Scribd
Upload
74 views3 pages

Reading 14 Demand and Supply Analysis Co

Uploaded by

geophrey kajoki
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
74 views3 pages

Reading 14 Demand and Supply Analysis Co

Uploaded by

geophrey kajoki
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

STUDY SESSION

Economics
4
Microeconomic Analysis

This study session focuses on the microeconomic principles used to describe the
marketplace behavior of consumers and firms. The first reading explains the concepts
and tools of demand and supply analysis—the study of how buyers and sellers interact
to determine transaction prices and quantities. The second reading covers the theory
of the consumer, which addresses the demand for goods and services by individuals
who make decisions to maximize the satisfaction they receive from present and future
consumption. The third reading deals with the theory of the firm, focusing on the sup-
ply of goods and services by profit-maximizing firms. That reading provides the basis
for understanding the cost side of firms’ profit equation. The final reading completes
the picture by addressing revenue and explains the types of markets in which firms
sell output. Overall, the study session provides the economic tools for understanding
how product and resource markets function and the competitive characteristics of
different industries.

READING ASSIGNMENTS

Reading 13 Demand and Supply Analysis: Introduction


by Richard V. Eastin, PhD, and Gary L. Arbogast, CFA
Reading 14 Demand and Supply Analysis: Consumer Demand
by Richard V. Eastin, PhD, and Gary L. Arbogast, CFA
Reading 15 Demand and Supply Analysis: The Firm
by Gary L. Arbogast, CFA, and Richard V. Eastin, PhD
Reading 16 The Firm and Market Structures
by Richard G. Fritz, PhD, and Michele Gambera, PhD, CFA

2016 Level I CFA Program Curriculum © CFA Institute.


Study Session 4 2

LEARNING OUTCOMES
READING 13. DEMAND AND SUPPLY ANALYSIS: INTRODUCTION
The candidate should be able to:
a distinguish among types of markets;
b explain the principles of demand and supply;
c describe causes of shifts in and movements along demand and supply curves;
d describe the process of aggregating demand and supply curves;
e describe the concept of equilibrium (partial and general), and mechanisms by
which markets achieve equilibrium;
f distinguish between stable and unstable equilibria, including price bubbles, and
identify instances of such equilibria;
g calculate and interpret individual and aggregate demand, and inverse demand
and supply functions, and interpret individual and aggregate demand and sup-
ply curves;
h calculate and interpret the amount of excess demand or excess supply associ-
ated with a non-equilibrium price;
i describe types of auctions and calculate the winning price(s) of an auction;
j calculate and interpret consumer surplus, producer surplus, and total surplus;
k describe how government regulation and intervention affect demand and
supply;
l forecast the effect of the introduction and the removal of a market interference
(e.g., a price floor or ceiling) on price and quantity;
m calculate and interpret price, income, and cross-price elasticities of demand and
describe factors that affect each measure.

READING 14. DEMAND AND SUPPLY ANALYSIS: CONSUMER


DEMAND
The candidate should be able to:
a describe consumer choice theory and utility theory;
b describe the use of indifference curves, opportunity sets, and budget constraints
in decision making;
c calculate and interpret a budget constraint;
d determine a consumer’s equilibrium bundle of goods based on utility analysis;
e compare substitution and income effects;
f distinguish between normal goods and inferior goods and explain Giffen goods
and Veblen goods in this context.

READING 15. DEMAND AND SUPPLY ANALYSIS: THE FIRM


The candidate should be able to:
a calculate, interpret, and compare accounting profit, economic profit, normal
profit, and economic rent;
b calculate and interpret and compare total, average, and marginal revenue;

2016 Level I CFA Program Curriculum © CFA Institute.


Study Session 4 3

c describe a firm’s factors of production;


d calculate and interpret total, average, marginal, fixed, and variable costs;
e determine and describe breakeven and shutdown points of production;
f describe approaches to determining the profit-maximizing level of output;
g describe how economies of scale and diseconomies of scale affect costs;
h distinguish between short-run and long-run profit maximization;
i distinguish among decreasing-cost, constant-cost, and increasing-cost indus-
tries and describe the long-run supply of each;
j calculate and interpret total, marginal, and average product of labor;
k describe the phenomenon of diminishing marginal returns and calculate and
interpret the profit-maximizing utilization level of an input;
l determine the optimal combination of resources that minimizes cost.

READING 16. THE FIRM AND MARKET STRUCTURES


The candidate should be able to:
a describe characteristics of perfect competition, monopolistic competition, oli-
gopoly, and pure monopoly;
b explain relationships between price, marginal revenue, marginal cost, economic
profit, and the elasticity of demand under each market structure;
c describe a firm’s supply function under each market structure;
d describe and determine the optimal price and output for firms under each mar-
ket structure;
e explain factors affecting long-run equilibrium under each market structure;
f describe pricing strategy under each market structure;
g describe the use and limitations of concentration measures in identifying mar-
ket structure;
h identify the type of market structure within which a firm operates.

2016 Level I CFA Program Curriculum © CFA Institute.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy