case study example microeconomics

IB Microeconomics Real-Life Examples

<- Back to Micro

<- Back to Extra

On Paper 1s, you are expected to use real-life examples in your arguments. This is a list of case studies, related to each part of the syllabus, you could keep in mind whilst answering a question. You shouldn't have to memorize everything, and remembering examples you've read about should come quite natural after a while. Following student feedback, I have tried adding links to most of these examples for further reading.

However, just stating a real example is not enough; You are expected to embed it in your evaluation. Get to know the content first!

This is not meant to be a list of examples you have to strictly memorize, but simply a list of cases you can keep in mind when evaluating an economic concept . The best way to learn real-life examples is to start reading economic news articles.

2 .1 Demand

Non-price determinants of demand :

Income: As China has grown rapidly in the last 25 years, car sales has increased from 250,000/month in 2000 to over 2,500,000/month now , because people earn significantly more. 

Tastes & Preferences: Many Android phones offer much better value than iPhones, yet 87% of US teenagers have an iPhone, and Apple has increased their market share worldwide in recent years.

Future Price Expectations: Many art pieces are in high demand, not because people think they look good, but because they think it will be worth more in the future.

Prices of Related Goods: Because many more affordable electric cars have come out in recent years (such as the Nissan Leaf), more electric cars are sold now than before. This then increases demand for EV chargers, even though the price of these have remained roughly the same.

2. 2 Supply

Non-price determinants of supply :

Indirect Taxes/Subsidies: TSMC, a big semiconductor (computerchips) manufacturer, has received $5.1B in subsidies from the Japanese government to build a new factory. This will increase the production/supply of microchips.

Changes in Technology: Thanks to advancements in automation, the Tesla factory in Shanghai finishes a new car every 40 seconds . This means the firm can supply more cars now than before.

Number of Firms: There are many more firms in the smartphone industry now than 30 years ago , which is one of the reasons (not the only one) why there are more phones supplied now than before.

2. 3 Equilibrium

Signalling, incentives, and rationing :

In recent years, the quantity demanded for gallium ( a chemical used for making batteries ) has increased, while supply has remained the same. This means the market price has increase.

This increase in price signals to mining companies that they should produce more, because they now have an incentive to mine more. 

However, there is still a limited amount of gallium supply available in the world, meaning supply has to be rationed ; For example, China has limited their exports of gallium , partly because of how little of it is available (they want it more for themselves)

2. 4 Critique of Maximizing Behavior ( HL Only )

Types of behavioral economics : 

Biases: Many people have a strong preference towards iPhones, and will never change over to Android, even though some Android models may offer better value.

Bounded Selfishness: The global charity industry was worth around $330B in 2021 . Much of this money comes as donations from people, who see past their own selfishness and donate money to help others, too.

Choice architecture : 

Cookie banners that pop up on seemingly every website often come with a big colorful button that says "Agree to all cookies" (the default choice) and then a tiny textbox that says "Manage my choices". 

When you click on "Manage my choices", you often have to untick many checkboxes before you can click "Save my preferences". 

Because they make it so hard to opt out of cookies, most people don't bother and just end up clicking "Agree to all," which is what the websites want.

Nudge theory : 

Amsterdam Airport (Schiphol) decided to try to combat "spillage" around their bathroom urinals, by putting small stickers of flies in the center of the urinals (so that people had something to aim at).

This worked ! Men aimed more at the urinal and there was less spillage.

2.5 Demand Elasticity

Examples of PED elastic/inelastic goods :

Elastic: Chewing gum is a product with many substitutes (other chewing gum companies), is (relatively) unimportant in people's lives, and is often bought because of its affordability. Therefore, when one firm increases prices, many consumers will very easily switch to a rival, meaning it is very elastic

Inelastic: Insulin is a drug needed by people who have diabetes. No matter what the price is, diabetics are still going to have to buy it, because their life depends on it. As a result, insulin has become very expensive in the US, costing almost $100 per vial .

Importance of PED

Some firms such as Uber or airlines frequently use PED to evaluate how to set the most optimal prices for their taxis. This is called "surge pricing".

On rainy days, PED is lower as customers will much rather pay a little more in order to get where they want without getting wet. The same is true after big sporting or concert events, where people want to get home safely and quickly no matter the cost. 

Because this has proven to be so successful, many other industries are considering this . (link requires Financial Times subscription. Here is a bypass for those without one)

Examples of YED elastic/inelastic goods

Inferior goods: Cheap foods such as fast food, frozen pizza, rice, and instant noodles are all goods consumers typically consume more of when their income is low. During the 2008-2009 financial crisis, the number of fast food locations in the UK's largest cities increased by 6.6% and 8.2% in these two years . Their YED is less than 0

Necessities: Fruits and vegetables are required parts of the human diet, and absolute consumption will therefore not decrease when people earn more money. However, if one's income doubles one typically won't double/triple the amount of fruit eaten. It therefore falls into the necessity category. Their YED is between 0 and 1

Luxury goods: Consumers purchase more designer clothes, sports cars, and go on more holiday vacations when their incomes increase. Not just that, but if their income doubles, their consumption of holidays to exotic countries usually more than doubles. This means YED is more than 1, and it is a luxury.

Importance of YED

Fast food chains position and market themselves differently in different countries.

In more developed countries (North America and Europe), fast food is considered "cheap", meaning its YED is low. 

In high-growth countries such as China or India, Western fast food chains such as McDonald's is considered a little more "luxury" (or at least not as much junk ). It's YED is considerably higher, and it is possible this is done on purpose by McDonald's: China and India both experience large increases in consumers' incomes, so a positive YED will mean more sales for McDonald's. 

2. 6 Supply Elasticity

Examples of PES elastic/inelastic goods

Elastic: Soft drinks are PES elastic. 

If more supply is needed, companies can relatively easily upgrade their capital (factories).

Since they are ultra-processed, they can be stored in warehouses and grocery store shelves very easily and for a long time.

Supply is therefore responsive to price changes = PES elastic

Inelastic: Semiconductors (computer chips) are very PES inelastic. 

If prices increase, it can take chip manufacturing companies like TSMC up to a decade to build new factories that increase capacity, because of the complexity needed to make these chips; it is very hard to build new capital. 

There is rarely any unused capacity in these factories as the companies try to maximize profits; TSMC, the world's largest chip manufacturer, is fully booked for years to come.

Chips also get better every year, so even though it is easy to store chips for later, there is no point as newer, faster ones now exist. 

In other words, supply is very unresponsive to price changes = PES inelastic

2. 7 Role of Government in Microeconomics

Price floor :

In the US there is a nationwide minimum wage of $7.25/hour , which acts as a price floor in the labor market. 

This value hasn't changed since 2009 despite inflation , so many want this to increase to $15/hour. This would increase workers' surplus but reduce companies' surplus. 

However, others argue that since this will increase the price of labor, there will be an excess of labor, in other words, more unemployment, because companies won't be willing to pay that much.

Price ceiling :

In countries like the Netherlands and France , there is a limit on how much housing rent is allowed to increase per year. 

This will ensure renting prices will not significantly outpace people's incomes, but it means that if demand suddenly were to increase, there would be a shortage of houses available to rent, because landlords won't be willing to rent for that little. 

Indirect tax :

Many countries have high indirect taxes on goods such as polluting cars, candy, alcohol, and cigarettes. 

This helps in reducing people's consumption because the price will be higher, but surplus for both consumers and producers will decrease. The government will on the other hand earn money, which can be spent on other priorities. 

China has for many years heavily subsidized electric cars , in an effort to increase both production and consumption. 

This has worked because these cars are now significantly cheaper than petrol cars. Both producer and consumer surplus has increased, however, this is a costly government effort, since the more successful this scheme becomes, the more money the government has to spend. 

Direct provision of services :

In most countries, public transportation (buses and trains) is not profitable for private companies, meaning there is little service and coverage without government intervention. 

Most public transit services are therefore provided by either the local city government or the national state, because its importance in relieving traffic and improving accessibility for people is "worth" the cost of operating buses in the eyes of the government.

Examples include Transport for London, a part of the London government that operates the famous Tube.

Command & control regulation/legislation :

In Norway, the government set a goal being that all new cars sold by 2025 should be emission-free (EVs). They have incentivized this using extensive legislation :

EV imports were for a long period tax-free, and there was no indirect tax on EVs (compared to 25% on petrol cars).

EVs got to use toll roads and ferries for free, had free parking, and could use bus lanes.

However, these rules were perhaps too successful, as it made buying an EV so attractive that the government lost significant amounts of tax, parking, and road toll revenue. Bus lanes were at many places jammed with EVs, destroying the whole point of a bus lane. 

Many of these incentives have therefore been scaled back, but it shows how effective regulation and legislation can be.

Consumer nudges :

Instead of banning cigarettes, many countries instead have rules about the packaging design of cigarettes to make them less appealing and attractive for consumers.

First pioneered in Australia but now used across the world, cigarette boxes have to use a specific brown color considered ugly and unappealing, and plain text describing the content rather than a colorful logo.

Additionally, messages encouraging you to quit, such as "SMOKING KILLS" or "QUITTING WILL IMPROVE YOUR HEALTH" are written in large letters across the package.

This " plain tobacco packaging " tactic is a way for governments to nudge consumers into quitting cigarettes, without actually restricting the freedom of its people. An outright ban could potentially reduce cigarette consumption more, but this would cause much more upset among people wanting the freedom to choose themselves.

2. 8 Market Failure: Externalities & Common Pool Resources

Positive externality of production :

When building new energy power plants from renewable sources in the US, the overall benefit for society is much larger than the benefit the electricity company receives: The world receives fewer carbon emissions, the US reduces its dependency on foreign gas imports, and people will experience less pollution. (MPC > MSC)

However, when left up to the free market, few of these projects will be done as private companies don't really care about how society will benefit. 

The US government therefore recently stepped in, with the "Inflation Reduction Act" meant to, amongst other things, subsidize investments in building green energy facilities. This is a form of subsidy, and is expected to boost the production of things like solar panels .

Positive externality of consumption :

Goods such as fruits and vegetables create positive externalities, as the healthcare system benefits from you being healthy, avoiding expensive trips to the hospital. As they say, an apple a day keeps the doctor away. (MSB > MPB)

However, in the free market, producers can earn more by selling processed foods, and consumers often enjoy the taste of unhealthy goods more.

In an effort to promote healthy eating, countries like the US, UK and Germany have therefore launched initiatives such as "5 a day" , where they try to encourage people to eat 5 fruits a day. This is a form of education/awareness campaign.

Negative externality of production :

A coal power plant in Poland pollutes as much CO2 as the entirety of Switzerland (!!!), just as a by-product for energy production. This is an enormous negative externality, as the world has to suffer from tens of millions of tonnes of extra CO2, which is a much higher cost than the power plant operator experiences themselves. (MSC > MPC)

An effort that could limit this pollution was proposed by the Polish state energy company, namely being tradable permits. This solution would have put a cap on total pollution in the country but allow the various power plants to trade permits for polluting, which would have encouraged this power plant to improve its efficiency. 

(this plan sadly failed after they failed to secure EU funding, but that's not necessary to mention in a paper 1)

Negative externality of consumption :

Smoking may result in a significantly higher cost for society than on the person smoking, as the national healthcare system has to pay for their lung cancer treatment, or other illnesses associated with smoking. (MPB > MSB)

Governments worldwide therefore try to discourage smoking using a wide variety of intervention methods: High indirect taxes, regulation limiting where you can smoke, educating people on the dangers of smoking, and international agreements trying to limit smoking worldwide. 

(however, it could also be argued that smokers are better for society than non-smokers: a study in 2000 concluded that since smokers tend to die much earlier than non-smokers, they cost the government a lot less in pension and healthcare costs. However, this study was funded by a tobacco company and caused international outrage due to its immorality)

2. 9 Market Failure: Public Goods

Examples of public goods :

Basically anything you can think of that companies won't provide because they won't make any money off of it: National military, streetlights, parks (in most cases), police, knowledge, etc.

Government intervention in response to public goods :

In the vast majority of countries there is at least some form of military provided by the government. 

Some of the militaries' goods and services are provided directly by the government, such as making armor and organizing the hierarchy in the system. 

However, the government may also pay private companies to design and build things themselves, such as fighter jets from Lockheed Martin or missiles from Raytheon (contracting out to the private sector). This is the case in many Western countries and is infamously known as the military-industrial complex . Sometimes this works because private companies tend to be more efficient than state entities, but since they also aim to maximize profits it can also be much more expensive than otherwise. 

2. 10 Market Failure: Asymmetric Information ( HL Only )

Example of asymmetric information :

Up until 1996, nutrition information was not required by food and drink manufacturers, meaning that consumers had very little information regarding what they ate. 

Responses to asymmetric information :

Both the US and the EU have in recent decades implemented their own standards saying that food and drinks companies have to list their ingredients on the packaging . This includes total energy, sugar, and fat, and is meant so that consumers can know more about what they are eating and drinking than before.

2.11 Market Failure: Market Power ( HL Only )

Monopoly : 

ASML has a monopoly on EUV-lithography machines (sounds complicated, is complicated, but basically machines used to make chips used in computers).

There is no substitute to this product, extremely high barriers to entry (as all expertise on how to make these machines has taken hundreds of billions of $ to find), and the firm is a price maker.

This is not allocatively efficient, as the company produces fewer machines than what is desired by chip companies who need these machines. 

This monopoly is an interesting one, as it has big economies of scale (lots of research would not have been possible if there had been 100 small companies), improving market efficiency. At the same time, it limits output and has high prices, reducing market efficiency. 

Natural Monopoly :

In many cities there is just 1 public transit provider, 1 company that controls the bus, train, and subway services. 

This is because it is most efficient for society to just have one company do this; Imagine the chaos if every bus line was operated by another company, compared to the convenience of being able to use one ticket on every transit line. 

Also, each individual bus line becomes cheaper to run when the company has 50 lines compared to just 1 (economies of scale). A natural monopoly can therefore reduce the overall costs of inefficiencies, lowering prices for consumers and reducing a welfare loss.

Collusive Oligopoly :

In 2019, it was found that Mercedes, BMW, and Volkswagen colluded together in an effort to prevent advancements in the efficiency of cars . Basically, they agreed not to use new ways of making cars more environmentally-friendly.

This collusion led to the fact that they could all maximize their profits, but it lead to allocative inefficiency as consumers were not given the best potential products. Since there are quite few car-makers, when such large companies collude, it severely limits consumer choice.

While the firms were likely tempted to take advantage of the others, as seen in a game theory matrix, the collusion was in effect until the EU found out about it in 2019 and fined them. 

Non-collusive Oligopoly :

In Bangladesh, the top 3 telecom companies control 43.8%, 30.2%, and 22.4% of the market share each. If we were to add these up, we get 96.4% as a concentration ratio. This indicates the market is extremely concentrated.

The companies are able to compete on price of their cellular subscriptions, as well as non-price elements, such as amount of gigabytes, extra features, discounts on new phones, etc. 

An oligopoly causes a welfare loss, as the price of cellular subscriptions is above what is socially optimum. 

Monopolistic Competition :

Many restaurant chains such as McDonald's operate under monopolistic competition, where they have a little market power, slight product differentiation from competitors, and some barriers to entry (it costs quite a lot to open a restaurant but it is not impossible)

However, restaurants are still price makers, meaning they can set a high price and maximize profits rather than providing what is best for society. It therefore still causes a welfare loss.

