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We learned that the interaction of supply and demand determines prices and output levels in markets. Prices and output levels change when either the demand curve or the supply curve shifts. Sometimes price and output both increase and decrease. Sometimes one increases while the other decreases.
Consider a situation where the price of a good rises when output increases. For example, lithium is used in rechargeable batteries for computers, phones, other electronic goods, and even certain cars. Demand for lithium was low as recently as the early 2000s. Since then, both the price of lithium and the production of lithium have more than doubled.
Start your discussion by responding to these questions:
What could explain the simultaneous increases in the price of lithium and the production of lithium? Use supply and demand curves to explain your answer.
Hint: Price and equilibrium quantity have both increased. Would a shift in the demand curve or a shift in the supply curve lead to this result?
Watch the video, Revenues, Profits, and Price, to help you prepare for this week’s discussion: https://youtu.be/UWImfFax8Ew
Start your discussion by responding to this question using the company for which you currently work, a business with which you’re familiar, or the dream business you want to start:
What are some key fixed and variable costs for this business? Remember, fixed costs do not change when output changes. That is, fixed costs remain even if the company is producing nothing. Variable costs increase as output increases.
Watch the video, Oligopolies and Monopolistic Competition, to help you prepare for this week’s discussion.https://www.youtube.com/watch?v=PzDthFTzEa0&t=1s
Start your discussion by responding to these questions using the company for which you currently work, a business with which you’re familiar, or a dream business you want to start:
With your selected business in mind, determine if it is in a market characterized by perfect competition, monopolistic competition, oligopoly, or monopoly.
How does the business/firm in this industry determine the price it will charge for the products or services it sells?