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#1
        The Chinese government has put a price ceiling on energy products and basic foods. Will this solve the problem?
        The price controls will reduce supply.
                Farmers kill cows reducing the supply of milk.
        Sinopec sells products overseas at international prices, or closes down refineries “for maintenance”.
#2
Why does demand curve slope downward and supply curve upward?
        Demand slopes downward because lower price increases quantity demanded.
        Supply slopes upward because quantity produced increases with higher prices.
#3
        The problem with rice is that it suffers from price inelasticity of demand and supply. T/F
        True
        Increased price does not reduce demand
        Increased price does not increase supply in the short term
        Problem
        When farmers do increase supply, this often drives price to below their cost.

#4
        Does milk have price inelasticity of demand?
–        Yes, it is considered a necessity today in China
–        No, there are many substitutes
–        Has the 50% increase in prices reduced demand by an equal or greater amount?
#5
        Does the Mengniu brand of milk have price inelasticity of demand?
–        Most said no because there are too many substitutes.
–        This means that Mengniu has not successfully differentiated their brand through advertising.
#6
        Explain the cross elasticity of labor and capital in China.  (Samuelson)
–        Substitute-Negative impact on the demand and price of substitute product
–        Complement-Positive impact on the price and demand of complementary product.
        Explain the cross price elasticity of labor and capital in China. (Dornbusch)
–        Complement-Negative cross price elasticity.
        As the price of capital has decreased, it has increased the demand and cost of labor in China. (1980-2007)
–        Substitute-Positive cross price elasticity. As the demand/cost of labor increases it will increase the demand/cost of capital. Capital will replace labor. (some time in the future)
#7
        Explain the short and long term price elasticity of petroleum.
        Short term-demand and supply inelasticity.
        People cannot easily find a substitute or reduce use.
        Industry cannot easily or quickly find new sources.
        Long term-demand and supply elasticity
        People will buy smaller cars, transport will move to the railroad, conservation.
        Industry will find new sources and substitutes.

Shortages exist only when government intervenes
#8
        Food/luxuries
        An increase in the price of luxuries (price elasticity) will not result in a decrease in the demand for food (price inelasticity).
        Negative cross elasticity exists when higher food prices cause a reduction in demand for luxuries.
        But, higher luxury prices will not cause a reduction in demand for food.  
#9
        Graph with MR and MC curves
a.        What happens when the price of milk rises
b.        What happens when the cost of producing the milk rises.
        This is not a question of supply and demand
        What happens to the point at which MC=MR cross, and quantity produced.
a.        A. MR moves up, moving MC=MR to the right, production increases.
b.        B. MC moves up, moving MC=MR to the left, production decreases.
#9
        Computer costs $1000
        $1 depreciates 20%
        50% China Content
        50% imported content
        1. 20% depreciation of US$1 means RMB price in dollars rises to $1,200. Assumption-China cannot raise price.
        2. Must maintain $1000 price.  MR moves down 20% in RMB (moves MR=MC to left-reduces production)
        3. However, MC moves down 10% because of imported content. (moves MR=MC to right-increases production)
        4. Net impact 10% or $100 (or 700 RMB), halfway between 1 and 2.
        (Also correct, dollar price rises to $1,100)

1.        The reason BauSteel has such high fixed costs is due to depreciation. Explain
A.        Steel requires a very high investment, which must be depreciated over the live of the plant. This causes the high fixed costs.
2.        The reason the steel industry has such high profits is because MR has been rising faster than MC.
A.        The demand for steel has been rising pushing prices up faster than costs. However, now demand for iron ore and coal has been greater than supply.

3.        How will the recession affect the steel industry’s MC/MR relationship?
A.        When demand decreases, prices will decline. However, all firms will want to produce at maximum economy of scale, which will cause prices to fall further. Prices and MR will continue to decline until everyone is producing below ATC. This will continue until the least efficient are producing at less than VC and shut down. Eventually supply will return to equilibrium and prices will begin to rise.
4.        Why does a steel company have greater pricing flexibility in the short term than a textile company?
A.        Because its VC curve is a smaller percentage of total cost than the textile firm.  
5.        Is this an advantage in the long run?
A.        No, because the steel company must include all costs in the long term.
6.        If both VW and GM sell 500,000 cars, who will have the lowest cost? Explain.
A.        GM, because it produces in only one production line with only one platform (perhaps 2 now), and VW has two production lines and multiple platforms.
7.        China has produced 9 million cars and sold only 8 million. Supply is greater than demand, causing a reduction in prices.
a)        A. How should GM with high fixed costs respond?
b)        B. How should Wu Lin with high variable costs respond?

A.         What should GM do?
Reduce price to maintain sales at a level above VC.
A.        What should WuLin do?
Has less price flexibility due to high variable cost. Maintain price and produce less.