Perfect Competition :

Discogs, an online marketplace to buy CDs, offers something very close to a perfect competition. 

Each seller of a CD sells the same (homogeneous) product, and has to provide the price, condition, and image of the CD. Consumers therefore have almost perfect information on the product, too. 

Since there are often lots many sellers, they are price takers as they have no market power at all. 

Lastly, there are no barriers to entry as anyone can register an account and start selling their own collection.

This makes for a very efficient market, at least for popular CDs, with very little welfare loss. 

2.12 The Market's Inability to Achieve Equity ( HL Only )

Certain countries like the US are very market-based economies, meaning they basically let the free market make most economic decisions. 

This has led to high levels of inequality, much higher than many countries with more government intervention. 

Income inequality is higher, life expectancy is lower, and general quality of life is lower in the US than in many other Western countries. 

Want to create or adapt books like this? Learn more about how Pressbooks supports open publishing practices.

Topic 7: Producer Theory

Some hate it and some love it, but regardless of how you feel oil is still a key part of our daily lives. The average Canadian uses about 20 barrels of oil each year, equivalent to about one and a half swimming pools. Since it is such a major part of our expenses, oil is a product where, when price changes, we really notice.

In 2008, China’s expansion sparked  a  long period of high prices. In this case study, we will analyze what has happened to these prices over time and the impact this has had on oil producers from the lens of producer theory. 

To simplify our case study, let’s assume that the oil market is perfect competition.

1. Consider the following producer theory model for a single firm producing oil, and the aggregate supply and demand. What is the firm’s equilibrium price and quantity?

2. What is the firm’s profit at this level?

3. What will occur in the long-run for this market? Show this on the new graph below.

The period of high prices indeed incentivized private firms to search farther than ever before –  in the Arctic, Brazil’s pre-salt fields, deep waters off Angola, and Canada’s oil sands to ever expand the supply of oil. Investors encouraged this activity, rewarding future growth as much as profitability.

Oil prices have been quite volatile. Recently, from mid 2014 to early 2016 oil prices plummeted from $110 a barrel to around $27. This sharp decline has been due to a number of causes. A key cause was when sanctions were lifted from Iran, a new producer entered the market with large quantities of oil. In addition, growing fears about action on climate change, coupled with the emergence of alternative-energy technologies, caused producers to pump as hard as they can, while they can.

Read more about the reasons for changing oil prices

3. Use the producer theory model from above to show the impact of Iran’s entry, assume this brings the market from long-run equilibrium to a price of $27.

4. What are the firms profits at this price?

In the industry at large, the incentive is to keep producing “as flat out as you can”, once investment costs have been sunk into the ground, says Simon Henry, Shell’s chief financial officer. He says it is sometimes more expensive to stop production than to keep pumping at low prices, because of the high cost of mothballing wells. He suggested that firms  will not pack up so long as prices cover day-to-day costs, in some cases as low as $15 a barrel.

It may be uneconomic to drill new deepwater wells at prices under $60 a barrel, he says, but once they are built it may still make economic sense to keep them running at prices well below that. Such resilience is used by some to justify why they expect prices to remain “lower for longer”.

Read more about the impact of price changes on oil firms

6. What does this excerpt suggest about how firms will behave in the short run?

7. Based on the information given about this market, what do you think the time horizon will be for this industries ‘long run’? What will happen in the long run?

Notice that in our model when prices fall, even in the short run individual firms will decrease production. In reality, firms part of the Organization of Petroleum Exporting Countries (OPEC) made a pact to keep production high, to try to retain market share and keep out competitors.

In his book “The Prize”, Daniel Yergin quotes an American academic writing as far back as 1926 about the “spectacle” of massive overproduction. “All saw the remedy but would not adopt it. The remedy was, of course, a reduction in the production.”

8. Comment on the effects of OPEC’s actions on the market.

In this case study we have shown how microeconomic concepts of monopoly and monopolistic competition can be used to understand current events in the news. Do you have a story you think would make a good case study? Contact [email protected] to propose your own case.

Principles of Microeconomics Copyright © 2017 by University of Victoria is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

Share This Book

Feedback/errata.

Comments are closed.

Microeconomic Case Studies

Economist Zone

Welcome to this comprehensive analysis of microeconomic case studies. We will explore a variety of real-world scenarios to understand the principles of microeconomics better. These case studies will provide insights into consumer behavior, market structures, and the impact of government policies on individual businesses. Let's embark on this exciting journey to unravel the intricacies of microeconomics through practical examples.

Understanding Consumer Behavior: The Case of Starbucks

Starbucks, a global coffee giant, offers an excellent case study to understand consumer behavior in microeconomics. The company's ability to maintain high prices despite stiff competition is a testament to its understanding of consumer preferences and elasticity of demand.

The concept of elasticity measures how demand for a product changes in response to price changes. For Starbucks, the demand for its products is relatively inelastic. This means that a price increase does not significantly affect the quantity demanded by its customers. The reason behind this inelasticity is the unique value proposition Starbucks offers - a premium experience that goes beyond just coffee.

Starbucks has successfully created a brand image that appeals to consumers who value quality, ambiance, and customer service over price. This strategy allows the company to charge higher prices without losing its customer base. This case study illustrates how understanding consumer behavior can help businesses make strategic decisions about pricing and product offerings.

Market Structures: The Case of Google

Google's dominance in the search engine market provides a fascinating case study on market structures in microeconomics. Specifically, it highlights the characteristics and implications of a monopoly.

A monopoly exists when a single company dominates a market, with no close substitutes available for its product or service. Google, with its unparalleled search engine, holds a significant share of the global search market. This dominance allows Google to control the market, influencing prices (in this case, advertising rates) and controlling market entry.

While monopolies often face criticism for potential consumer exploitation, they also contribute positively by providing substantial resources for research and development. Google's innovative services like Google Maps, Google Drive, and Gmail are direct results of its ability to invest heavily in innovation. This case study underscores the complexities of market structures and their impact on business strategies and consumer experiences.

Government Policies and Individual Businesses: The Case of Tesla

Tesla, the electric vehicle manufacturer, provides an intriguing case study to understand the impact of government policies on individual businesses. Government incentives and regulations have played a significant role in Tesla's growth and the broader adoption of electric vehicles.

Government policies, such as tax credits for electric vehicle owners and emissions regulations for traditional vehicles, have created a favorable environment for Tesla's growth. These policies have made electric vehicles more affordable for consumers and have increased the cost of producing gasoline-powered vehicles.

Tesla's success highlights how government policies can influence market dynamics and business strategies. It also underscores the role businesses can play in shaping policy decisions. Tesla's advocacy for electric vehicles and renewable energy has contributed to policy developments that benefit its business model.

The Role of Competition: The Case of Coca-Cola and Pepsi

The long-standing rivalry between Coca-Cola and Pepsi offers a classic case study on the role of competition in microeconomics. Their ongoing battle for market share in the beverage industry has led to innovative strategies and products.

Competition in microeconomics refers to the rivalry between firms to gain a larger share of the market. In the case of Coca-Cola and Pepsi, this competition has resulted in a wide variety of products, from diet sodas to fruit juices and bottled water. The competition has also led to aggressive marketing campaigns and pricing strategies.

This case study highlights how competition can drive innovation and benefit consumers through a wider variety of product choices. It also illustrates how businesses must continually adapt their strategies to maintain or increase their market share in a competitive environment.

Supply and Demand: The Case of the Housing Market

The housing market offers a compelling case study to understand the principles of supply and demand in microeconomics. Housing prices are largely determined by the balance between the availability of properties (supply) and the number of people looking to buy (demand).

When demand exceeds supply, as seen in many urban areas, housing prices tend to rise. Conversely, when supply exceeds demand, as in some rural areas, prices tend to fall. Various factors can influence supply and demand in the housing market, including interest rates, economic growth, and government policies.

