COMM 220 Analysis of markets Notes (All chapters + BOTH
MIDTERMS AND FINAL Qs &S except for Ch 4,5 are included
in this pack) 2025 Concordia University
Comm 220 Notes
* All chapters except for Ch 4,5 are included in this pack
, Chapter 1: Introduction
Microeconomics: The behavior of industrial economic units. It affects all decisions made by the company
- Consumers The price & need for a product determines a lot how a customer will react to buying it
- Workers They decide how willing they are to balance work and leisure
- Investors The want to invest if there is an opportunity to make profit
- Owners Role and limits that they have on the company
- Business Firms Have limits on what can be produced
- Since there are limits, microeconomics focuses on the allocation of scares resources to be
optimized for maximum output
Macroeconomics: Deals with aggregate economic quantities
- Level of growth of national output
- Interest Rate
- Unemployment
- Inflation
- With time, macro and micro have become closer and closer
* In communist countries, since the government decides everything, microeconomics for a
business do not apply here
Determinants in a firm:
- Price of a product
- Price of the labor
- Optimize cost for more profit
Theory Model How will the firm react to the cost of a product decreasing/increasing?
Positive Analysis: Statement that describes the relationship of cause and effect
- It helps make predictions
Ex: How much less will people buy if prices of gas increases with tax from the government
Normative Analysis: Finding out what would be best (maximize profit vs positive result)
- It might involve many options for which one must be picked
- Decisions made might affect millions of workers
,1.2 What is a Market?
- There are buyers and sellers (firms, workers, resource owner)
Market: Collection of buyers & sellers that, through their actual or potential interaction,
determine the price of the product(s)
Arbitrage: Buying at a low price in once location & selling it at a higher price somewhere else
- Globalization made it so that there is a large variation in price from place to place
Perfectly Competitive Market: Has many buyers and sellers so a seller does not have an impact
on the price
Ex: The price of a computer is determined by the dozens of available brands (Apple, dell, LG,
Asus)
Non-Competitive Market: Individual firms can affect the price
- Oil companies owned by few firms (Opec Cartel)
- Netflix has a lot of power on streaming prices
Market Price: Price prevailing in a competitive market (little variant from location to location)
* The stock market is highly competitive because there are many buyers and sellers
- Gas prices can only be compared between Kirkland and Beaconsfield rather than Kirkland and
Nunavut
Ex 1: House market in Montreal vs Pointe-Claire
Ex 2: Diesel & regular gas have to be distinguished
Ex: 3: Difference between budget phone and flagship phone (different purpose)
Producer Price Index (PPI): Measures the aggregate price level for intermediation products &
wholesale goods
, - Nominal value might have increased (Red) but the real value of the money has decreased
1.3 Real Vs Nominal Prices
Inflation: The rate at which the average price level of a basket of selected goods & services in an
economy increase over a period of time
- The minimum wage increases to be able to catch up to inflation
Selling Price: Retail price is not equal to nominal price
Nominal Price: Value in terms of money (CAD, USD)
Real Price (Relative price): Value in terms of some other goods, service or bundle of good at the
same moment in time while being adjusted for inflation
1.4 Reasons to study Microeconomics
1) Concerned with the decision made by individual economic units – consumers, workers,
investors, owners of resources, and business firms
2) Concerned with the interaction of consumers and firms to form markets and industries
MIDTERMS AND FINAL Qs &S except for Ch 4,5 are included
in this pack) 2025 Concordia University
Comm 220 Notes
* All chapters except for Ch 4,5 are included in this pack
, Chapter 1: Introduction
Microeconomics: The behavior of industrial economic units. It affects all decisions made by the company
- Consumers The price & need for a product determines a lot how a customer will react to buying it
- Workers They decide how willing they are to balance work and leisure
- Investors The want to invest if there is an opportunity to make profit
- Owners Role and limits that they have on the company
- Business Firms Have limits on what can be produced
- Since there are limits, microeconomics focuses on the allocation of scares resources to be
optimized for maximum output
Macroeconomics: Deals with aggregate economic quantities
- Level of growth of national output
- Interest Rate
- Unemployment
- Inflation
- With time, macro and micro have become closer and closer
* In communist countries, since the government decides everything, microeconomics for a
business do not apply here
Determinants in a firm:
- Price of a product
- Price of the labor
- Optimize cost for more profit
Theory Model How will the firm react to the cost of a product decreasing/increasing?
Positive Analysis: Statement that describes the relationship of cause and effect
- It helps make predictions
Ex: How much less will people buy if prices of gas increases with tax from the government
Normative Analysis: Finding out what would be best (maximize profit vs positive result)
- It might involve many options for which one must be picked
- Decisions made might affect millions of workers
,1.2 What is a Market?
- There are buyers and sellers (firms, workers, resource owner)
Market: Collection of buyers & sellers that, through their actual or potential interaction,
determine the price of the product(s)
Arbitrage: Buying at a low price in once location & selling it at a higher price somewhere else
- Globalization made it so that there is a large variation in price from place to place
Perfectly Competitive Market: Has many buyers and sellers so a seller does not have an impact
on the price
Ex: The price of a computer is determined by the dozens of available brands (Apple, dell, LG,
Asus)
Non-Competitive Market: Individual firms can affect the price
- Oil companies owned by few firms (Opec Cartel)
- Netflix has a lot of power on streaming prices
Market Price: Price prevailing in a competitive market (little variant from location to location)
* The stock market is highly competitive because there are many buyers and sellers
- Gas prices can only be compared between Kirkland and Beaconsfield rather than Kirkland and
Nunavut
Ex 1: House market in Montreal vs Pointe-Claire
Ex 2: Diesel & regular gas have to be distinguished
Ex: 3: Difference between budget phone and flagship phone (different purpose)
Producer Price Index (PPI): Measures the aggregate price level for intermediation products &
wholesale goods
, - Nominal value might have increased (Red) but the real value of the money has decreased
1.3 Real Vs Nominal Prices
Inflation: The rate at which the average price level of a basket of selected goods & services in an
economy increase over a period of time
- The minimum wage increases to be able to catch up to inflation
Selling Price: Retail price is not equal to nominal price
Nominal Price: Value in terms of money (CAD, USD)
Real Price (Relative price): Value in terms of some other goods, service or bundle of good at the
same moment in time while being adjusted for inflation
1.4 Reasons to study Microeconomics
1) Concerned with the decision made by individual economic units – consumers, workers,
investors, owners of resources, and business firms
2) Concerned with the interaction of consumers and firms to form markets and industries
