Resources  and  Environmental  Economics    First  Term  2019/2020  

       

Lecture 7

PowerPoint Slides prepared by

Dr. Walaa W. Diab FCOM-BU

 

Dr.  Walaa  Wageh  Diab  

     

Resources  and  Environmental  Economics    

First  Term  2019/2020  COURSE  SYLLABUS  

       

PowerPoint Slides prepared by

Dr. Walaa W. Diab FCOM-BU

 

1-­‐  Instructor  Contact  Info.    Name:  Dr.  Walaa  Wageh  Diab  

Office  Hours:  from  8:30  am  to  9  am  each  Wednesday  Online  Office  Hours:  Each  Friday  at  1pm  to  3  pm  

Class  meets  Wednesday    Email:  Walaa.dyab@fcom.bu.edu.eg  

Course  website:    Lecture  slides  and  exercises  accessible  through  My  official  page:  

hVp://bu.edu.eg/staff/walaadyab4    

Dr.  Walaa  Wageh  Diab  

     

Resources  and  Environmental  Economics    

First  Term  2019/2020  COURSE  SYLLABUS  

       

Dr.  Walaa  Wageh  Diab  

     

Resources  and  Environmental  Economics    

First  Term  2019/2020  COURSE  SYLLABUS  

       

Dr.  Walaa  Wageh  Diab  

     

Resources  and  Environmental  Economics    

First  Term  2019/2020  COURSE  SYLLABUS  

       

Dr.  Walaa  Wageh  Diab  

Market  Structures  

Market  Structures  

•  Type  of  market  structure  influences  how  a  firm  behaves:  – Pricing  – Supply  – Barriers  to  Entry  – Efficiency  – CompeEEon  

Market  Structures  

•  Degree  of  compeEEon  in  the  industry  •  High  levels  of  compeEEon  –  Perfect  compeEEon  

•  Limited  compeEEon  –  Monopoly  •  Degrees  of  compeEEon  in  between  

Market  Structure  

•  Determinants  of  market  structure  – Freedom  of  entry  and  exit  – Nature  of  the  product  –  homogenous  (idenEcal),  differenEated?  

– Control  over  supply/output  – Control  over  price  – Barriers  to  entry  

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q Most  markets  fall  between  the  two  extremes  of  monopoly  and  perfect  

compeZZon  

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What  is  meant  by  a  deadweight  loss?    q  A  deadweight  loss  is  the  loss  in  producer  and  consumer  surplus  

due   to  an   inefficient   level  of  producEon  perhaps   resulEng   from  one  or  more  market  failures  or  government  failure.  

 q  A   deadweight   loss   is   a   cost   to   society   created   by   market  

inefficiency,  which   occurs  when   supply   and   demand   are   out   of  equilibrium.   It   can   be   applied   to   any   deficiency   caused   by   an  inefficient   allocaEon   of   resources.   Price   ceilings,   such   as   price  controls  and   rent  controls;  price  floors,   such  as  minimum  wage  and   living   wage   laws;   and   taxaEon   can   all   potenEally   create  deadweight  losses.  With  a  reduced  level  of  trade,  the  allocaEon  of  resources  in  a  society  may  also  become  inefficient.  

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What  is  meant  by  a  deadweight  loss?    q  Deadweight   loss   occurs   when   supply   and   demand   are   not   in  

equilibrium,   which   leads   to   market   inefficiency.   Market  inefficiency   occurs   when   goods   within   the   market   are   either  overvalued   or   undervalued.   While   certain   members   of   society  may   benefit   from   the   imbalance,   others   will   be   negaEvely  impacted  by  a  shi[  from  equilibrium.  

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