This case study underscores the dynamic nature of supply and demand and their impact on prices. It also highlights the role of external factors in influencing market dynamics.

The Impact of Globalization: The Case of Apple

Apple, with its global supply chain and market presence, provides an interesting case study to understand the impact of globalization on individual businesses. Globalization refers to the increasing integration of economies around the world, facilitated by the free movement of goods, services, and capital.

Apple sources components for its products from various countries, assembles them in others, and sells them globally. This strategy allows Apple to benefit from cost efficiencies and access to global markets. However, it also exposes the company to risks, such as trade disputes and fluctuations in exchange rates.

This case study highlights the opportunities and challenges that globalization presents for businesses. It also underscores the need for businesses to adapt their strategies to a rapidly changing global economic environment.

Case Studies in Business Economics, Managerial Economics, Economics Case Study, MBA Case Studies

Ibs ® case development centre, asia-pacific's largest repository of management case studies, mba course case maps.

• Business Models
• Blue Ocean Strategy
• Competition & Strategy ⁄ Competitive Strategies
• Core Competency & Competitive Advantage
• Corporate Strategy
• Corporate Transformation
• Diversification Strategies
• Going Global & Managing Global Businesses
• Growth Strategies
• Industry Analysis
• Managing In Troubled Times ⁄ Managing a Crisis ⁄ Product Recalls
• Market Entry Strategies
• Mergers, Acquisitions & Takeovers
• Product Recalls
• Restructuring / Turnaround Strategies
• Strategic Alliances, Collaboration & Joint Ventures
• Supply Chain Management
• Value Chain Analysis
• Vision, Mission & Goals
• Global Retailers
• Indian Retailing
• Brands & Branding and Private Labels
• Brand ⁄ Marketing Communication Strategies and Advertising & Promotional Strategies
• Consumer Behaviour
• Customer Relationship Management (CRM)
• Marketing Research
• Marketing Strategies ⁄ Strategic Marketing
• Positioning, Repositioning, Reverse Positioning Strategies
• Sales & Distribution
• Services Marketing
• Economic Crisis
• Fiscal Policy
• Government & Business Environment
• Macroeconomics
• Micro ⁄ Business ⁄ Managerial Economics
• Monetary Policy
• Public-Private Partnership
• Entrepreneurship
• Family Businesses
• Social Entrepreneurship
• Financial Management & Corporate Finance
• Investment & Banking
• Business Research Methods
• Operations & Project Management
• Operations Management
• Quantitative Methods
• Leadership,Organizational Change & CEOs
• Succession Planning
• Corporate Governance & Business Ethics
• Corporate Social Responsibility
• International Trade & Finance
• HRM ⁄ Organizational Behaviour
• Innovation & New Product Development
• Social Networking
• China-related Cases
• India-related Cases
• Women Executives ⁄ CEO's
• Effective Executive Interviews
• Video Interviews

Executive Brief

• Movie Based Case Studies
• Case Catalogues
• Case studies in Other Languages
• Multimedia Case Studies
• Textbook Adoptions
• Customized Categories
• Free Case Studies
• Faculty Zone
• Student Zone

Economics case studies

Covering micro as well as macro economics, some of IBSCDC's case studies require a prior understanding of certain economic concepts, while many case studies can be used to derive the underlying economic concepts. Topics like Demand and Supply Analysis, Market Structures (Perfect Competition, Monopoly, Monopolistic, etc.), Cost Structures, etc., in micro economics and national income accounting, monetary and fiscal policies, exchange rate dynamics, etc., in macro economics can be discussed through these case studies.

Browse Economics Case Studies By

Sub-Categories

• Government and Business Environment
• Micro / Business / Managerial Economics
• Public Private Partnership
• Aircraft & Ship Building
• Automobiles
• Home Appliances & Personal Care Products
• Minerals, Metals & Mining
• Engineering, Electrical & Electronics
• Building Materials & Construction Equipment
• Food, Diary & Agriculture Products
• Oil & Natural Gas
• Office Equipment
• Banking, Insurance & Financial Services
• Telecommunications
• e-commerce & Internet
• Transportation
• Entertainment
• Advertising
• IT and ITES
• Leisure & Tourism
• Health Care
• Sports & Sports Related
• General Business
• Business Law, Corporate Governence & Ethics
• Conglomerates

Companies & Organizations

• China Aviation Oil Corp
• De Beers and Lev Leviev
• Goldman Sachs
• Gordon Brown
• Iliad Group, France Telecom
• Lehman Brothers
• Merrill Lynch
• Mittal Arcelor
• Morgan Stanley
• Northern Rock
• Temasek Holdings
• Wachovia Wells Fargo
• Dominican Republic
• Netherlands
• North America
• Saudi Arabia
• South Africa
• South Korea
• United Kingdom
• United Arab Emirates
• United States

Recently Bought Case Studies

• Coca-Cola in India: Innovative Distribution Strategies with 'RED' Approach
• Indian Banking Industry and Bank of Baroda: The Need for Organisational Transformation
• India`s Moon Mission Chandrayaan-3: From Failure to Success
• Baby Milk Powder Contamination at China�s Sanlu: Violation of Business Ethics
• Corporate Frauds: India Inc.�s Response
• Tata Consultancy Services: Managing Liquidity Risk
• SSS�s Experiment: Choosing an Appropriate Research Design
• Differentiating Services: Yatra.com�s �Click and Mortar�Model
• Wedding Services Business in India: Led by Entrepreneurs
• Shinsei Bank - A Turnaround
• Accenture�s Grand Vision: �Corporate America�s Superstar Maker�
• Tata Group�s Strategy: Ratan Tata�s Vision
• MindTree Consulting: Designing and Delivering its Mission and Vision
• IndiGo�s Low-Cost Carrier Operating Model: Flying High in Turbulent Skies
• Evaluation of GMR Hyderabad International Airport Limited (GHIAL)
• Ambuja Cements: Weighted Average Cost of Capital
• Walmart-Bharti Retail Alliance in India: The Best Way Forward?
• Exploring Primary and Secondary Data: Lessons to Learn

New Case Studies In Economics

• The Sri Lankan Economic Crisis � What Went Wrong?
• Crude Oil Market and the Law of Supply
• Understanding Crude Oil Demand
• The `C` Factor: Cement Industry in India � Unhealthy Oligopoly & Controls
• Venezuela`s Macroeconomic Crisis: An Enduring Ordeal of Worsening Economy with Alarming Inflation
• Guwahati Molestation Case: Professional Responsibility Vs Moral Ethics
• The Renaissance of the South Africa Music Industry
• EU BREAK-UP?
• The Cyprus Bailout - Is the European Zone Failing?
• Global Financial Crisis and ITS Impact on Real and Financial Sectors in India

Best Selling Case Studies In Economics

• Perfect Competition under eBay: A Fact or a Factoid?
• Mexican Telecom Industry: (Un)wanted Monopoly?
• Mobile Telephony in India: Would Cheaper Rates Bring More Profits?
• US Financial Crisis: The Fall of Lehman Brothers
• Executive Pay Package: A Study of Demand and Supply
• OPEC: The Economics of a Cartel (A)
• OPEC The Economics of a Cartel (B)
• OPEC: The Economics of a Cartel (C)
• Comparative Cost Advantage and the American Outsourcing Backlash
• Global Oil Prices: Demand Side vs Supply Side Factors

Video Inerviews

Case studies on.

• View all Casebooks »

Course Case Mapping For

• View All Course Casemaps »
• View all Video Interviews »
• Executive Briefs
• Executive Inerviews
• View all Executive Briefs »

Executive Interviews

• View All Executive Interviews »

Contact us: IBS Case Development Centre (IBSCDC), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad-501203, Telangana, INDIA. Mob: +91- 9640901313, E-mail: [email protected]

Improving economics teaching and learning for over 20 years

Microeconomic Case Studies

An economics network funded project 2006-7.

