global economy 15-20?

Market based fior EG/ED

• market based supply side

  • Competition (deregulation, privatisation, anti-monopoly)

  • Labour market reforms

    • Improve allocations of resources

  • Incentive

• Trade liberalisation

  • Make markets larger

• Floating exchange rates

General drawbacks:n

• market failure: cpR, negative environmental externalities , merit goods 不足够，包括：教育，医疗，设备，清水，卫生，路上，通勤，力， lack public goods

• Weak framework —developing need stronger legal system, contracts, taxation system“ banking, so MBP do not help with this

• Insufficient credit for poor, (who do not have access)

• Income inequalities — worker protection , poverty, unemployment

• Poverty, empowering women not dealt with — redistribution of wealth

• Informal economy (growth)

General strengths

• allocative efficiency, encouraging compeition, markets

Interventionist based (for econ growth/develoop)

• correcting market failures : Usman cap, infras, institutions, income redist, poverty, gender q,

• BUT: budget, bureaucracy/ineff, protect ineff, allocative ineff, corruption, influence of elite

Using real-world examples, examine the importance to producers of price elasticity of demand and income elasticity of demand.

 

-              PED affect the revenue change after a change in price, which affect the producers’ decision on how to adapt their price to influence profitability.

 

-              YED affect the revenue change after a change in consumer in income, the producer may want to respond to change in income tax, consumer indebtedness to gain higher revenue.

Luxury and Inferior...

 

-              YED is not as important for producers of necessities (YED is in between 0 and 1),

o   As income grows, less household is spent on necessities as a proportion of their entire income, however, this does not have as big as an impact on the nominal value of necessities purchased. For example, A low-income household spends 6,000$ on food, which is 30% of their income, and high-income households only spend 7% of their income on food, but that is around 10,000$.

o   This increase may be due to increase in quality of necessities, e.g. eating more organic.

RWE: apple usa / global

-              iPhone pricing , high prices but revenue and profit not damaged — indicate low PED (Due to brand loyalty and strong image, ecosystem of apple products + percieved lack of substitutes)

-              Hpwber, perform worse in certain markets like india due to low income —UED variance?

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LV(MH)

-              Revenues increased significantly post Covid as incomes rise— indicate YED elastic/luxury goods

-              So target high incommarkets and econmic grow regions  no

-              - LVHM not But volatile as affe  — recession vulnerability

 

McDonald’s

-              Some places inferior, some place normal good — harder to predict ,

-              Typically inferior , so during recession can benefit

 

Uber uses real-time surge pricing (since ~2014 onwards globally)

Prices can increase 2x–5x during peak demand (e.g. rain, events)

During peak times:

Demand becomes relatively inelastic (urgent need for transport)

Uber increases prices sharply

 

 

Fr

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Persistent current account defitcit

• funding with borrowing debt

• Funding with selling assets