ECONOMICS of packaging_Lecture notes_1-1
PKG 153: Economics of Packaging Lecture Notes
Course Overview
Instructors: Dr. Robert Aidoo & Dr. David Boansi
Department: Agricultural Economics, Agribusiness & Extension, KNUST, Kumasi-Ghana
Course Objectives & Outcomes
Objective: Understanding economic principles influencing packaging decisions.
Learning Outcomes:
Grasp basic economic concepts applied to packaging.
Explain government roles in market behavior.
Outline implications of economic policies on individuals and the economy.
Course Outline
Introduction to Microeconomics
Principles of demand and supply
Marketing
Theory of the Firm
Consumer Behavior
Markets and Business Firms
Industrial Organization in Ghana
Production costs
Assessment
Continuous Assessment: 40%
Examinations: 60%
Additional Requirement: Mini-project for the semester
Introduction to Microeconomics
Concept and principles of demand and supply.
Economics Defined
Economics deals with choice and scarcity.
Lionell Robbins (1935): Human behavior is about ends and scarce means with alternative uses.
General definition: Examines how people use limited resources to satisfy unlimited wants.
Needs, Wants, and Means
Need: Essential for survival (e.g., food).
Want: Desirable but not necessary (e.g., music).
Means: Resources to satisfy wants (e.g., land, labour, money).
Scarcity and Choice
Scarcity: Desire exceeds availability, influencing individuals and society.
Choices must be made due to limited resources.
Economics often termed the study of scarcity.
Scale of Preference
Logical arrangement of wants in order of importance.
Satisfy top wants first when resources are limited.
Opportunity Cost
Best alternative forgone for a decision.
Eg. Spending money on food vs. books.
Key Concept: There is no free lunch; every choice has an opportunity cost.
Major Economic Questions
How choices determine what, how, and for whom goods/services are produced?
When do self-interested choices promote social interest?
Production Choices
Factors of Production:
Land
Labour
Capital
Entrepreneurship
Distribution of Goods
Distribution based on income:
Land earns rent.
Labour earns wages.
Capital earns interest.
Entrepreneurship earns profit.
Self-Interest vs. Social Interest
Self-Interest: Choices beneficial to oneself.
Social Interest: Choices beneficial to society, encompassing efficiency and equity.
Economic Efficiency and Equity
Efficiency: Cannot improve one without harming another.
Equity: Fairness in distribution, varies among economists.
Economic Principles Summary
Scarcity prompts choices among limited resources.
Choices are influenced by incentives—rewards or penalties affecting actions.
The Economic Way of Thinking
Key ideas:
Every choice involves trade-offs.
Benefits vs. costs evaluation.
Rational choices made at the margin.
Choices influenced by incentives.
Branches of Economics
Microeconomics: Individual decision-making by consumers/firms.
Macroeconomics: Aggregate economy overview, considers total output and economic indicators.
Positive vs. Normative Economics
Positive Economics: Objective analysis based on facts.
Normative Economics: Subjective judgments regarding what ought to be.
Scientific vs. Economic Method
Scientific Method: Observation, hypothesis, experimentation, evaluation, conclusions.
Economic Method: Identifying problems, formulating hypotheses, data collection, analysis, conclusions.
Tools for Economic Analysis
Use of tables, graphs, descriptive tools (mean, median, etc.), models/equations.
Demand and Supply Principles
Law of Demand: Price increase → lower quantity demanded.
Law of Supply: Price increase → higher quantity supplied.
Demand & Supply Schedules
Graphical representation of demand and supply curves.
Non-Price Determinants of Demand and Supply
Demand Influencers: Taste, number of consumers, income, related goods.
Supply Influencers: Resource prices, technology, number of sellers.
Market Equilibrium Dynamics
Shortages (price ceiling) and surpluses (price floor) affect quantity supplied and demanded.