Project leader: Ms. A. Vindelyn Smith-Hillman Contact: [email protected]

• Teaching guide
• Answer guide
• Student handout

The case studies aim to provide an applied contemporary vehicle to engage economic students in an area of familiarity. All too often microeconomics is perceived as being essentially a theoretical tool in which models and accompanying diagrams are memorised with little understanding of their significance in policy application.

It is anticipated that the case study approach will foster analytical development and also cater to mainstream business students who are taking an economics minor thereby widening participation in economic disciplines.

It is also intended that the case study vehicle provides a means of reaching out to developing country economic lecturers through suggesting alternative assessment. It affords the opportunity for oral assessment as against sole reliance on written assessment. In addition to written skills therefore, it offers the potential for development of social skills and enables students to learn by doing. Similar cases can be developed for the developing country context, in any case anti-competitive conduct pursued by a multinational corporation is often not isolated to a particular region, or if it is, developing countries bear the brunt.

See also case studies of mathematical concepts in Economics

• 78606 views
• Views on request

We’re fighting to restore access to 500,000+ books in court this week. Join us!

Send me an email reminder

By submitting, you agree to receive donor-related emails from the Internet Archive. Your privacy is important to us. We do not sell or trade your information with anyone.

Internet Archive Audio

• This Just In
• Grateful Dead
• Old Time Radio
• 78 RPMs and Cylinder Recordings
• Audio Books & Poetry
• Computers, Technology and Science
• Music, Arts & Culture
• News & Public Affairs
• Spirituality & Religion
• Radio News Archive

• Flickr Commons
• Occupy Wall Street Flickr
• NASA Images
• Solar System Collection
• Ames Research Center

• All Software
• Old School Emulation
• MS-DOS Games
• Historical Software
• Classic PC Games
• Software Library
• Kodi Archive and Support File
• Vintage Software
• CD-ROM Software
• CD-ROM Software Library
• Software Sites
• Tucows Software Library
• Shareware CD-ROMs
• Software Capsules Compilation
• CD-ROM Images
• ZX Spectrum
• DOOM Level CD

• Smithsonian Libraries
• FEDLINK (US)
• Lincoln Collection
• American Libraries
• Canadian Libraries
• Universal Library
• Project Gutenberg
• Children's Library
• Biodiversity Heritage Library
• Books by Language
• Additional Collections

• Prelinger Archives
• Democracy Now!
• Occupy Wall Street
• TV NSA Clip Library
• Animation & Cartoons
• Arts & Music
• Computers & Technology
• Cultural & Academic Films
• Ephemeral Films
• Sports Videos
• Videogame Videos
• Youth Media

Search the history of over 866 billion web pages on the Internet.

Mobile Apps

• Wayback Machine (iOS)
• Wayback Machine (Android)

Browser Extensions

Archive-it subscription.

• Explore the Collections
• Build Collections

Save Page Now

Capture a web page as it appears now for use as a trusted citation in the future.

Please enter a valid web address

• Donate Donate icon An illustration of a heart shape

Microeconomics : case studies and applications

Bookreader item preview, share or embed this item, flag this item for.

• Graphic Violence
• Explicit Sexual Content
• Hate Speech
• Misinformation/Disinformation
• Marketing/Phishing/Advertising
• Misleading/Inaccurate/Missing Metadata

plus-circle Add Review comment Reviews

282 Previews

3 Favorites

DOWNLOAD OPTIONS

No suitable files to display here.

PDF access not available for this item.

IN COLLECTIONS

Uploaded by station03.cebu on February 16, 2022

SIMILAR ITEMS (based on metadata)

Want to create or adapt books like this? Learn more about how Pressbooks supports open publishing practices.

Case Study – Beer or Cancer?

Interesting things have been happening in the chemistry labs of UVic. Professor  Fraser Hof and Philips Brewery chemist Euan Thomson have been collaborating to revolutionize the craft brewing process.

The project was inspired by a very different invention from Hof’s lab—the only one of its kind. “We created a tool for profiling the proteins in cancer cells,” said Hof. “And I realized that it could also be used to profile the proteins in brewer’s yeast.”

Read more about the beer chemistry collaboration.

In Topic 1 we talked about the opportunity costs of an action. Let’s explore how opportunity costs might impact decisions on what to research.

Assume that the government provides $50,000/year for the department to conduct  cancer research,  and the costs of operating the research lab is $30,000. Philips offers $70,000/year to do beer research, but researching beer would increase costs by $5,000.

1. What is the opportunity cost of conducting cancer research? Break this into implicit and explicit costs.

2. What option will the department choose? What are the opportunity costs of this choice?

3. What is the total economic profits from this choice?

4. If the cancer lab was offered $30,000 to shut down what would be the opportunity cost?

5. What is the minimum amount the government would have to provide for the department to conduct cancer research?

6. Why must the government pay the lab more money for the same work as before? What does this show us about how opportunities effect compensation?

Academic pursuits often have high private opportunity costs – its why professors are so well paid.   If they’re paid too little, the brightest PhDs will turn to industry instead of academia and universities will suffer. In order to attract experts from industry, the university needs to have the resources to compensate them.

Read more about professor compensation.

Consider an Economics prof who could be making $80,000 in the private sector, and a Business prof that could be making $100,000. Assume the individuals value the added prestige and benefits from being a prof at $20,000.

7. All else equal, how much will you have to pay each professor to entice them to teach?

In this case study we have shown how microeconomic concepts of opportunity costs can be used to understand current events and practical examples. Do you have an example you think would make a good case study? Contact [email protected] to propose your story.

Principles of Microeconomics Copyright © 2017 by University of Victoria is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

Share This Book

• Free Case Studies
• Business Essays

Write My Case Study

Buy Case Study

Case Study Help

• Case Study For Sale
• Case Study Services
• Hire Writer

Case Study on Microeconomics

Microeconomics case study:.

Microeconomics is the branch of economics which studies the structure, functioning and problems of the definite companies and small firms but also touches upon the general questions of economics and studies them on the definite examples. Microeconomics touches upon such key problems as: the problems of consumers; the problem of producers; balance of the market; general balance; economical effectiveness, the problem of supply and demand, etc.

So, the question about consumers is very important, because a smart businessman should know that the key function on the market play consumers, who decide what goods and services they require. One should think about the popular goods which are bought the most frequently and try to focus the development of his business on the production of the required goods, otherwise the firm will never be a successful one. Then, one will need to advertise these goods to inform the customers about his existence. Microeconomics studies the problem of the production of goods and services and the difficulties it faces. The structure of the market is the balance of the market is also an important topic discussed by the experts in microeconomics.

We Will Write a Custom Case Study Specifically For You For Only $13.90/page!

Without the knowledge about the rules and standards of the functioning of the market it is impossible to improve the business and wait high profits. The question of prices is considered to be the most important and controversial one in the discipline.Only professionals can explain what factors cause the raise and reduction of prices on the market and what the effect of these changes is. Finally, the problem of supply and demand is known to be one of the key ones concerning the starting of business and its effective functioning.Microeconomics is the essential branch of the economics discipline and it touches upon the important problems of the limited and local character. Evidently, without microeconomics the development of macroeconomics is impossible, so the branch is worth everybody’s attention.

A good case study is a detailed investigation of the given topic connected with microeconomics and its key points. Nevertheless, one should not dwell only the suggested problem, but pay attention to the general problems to be able to find out the cause and effect sides effectively and draw reasonable solutions.Students often feel disappointed being asked to complete a case study, because the assignment is not an easy one. Students have to be aware of the required manner of writing, structure, format and logical presentation of data. A free example case study on microeconomics which can be found in the web is able to provide every student with the effective answers to all these questions.

