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

1. Introduction to Microeconomics

   • Principles of demand and supply

2. Marketing

3. Theory of the Firm

4. Consumer Behavior

5. Markets and Business Firms

6. 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

1. How choices determine what, how, and for whom goods/services are produced?

2. 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.