Economics Newsletter Issue 1

ECONOMICS SOCIETY

INTRODUCTION

THE ECONOMICS SOCIETY PRESENTS TO

YOU ALL THE FIRST ECONOMICS

NEWSLETTER OF THE YEAR, ONE OF THE

MANY PUBLICATIONS THAT WILL BE

PUBLISHED.

THE NEWSLETTER WILL ALSO INFORM YOU

OF UPCOMING ACTIVITIES THAT WILL BE

HELD BY THE ECONOMICS SOCIETY, SO

STAY TUNED TO THE NEWSLETTERS!!

November, 2012 VOL 1 ISSUE 1

NEWSLETTER ISSUE NO. 1

In this issue

Monopoly

Oligopoly

Merger Control

Facts about coin

Inflation

An Example of Monopoly

in Hong Kong: The Ng Fung Hong (五豐行) is the sole retailer of fresh beef

imported from mainland, effectively becoming one of the few

evident examples of monopoly in Hong Kong.

Discontent on the monopoly of Ng Fung Hong has been a long

story. However, up till now, the government has failed to do

something about it.

Ever since Ng Fung Hong had become the sole retailer of

mainland beef, the price of beef it sold kept on increasing. One

of the most recent times this issue was brought up in a news

article again was on November 05, 2012 (in The Standard).

According to the Standard, the beef sellers in Hong Kong

demanded an increase in the import of beef from mainland,

however, Ng Fung Hong refused. Fewer than 100 head of cattle

are imported from the mainland each day thanks to Ng Fung

Hong and that is one of the reasons the price of beef has

increased again, this time being a 44% increase.

This scenario shows how monopoly can push up the price for

every one, and thus, in some cases detrimental to the society as

a whole.

November, 2012 VOL 1 ISSUE 1

MONOPOLY AND OLIGOPOLY

What is monopoly? A monopoly exists where there is only one supplier of a product or service. This allows the supplier to charge higher prices than if there was keen competition.

What is oligopoly?

An oligopoly is a market form in which a market or industry is dominated by a small number of sellers.

What is merger control?

Merger control refers to the procedure of reviewing mergers and acquisitions under antitrust / competition law. Merger

control regimes are adopted to prevent anti-competitive consequences of concentrations.

Advantages of Monopoly Successful research can be used for improved products and lower costs in the long term. Increased output will lead to a decrease in average costs of production. These can be passed on to consumers in the form of lower prices. Monopolies may use price discrimination which benefits the economically weaker sections of the society. A firm may become a monopoly through being efficient and dynamic. Therefore, it is a sign of success but not inefficiency.

Disadvantages of Monopoly

A monopoly may use its market power and pay lower prices to its suppliers. Lack of competition may also lead to slow product innovation. Monopoly also causes increased prices. This is because with only one company in the market that can provide the product, the company can increase the price in order to maximize its profit.

3.Why do some coins have grooves on the edges? Coins have a grooved edge because in the past dishonest traders filed down the edges to

remove some of the precious metal. Many countries print images or writing at the very edge of

the coin to prevent this same dishonest practice.

Famous Quotes

“The gold and silver money which circulates in any

one country may very properly be compared to a

highway which while it circulates and carries to

market all the grass and corn of the country,

produces not a single pile of either”

~Adam Smith

About Coins

1. Smallest coin in the world The 'windblown type' silver coin called 'Fukadam' ('Chundam' in

Newari) that was made during the reign of Kantipur’s last king of

Nepal, Jayaprakash Malla. It is said to be listed in the Guinness

Book as the world's smallest coin.

2. Largest coin the world Officially acknowledged by the Guinness Book of World

Records as the worlds largest gold coin. The 1000oz Vienna

Philharmonic gold coin was issued by the Austrian Mint (with

headquarters in Vienna, Austria and led by President and

Master Dietmar Spranz) in October 2004 to mark the 15th

Anniversary of the Vienna Philharmonic gold bullion coins which

are the only pure gold bullion coins in Europe. Only 15 were

issued world wide. They have a face value of 100,000 euros. It

took the mint 18 months to produce this coin.

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The Hungarian Money at the time- Pengő note

About Inflation

1. Most rapid Hyperinflation in History

The post-WWII hyperinflation of Hungary holds the record for the most rapid monthly inflation increase ever:

41,900,000,000,000,000% for July 1946, which means prices doubled every 13.5 hours. [1]

2.First hyperinflation in 21st century

The first country to experience hyperinflation in the 21st

century is Zimbabwe. In 2008, a loaf of bread cost 1.6

trillion Zimbabwe dollars. Officials in Zimbabwe blamed it

on rising global food prices and international sanctions [2]

.

Flag of Republic of Zimbabwe

[1]: Bernholz, Peter. 2003. Monetary Regimes and Inflation. Northampton, MA: Edward Elgar Publishing.

[2]: “Zimbabwe Inflation Hits 11,200,000 Percent.” CNN. August 19, 2008. Accessed: August 9, 2010.