium price, and the effects are the opposite to those of a minimum price. In Figure 2.5, pmax is the maximum price. It causes the consumers to demand

the quantity Q1 whereas the producers only want to supply Q2, and, consequently, there is a shortage. A typical consequence of a maximum price is that the search time to find an appropriate good is increased since the supply is too small to meet the demand.

The Effect of a Maximum Price

Figure 2.5: The Effect of a Maximum Price

Quantity Regulations

The effects of quantity regulations are similar to those of price regulations. Assume for instance that there is a restriction stating that one may only import the quantity Qmax of a certain good, say Asian textiles.

The Effect of a Quantity Regulation

Figure 2.6: The Effect of a Quantity Regulation

Producers would have been willing to supply the quantity Qmax at a price of pS, whereas the consumers would have been willing to buy that quantity at a price of pD. Since the quantity is not allowed to increase, there is excess demand at all prices other than pD. When there is excess demand, consumers are likely to bid up the price, so the price that this market is likely to arrive at is pD. Note that at the price pD, producers are willing to supply a much larger quantity, Q1, but that they are prevented from doing so by the regulation. The consumers

have to pay a price that is larger than the equilibrium price (pD instead of p*) and they get fewer units of the good, so they typically are made worse off by a quantity regulation.

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