One can rely on the experience of the professional writer and his free sample case study and organize his own paper on the model of the successful example from the Internet.

Related posts:

• Economics Case Study
• Principles of Microeconomics
• Term Paper about Microeconomics
• Microeconomics report on fiat
• Case Study on Macroeconomics
• Case Study on Economic Environment
• Case Study on Economies of Scale

Quick Links

Privacy Policy

Terms and Conditions

Testimonials

Our Services

Case Study Writing Services

Case Studies For Sale

Our Company

Welcome to the world of case studies that can bring you high grades! Here, at ACaseStudy.com, we deliver professionally written papers, and the best grades for you from your professors are guaranteed!

[email protected] 804-506-0782 350 5th Ave, New York, NY 10118, USA

Acasestudy.com © 2007-2019 All rights reserved.

Hi! I'm Anna

Would you like to get a custom case study? How about receiving a customized one?

Haven't Found The Case Study You Want?

For Only $13.90/page

Reference Library

Collections

• See what's new
• All Resources
• Student Resources
• Assessment Resources
• Teaching Resources
• CPD Courses
• Livestreams

Study notes, videos, interactive activities and more!

Economics news, insights and enrichment

Currated collections of free resources

Browse resources by topic

• All Economics Resources

Resource Selections

Currated lists of resources

Topic Videos

Great Applied Micro Examples for your Exams in 2019

Last updated 19 May 2019

• Share on Facebook
• Share on Twitter
• Share by Email

In this video I have chosen loads of current examples that you might want to use as context in your microeconomics exams.

We look at examples from different market structures, recent mergers and takeovers, the world's most valuable companies, the largest employer, unicorn business, de-mergers, the biggest initial public offerings (IPOs) and much else. Hopefully a useful video to go through to add some super examples into your revision notes.

NOW WATCH THESE REVISION VIDEOS FOR MICRO...

Key topics to revise for paper 1 micro in 2019.

Exam Support

Key Micro Diagrams (Markets)

Key micro diagrams (market failure), key micro diagrams (government intervention), key micro diagrams (market structures), key micro diagrams (theory of the firm), key micro diagrams (labour markets).

• Conglomerate
• Horizontal integration

You might also like

Merger policy in the uk and the european union.

Study Notes

Timpson's Upside School of Management Model!

18th October 2015

Impact of competition in the mobile phone market

19th February 2016

Just Eat acquires Hungry House - Horizontal Integration at work

15th December 2016

Tesla scales back production target

2nd November 2017

Internal Economies of Scale (2019 Update)

Rapid organic growth - Lidl to open another 220 stores by 2025

26th November 2021

Ryanair and Economies of Scale

10th May 2023

Our subjects

• › Criminology
• › Economics
• › Geography
• › Health & Social Care
• › Psychology
• › Sociology
• › Teaching & learning resources
• › Student revision workshops
• › Online student courses
• › CPD for teachers
• › Livestreams
• › Teaching jobs

Boston House, 214 High Street, Boston Spa, West Yorkshire, LS23 6AD Tel: 01937 848885

• › Contact us
• › Terms of use
• › Privacy & cookies

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.

Want to create or adapt books like this? Learn more about how Pressbooks supports open publishing practices.

9 Case Study: Principles of Microeconomics

Ed. elizabeth mays.

Maxwell Nicholson’s interest in open textbooks started as a student leader at the University of Victoria Students’ Society.

He ran on a platform of open textbooks, and won (when we spoke with him he was just ending his post as director of campaigns and community relations). His involvement in an open textbook was one way of fulfilling a campaign promise to bring free textbooks into use at the university.

After the campaign, Nicholson met with about ten professors in exploratory meetings to find out about the barriers to adoption for open textbooks. These included Dr. Emma Hutchinson, who taught the ECON 103 course that Nicholson (and three of the other candidates) had been longtime lab instructors for.

“It’s not going to go anywhere if the professor’s not onboard, so we were fortunate enough for Dr. Hutchinson to be really excited about it too,” Nicholson says.

Post-election, Nicholson’s first step to operationalize the project was to apply for a $4,800 grant for the project from BC Campus, which served as a granting agency for open textbook projects that could prove a demand. Despite a few bumps along the way, the funds came through for the project.

This open textbook project was different in that rather than being primarily the work of an instructor with funding to write it or a class-assigned project for students, the grant funded lab instructors to do the heavy lifting of compiling the textbook. The professor reviewed it and made the changes they thought necessary from there. This was doable since Nicholson had direct experience with how the instructor taught the class.

Nicholson had assisted the microeconomics class three times and the macroeconomics course once. “I’ve been fortunate to be on the pedagogy side to some extent, obviously nothing compared to professors, but when writing the textbook, that was really really crucial for me to have that lens when I was contributing.”

The textbook started as an adaptation of Timothy Taylor’s open textbook, Principles of Microeconomics, [1]  from OpenStax. But in the process of adapting the text, they found there were a lot of components that had to be written.

Ultimately, the textbook comprised around 30 percent material that came from Timothy Taylor’s book and 70 percent new content the lab instructors developed from their notes and the professor’s slide decks.

“The reason this project was most appealing is because she had her slides over here which taught what she wanted [students] to know, and then the publisher’s textbook was completely different,” Nicholson says. “So from the start our goal was really to align those two things.”

Nicholson says the lab instructors thought a lot about how students were going to consume the material, and what components of the course the instructor really wanted to stress.

They hoped to save students the cost of buying a textbook they didn’t really use.

The book was structured into eight topics, then the lab instructors divided them and did the heavy lifting to compile the chapters. Dr. Hutchinson edited each of the chapters to make sure everything was accurate, thorough and clear.

The process, Nicholson says, helped “remove the biggest barrier for professors–the magnitude of work that goes into redesigning a textbook.”

Nicholson says he thinks large first-year courses such as ECON 103 (which has 800 students per year) make the best candidates for OER–and are also the most likely courses to have lab instructors that can be leveraged to compile the content. (He recognizes that most professors probably don’t want to spend their nights and weekends becoming book publishers.)

“What [professors] can do if they know that they’re going to do this project, is take one of their most christened lab instructors, get access to grant funding and pay the lab instructor to work on the textbook,” Nicholson says. “Then they can be confident that it’s someone who not only knows the course, but knows the course as the professor teaches it.”

For his part, Nicholson says he learned a lot from the project, including understanding the work that goes into designing a course, and gaining a greater appreciation for good textbooks and discernment of those that aren’t well-matched for the subject. Creating OER offers great opportunities to customize a textbook to a course, he says, observing that it must be challenging for traditional publishers to create one-size-fits-all content for teachers, who may teach subjects very differently.

“I would hope they’re doing a lot of getting students to read this book and connect on it,” he says. “A lot of times it feels like they don’t.”

Nicholson, who is studying business and economics, says, “If you’re trying to create a product, you’re always supposed to ask your end user ‘what do you think?’”

So even if you don’t want to have students write a textbook for your class, he says, you should have some of your top students read it and provide feedback.

Otherwise, he says, students will either buy the textbook and not use it, or tell future students not to buy it.

“With a publisher’s resource, if it’s not useful, the students are going to stop buying it,” Nicholson says.

Of course, some might object to students having as much involvement in a textbook’s writing as Nicholson and his fellow lab instructors experienced, but Nicholson says that after the instructors create the chapters, the professor is going to change and edit things, and ensure the quality meets their standard.

“If you’re a respected faculty and you have the experience teaching and you’ve put that stamp of approval, I’m really confident that the resource is going to be [Dr. Hutchinson’s] resource. It’s not just some resource that was written by students.”

For students involved in such projects, he encourages them to appreciate the potential impact they might have through their involvement.

“If you’re involved in this kind of project, you’re going to be on the back end of the course design, and you’re able to take all the components that you thought were really bad about other textbooks and avoid those and leave all the really good elements,” Nicholson says.