8.        The raw materials (food) for a restaurant such as KFC amount to only 25% of their costs. Most other costs are fixed. Why does KFC give customers so many discount coupons?
A.        Discriminatory pricing
a)        Simple answer: If price is 10RMB and discount 20%. Marginal cost of 8RMB sale is only 2.5RMB with 5.50RMB MR
b)        Complicated answer, moves MR up more than MC.
9.        Why is the Chinese government separating the generation and the distribution of electricity?
A.        Distribution is a natural monopoly
A.        Generation is not a natural monopoly.
10.        Since firms in imperfect competition industries use monopoly power to artificially raise prices, all firms shyould compete on the basis of perfect competition. True/False  Explain
A.        No. No company/industry would have the supernormal profits to invest in new technologies.
11.        (Bonus)----As a result of globalization, much of China’s textile (clothing/shoes) export business will move to other countries. Why? Is this good or bad.
A.          Good.
Allow for the reallocation of resources to industries with greater added value and higher wages. This is already happening with resources now pouring into auto manufacture and shipbuilding.  
OR
A.        Bad.
Some workers may be too old to be retrained.

Question #3
Why do airlines use discriminatory pricing?
Businessmen pay a higher fare and account for most of an airline’s revenue. However, airlines need the tourist to cover all costs and make a profit. Each additional tourist increases MR with little or no increase to MC.
Airlines are able to discriminate because businessmen have a high price inelasticity of demand and insist on being home the weekend. Tourists have a high price elasticity of demand and do not insist on being home the weekend.

#4
Short run an appreciation of the RMB will affect the textile industry more than the steel industry.
Companies cannot produce at less than VC. Textile companies have a much higher VC than the steel industry. Fixed costs amount to 10% or less. In the steel industry, FC probably accounts for 50% even when operating at full capacity.

#5
Which industry has higher entry and exit barriers?
The investment required for steel is a very high entry and exit barrier. Just to close down a steel plant is extremely expensive.
However, it can also be argued that the time and investment necessary to establish a global brand in textiles is also an important entry barrier.

#6
Reallocation of capital from textiles to shipbuilding.
As China moves up the technology ladder, and as wages increase in China, OEM textiles no longer offer the profits which enable textile companies to pay the price of capital. Shipbuilding and car manufacture can pay the cost of capital, meaning it is being reallocated from textiles to more profitable industries

#7
In China, the government sets deposit and lending rates. How does this affect allocation of capital?
The government has set deposit rates at 2.75% and lending rates at 7.75%, both below the 8% inflation. Since wealthy people  do not put their money in the bank, much money now flows through venture capital and private equity companies, which now control the allocation of capital, to those industries which can pay the highest rates.
Of course, state banks, which control 90% of the bank money, lend to SOEs which represent only 40% of GDP. This is not an efficient allocation of capital.

#8
Government intervention in the labor market creates labor market inflexibility.
When they set minimum wages, this expands supply and reduces demand, causing “involuntary unemployment”.
When the government pays unemployment compensation (for life in EU), people prefer voluntary unemployment.
As the Chinese government pours more subsidies into the interior, workers prefer not to move to the coast.

#9
Why does Baidu have a higher P/E than Bausteel?
The value of a stock should be determined by the future income stream of the company (discounted). Baidu’s future income stream is projected to grow much faster than BaoSteel, therefore has a higher P/E.

#10
Selling pollution rights to reduce pollution.
Those using scarce pollution rights to provide maximum added value will be able to pay the highest price, eliminating those who cannot.
Since the price of pollution rights will be very high, all companies will have the incentive to reduce them to the maximum possible.
Since pollution rights will be included in their costs, they will raise the price of their product, which will reduce demand.

BQ
Explain the benefits and costs of globalization.
Benefits-Best reallocation of resources on a global scale. On balance, it has benefited developing countries with low labor costs most, and has put them on the “development ladder”.
Costs-The greatest cost has been to the unskilled in developed countries. Of course, uncompetitive industries in any country bear the cost of globalization.
Costs-Polluting industries have relocated to countries with less pollution control. US lost much of its steel production because it could not compete with countries with easy pollution regulations. Now that other countries are enforcing pollution regulations, some steel production returning to the US.
Makes the rich richer and the poor poorer? Why? Makes developing countries poorer?
Trade barriers is not globalization, it is protectionism, anti-free trade.

05国贸的 也弄点来  啊   经贸英语   
期待中……

大家有资料就发上来大家共享呀。。。。要发挥大家的力量，站长的一个人力量有限...

好qiu  ~~~   重要地资料啊！ 真嗒~
钢铁与纺织业的短期曲线；
股票和PE；
MR—MC曲线；
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下一步资料即将推出，没看期中考嘀同学要加油哦~　那个是基础哈～　还有整整一周，考试复习加油吧！