Students working on an open textbook for a class should realize the impact they’ll have on future students who take that class–whether it’s the only survey course they ever take on the subject, or the foundation of many in their majors. Plus, they’re participating in an innovative movement in education.

Even for those who may not participate on an open textbook project, Nicholson says they can play a role in the movement as advocates, speaking with professors and outlining the benefits of OER, telling them when their book is expensive and there’s an alternative open textbook in use by a peer institution.

“Creating the buzz about [open textbooks]–students can do that.”

Key Takeaways

For Faculty:

• Engage with student governments, who may be able to spread the word about your project and help recruit interested and willing students.
• Involve TAs who have both taken the course and are assisting in teaching the course and leverage their experience as students.
• Review existing materials (slide presentations, lesson plans, assignments and more) to see if there are any that can be converted into content for the open textbook.
• Get student feedback on the completed book. It’s valuable! Be sure to implement fixes where appropriate for future editions.

For Students:

• Look for internal and external funding opportunities that may pay for your professor to hire you to help them create OER.
• Clarify roles, expectations, workflow, and timelines.
• Timothy Taylor, Principles of Microeconomics (Houston, OpenStax: 2014), https://openstax.org/details/books/principles-microeconomics. ↵

A Guide to Making Open Textbooks with Students Copyright © 2017 by Ed. Elizabeth Mays is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

Share This Book

Microeconomics: Case Studies and Applications, 4th Edition

Jeff borland.

Microeconomics: Case Studies and Applications contains case studies that explore core microeconomics concepts by focusing on current events in economics. Each case study presents a different application of a core concept or theory and contains a range of extra material. A ‘Theory refresher’ section helps you to revise a key concept or theory that is important for your understanding of the application in that case study.

• Table of Contents
• Meet the Authors
• Supplements
• Related Products

Section 1 Scarcity, decision making, incentives and trade: an introduction to key concepts in economics Section 2 Demand, supply and equilibrium in competitive markets Section 3 International trade Section 4 Market failure and government policy Section 5 Theory of the firm and managerial economics Section 6 Game theory Section 7 Labour markets Section 8 Economics of information

Jeff Borland is Truby Williams Professor of Economics at the University of Melbourne. He has been teaching microeconomics for 25 years. He is a past winner of The University of Melbourne's Ed Brown Teaching Award, and has received a Carrick Citation for Outstanding Contribution to Student Learning. His main research interests are analysis of the operation of labour markets in Australia, program and policy evaluation and design, Australian economic history, and sports economics. His current teaching is in the areas of microeconomics, sports economics, and Australian and world economic history.

NEW case study database for instructors that consolidates compelling cases from previous editions into one location

NEW correlation grid that maps the cases against the Gans, Principles of Microeconomics textbook allows academics to easily identify where a case could be introduced to support a topic

NEW and updated case studies that use contemporary examples to reflect core microeconomics concepts (Cases 2.4 and 2.10 are brand new to this edition)

Each case is written specifically for introductory microeconomics students with Key Lessons that directly link the cases to key concepts, and discussion questions to help students develop their understanding of how theory is applied in a practical setting.

Borland, 4e saves instructors time by providing cases already suited to microeconomics courses that include pedagogy with solutions. The text’s structure allows Gans, Principles of Microeconomics/Economics adopters to easily incorporate the resource into their courses with the help of the correlation grid.

Instructor Website for Borland's Microeconomics: Case Studies and Applications 9780170439497 Microeconomics: Case Studies and Applications Instructor Solutions Manual 9780170439503

Microeconomics: Price Ceiling in the Oil Industry Case Study

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

Summary of the Case

Introduction about the topic, analysis of the case, works cited.

The concept of a price ceiling in the oil industry is not only common in Australia, but also in other countries, including the United States. Issues such as labor disputes, natural disasters, and an increase in the price of crude oil have a direct impact on the supply of petrol. They tend to reduce supply. Under such circumstances, the supply will be greater than demand. Given the fact that governments have a price ceiling beyond which a firm cannot price their products, the common phenomenon during such shortage of petrol is long queues at the gas stations. Most of the owners of petrol stations do not consider spending more because they lack incentives that always come with a price increase.

A price ceiling is a concept that many governments have embraced as a way of protecting the interest of the poor members of society. Oil is one of the most important factors of production and changes made in its price erratically may have serious consequences on the lives of the poor. Firms always transfer the cost of production to their consumers (Common and Stagl 87). It means that even if the poor do not buy the product directly at the gas stations, they will have to pay the price in form of the increased cost of basic goods. Although the price ceiling helps in protecting the poor, its main disadvantage is that it does not help in addressing the problem of product shortage, especially in times of crisis.

Long lines at gas stations are common phenomena when there is a crisis that affects the supply of oil within the country. Incidents such as an increase in international oil prices, labor disputes, and natural disasters all have the effect of reducing oil supply within the country. When this occurs, there will be an imbalance between demand and supply. The demand for the product will exceed its supply due to the shortage. According to Mankiw, under normal circumstances, forces of demand and supply are allowed to determine product price (24). It means that in cases where the demand exceeds supply, then product price shall be expected to increase.

This is one of the best ways of eliminating long queues that are always common at gas stations when there is a shortage in oil supply. By increasing the price, a section of the consumers, the poor, will be eliminated from the bracket of those who can purchase the product. The price shall increase to the level where demand and supply will be at equilibrium. This means that most of the consumers shall be unable to purchase the product as long as the supply issue is not addressed.

The government realized that allowing the forces of demand and supply to determine the price of oil may be unfair to the poor because they may be forced to avoid purchasing some of the products considered basic. That is why the price ceiling was set. As presented in this case, the price ceiling has its benefits, especially in protecting the interest of the poor. However, it comes with some challenges too. For instance, if oil firms are allowed to price their products based on the demand, the problem of oil shortage can be addressed more easily than when the price ceiling is set. A price increase will be an incentive for oil companies to go the extra mile in getting the product from other regions that are not affected by the shortage (Lipsey and Harbury 78). Governments may need alternative ways of motivating these oil firms.

The price ceiling on the oil industry is something that many governments may not afford to abandon as they try to protect the poor. However, the case reveals that this concept always leads to long lines at gas stations whenever there is an oil shortage. To solve this problem, governments should come up with alternative ways of motivating employees such as tax incentives when there is a crisis that leads to an oil shortage.

Common, Michael, and Sigrid Stagl. Ecological Economics: An Introduction . New York: Cambridge University Press, 2005. Print.

Lipsey, Richard, and Charles Harbury. First Principles of Economics . Oxford: Oxford University Press, 2008. Print.

Mankiw, Gregory. Essentials of Economics . Stamford: Cengage Learning, 2015. Print.

• Microeconomics: Art Gallery's Pricing Strategy
• German Competition Authorities Correcting Market Failures
• Solution of Patient’s Queues Problem
• Rethinking Microeconomic Competitiveness
• Difference Between Microeconomics and Macroeconomics
• Business Microeconomics Notions
• Equilibrium Shifts in Market: Impact of New Products and Supply Changes
• The Australian Economy: Private Examples and Problems
• Safaricom Company in the Changing Monopoly Market
• Caesars Palace Hotel's Product Pricing Components
• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2021, April 5). Microeconomics: Price Ceiling in the Oil Industry. https://ivypanda.com/essays/microeconomics-price-ceiling-in-the-oil-industry/

"Microeconomics: Price Ceiling in the Oil Industry." IvyPanda , 5 Apr. 2021, ivypanda.com/essays/microeconomics-price-ceiling-in-the-oil-industry/.

IvyPanda . (2021) 'Microeconomics: Price Ceiling in the Oil Industry'. 5 April.

IvyPanda . 2021. "Microeconomics: Price Ceiling in the Oil Industry." April 5, 2021. https://ivypanda.com/essays/microeconomics-price-ceiling-in-the-oil-industry/.

1. IvyPanda . "Microeconomics: Price Ceiling in the Oil Industry." April 5, 2021. https://ivypanda.com/essays/microeconomics-price-ceiling-in-the-oil-industry/.

Bibliography

IvyPanda . "Microeconomics: Price Ceiling in the Oil Industry." April 5, 2021. https://ivypanda.com/essays/microeconomics-price-ceiling-in-the-oil-industry/.

• Browse All Articles
• Newsletter Sign-Up

Economics →

• 05 Aug 2024
• Research & Ideas

Watching for the Next Economic Downturn? Follow Corporate Debt

Rising household debt alone isn't enough to predict looming economic crises. Research by Victoria Ivashina examines the role of corporate debt in fiscal crashes since 1940.

• 23 Jul 2024

Forgiving Medical Debt Won't Make Everyone Happier

Medical debt not only hurts credit access, it can also harm one's mental health. But a study by Raymond Kluender finds that forgiving people's bills—even $170 million of debt—doesn't necessarily reduce stress, financial or otherwise.

• In Practice

The New Rules of Trade with China: Navigating Tariffs, Turmoil, and Opportunities

Trade tensions between the US and China have continued well beyond the Trump Administration's tariffs. Harvard Business School faculty offer insights for leaders managing the complexities of doing business with the world's second-largest economy.

• 18 Jun 2024

Central Banks Missed Inflation Red Flags. This Pricing Model Could Help.

The steep inflation that plagued the economy after the COVID-19 pandemic took many economists by surprise. But research by Alberto Cavallo suggests that a different method of tracking prices—a real-time model—could predict future surges better.

• 28 May 2024

Job Search Advice for a Tough Market: Think Broadly and Stay Flexible

Some employers have pared staff and reduced hiring amid mixed economic signals. What does it mean for job seekers? Paul Gompers, Letian Zhang, and David Fubini offer advice for overcoming search challenges to score that all-important offer.

• 21 May 2024

What the Rise of Far-Right Politics Says About the Economy in an Election Year

With voters taking to the polls in dozens of countries this year, could election outcomes lean conservative? Paula Rettl says a lack of social mobility and a sense of economic insecurity are some of the factors fueling far-right movements around the world.

• 11 Apr 2024

Why Progress on Immigration Might Soften Labor Pains

Long-term labor shortages continue to stoke debates about immigration policy in the United States. We asked Harvard Business School faculty members to discuss what's at stake for companies facing talent needs, and the potential scenarios on the horizon.

• 01 Apr 2024

Navigating the Mood of Customers Weary of Price Hikes

Price increases might be tempering after historic surges, but companies continue to wrestle with pinched consumers. Alexander MacKay, Chiara Farronato, and Emily Williams make sense of the economic whiplash of inflation and offer insights for business leaders trying to find equilibrium.

• 29 Jan 2024

Do Disasters Rally Support for Climate Action? It's Complicated.

Reactions to devastating wildfires in the Amazon show the contrasting realities for people living in areas vulnerable to climate change. Research by Paula Rettl illustrates the political ramifications that arise as people weigh the economic tradeoffs of natural disasters.

• 10 Jan 2024

Technology and COVID Upended Tipping Norms. Will Consumers Keep Paying?

When COVID pushed service-based businesses to the brink, tipping became a way for customers to show their appreciation. Now that the pandemic is over, new technologies have enabled companies to maintain and expand the use of digital payment nudges, says Jill Avery.

• 17 Aug 2023

‘Not a Bunch of Weirdos’: Why Mainstream Investors Buy Crypto

Bitcoin might seem like the preferred tender of conspiracy theorists and criminals, but everyday investors are increasingly embracing crypto. A study of 59 million consumers by Marco Di Maggio and colleagues paints a shockingly ordinary picture of today's cryptocurrency buyer. What do they stand to gain?

• 15 Aug 2023

Why Giving to Others Makes Us Happy

Giving to others is also good for the giver. A research paper by Ashley Whillans and colleagues identifies three circumstances in which spending money on other people can boost happiness.

• 13 Mar 2023

What Would It Take to Unlock Microfinance's Full Potential?

Microfinance has been seen as a vehicle for economic mobility in developing countries, but the results have been mixed. Research by Natalia Rigol and Ben Roth probes how different lending approaches might serve entrepreneurs better.

• 23 Jan 2023

After High-Profile Failures, Can Investors Still Trust Credit Ratings?

Rating agencies, such as Standard & Poor’s and Moody's, have been criticized for not warning investors of risks that led to major financial catastrophes. But an analysis of thousands of ratings by Anywhere Sikochi and colleagues suggests that agencies have learned from past mistakes.

• 29 Nov 2022

How Much More Would Holiday Shoppers Pay to Wear Something Rare?

Economic worries will make pricing strategy even more critical this holiday season. Research by Chiara Farronato reveals the value that hip consumers see in hard-to-find products. Are companies simply making too many goods?

• 21 Nov 2022

Buy Now, Pay Later: How Retail's Hot Feature Hurts Low-Income Shoppers

More consumers may opt to "buy now, pay later" this holiday season, but what happens if they can't make that last payment? Research by Marco Di Maggio and Emily Williams highlights the risks of these financing services, especially for lower-income shoppers.

• 01 Sep 2022
• What Do You Think?

Is It Time to Consider Lifting Tariffs on Chinese Imports?

Many of the tariffs levied by the Trump administration on Chinese goods remain in place. James Heskett weighs whether the US should prioritize renegotiating trade agreements with China, and what it would take to move on from the trade war. Open for comment; 0 Comments.

• 05 Jul 2022

Have We Seen the Peak of Just-in-Time Inventory Management?

Toyota and other companies have harnessed just-in-time inventory management to cut logistics costs and boost service. That is, until COVID-19 roiled global supply chains. Will we ever get back to the days of tighter inventory control? asks James Heskett. Open for comment; 0 Comments.

• 09 Mar 2022

War in Ukraine: Soaring Gas Prices and the Return of Stagflation?

With nothing left to lose, Russia's invasion of Ukraine will likely intensify, roiling energy markets further and raising questions about the future of globalization, says Rawi Abdelal. Open for comment; 0 Comments.

• 10 Feb 2022

Why Are Prices So High Right Now—and Will They Ever Return to Normal?

And when will sold-out products return to store shelves? The answers aren't so straightforward. Research by Alberto Cavallo probes the complex interplay of product shortages, prices, and inflation. Open for comment; 0 Comments.

• Free Samples
• Premium Essays
• Editing Services Editing Proofreading Rewriting
• Extra Tools Essay Topic Generator Thesis Generator Citation Generator GPA Calculator Study Guides Donate Paper
• Essay Writing Help
• About Us About Us Testimonials FAQ
• Studentshare
• Macro & Microeconomics
• Utility in the Context of Microeconomics

Utility in the Context of Microeconomics - Case Study Example

• Subject: Macro & Microeconomics
• Type: Case Study
• Level: Masters
• Pages: 6 (1500 words)
• Downloads: 1
• Author: hstracke

Extract of sample "Utility in the Context of Microeconomics"

• Indifference
• Cited: 0 times
• Copy Citation Citation is copied Copy Citation Citation is copied Copy Citation Citation is copied

CHECK THESE SAMPLES OF Utility in the Context of Microeconomics

Analysis of news article in relation to macroeconomic concepts, factors of production and circular flow of income, sonys business strategy for the playstation portable, terms comparison paper, topic selection and rationale (attempt 1 ), monetary policy, inflation, and the business cycle, how complicated does the model have to be, the dynamic effects of aggregate demand and supply disturbances.

• TERMS & CONDITIONS
• PRIVACY POLICY
• COOKIES POLICY