Hi Class! Dun read this message unless u have absolutely nothing to do! This essay to dedicated to our two econs reps, siyao and xianzhe, and also to the junior class :P

Discuss all economic topics with regards to the S61 Guo Tie stall in the street market in HC during CNY. [25]

The S61 Gui Tie stall can be said to exist in a duopoly. However, we must first analyses the central problem of economics, which is scarcity in terms of the street market.

Scarcity refers to the situation where the limited resources available are unable to satisfy the unlimited human wnats. With references to the guo tie (GT), we can see that there is a limited number of GT available to many consumers, and there is also limited resouces which the stall have to face. The various forms of inputs are limited. For example, the land allocated to the stall was only the area of one table and one chair. Thus, labour that can be squeezed into such a small area will be lesser.This can be further discussed in the LDMR. Capital goods tgeb us provided is fixed, in the form of GT and cooker. However, due to the entrepreneurship of some members of the stall, they were able to invest in other capital, that will be discuss in the section of EOS. To ensure resources are used at full capacity, 61 have to decide on what to produce and how much to produce in a given set of time. Also, they have to decide on the method of production that will achieve maximum effiency, and also for whom to produce GT for. All three questions have already being answered even before the stall was set up. Using the PPC model, we can see that 61 focus on being at the PPC itself, to sell out all GT asap.

Now, using the demand supply analysis method, we are able to determine the equilbrium level of GT. During the course of the street market, lots of consumers demand GT, this lead to a shortage of the good in demand, and competition amon the consumers drive up competition. However, the number of GT stall have being fixed, thus demand can only be spread throughout the two stalls. Thus, from this the demand curve will shift right, while the supply curve stays. Equilbirum point shift upwards. However, as the production rate of GT was slow at the beginning, supply slowly decreased at first, and equilbirum point is brought upward.Thus, prices can be seen to have go up, while the change in quantity can only be determined by the different magnitude of shift. Without government intervention, the equilbrium level will be determined solely based on market conditions.

Having covered the D&S of the stall, we are able to move on to the market structure and cost theory to understand the various steps taken by 61 in handling the increasing demand. To do this we have to assume the firm seek to maximise profit, which is defined to be total revenue minus the total cost. In the short run, fixed factors include land and labour etc etc. However, during the long run, all factors of productio nare variable. When more labour squeeze into the now fixed piece of land, the LDMR kicks into action. The productivity of each additional member decrease, until the maximum output level is constant. Later on, EOS is encountered by the stall. EOS occur when unit cost fall as output increases, and can be classified into two groups, Internal EOs or External EOS. Some internal EOS experienced by the stall includ technical EOS. There is a division of labour, as different people specialize in some form, for example, advertising, money collecting, cooking or even stoning. Thus, a production line is formed to boost efficency. Later on, having buy over the malay stall for free, there is indivisbilities, when large machine in fixed size can be employed, e.g of large wok to cook more GT in shorter period of time. Fixed cost is thus spread over larger output, and unit cost decreases. R&D was carried out to conduct the successful merger of the 61 stall and the Malay stall. IN terms of marketing EOS, bulk purchase and bulk distribution helps to be more cost efficient. Large scale Advertising can also be carried out after seeking permission from the government, in this case, the school. having gone over the various cost theory, we now bring our focus back to the market structure of the street market.
The street market can be argued to be PC, Monopolistic Competition, Oligopoly, and even Monopoly! We try to analyse the various charactestics of the street market that fits each market structure.

PC
Large number of stalls
Identical good: F&B (can be argued)
Freedom of entry, no barriers of entry

MC
Large number of stalls
Differentiated goods: GT, Nachos, Cake etcetc
Some control to set priceFreedom of entry, no barriers of entry

Oli: when looking at GT stalls only
Few firms (GT only)
Identical good: GT
price rigidity and mutal interdependence
significant barriers to entry: school permission
Non price competition evident

Mono: When consumers see all the stall as trying to leech as much money from them as possible)
One single firm (J1 vs J2: in terms of getting profits)
No close substitute
Price setting ( Usually as high as possible)
Blocked entry
public relation and advertising ("we want ur money")

However, since the question stated to be with regards to only GT stall, the most likely market structure is Oligopoly. LAstly, in terms of mircoeconomics, we have to examine the possibility of market Failure. the only type of market failure is prehaps externalities. The loud noise pollutin and also pollution from other stalls means that the social marginal cost is understated. there will thus be a welfare loss due to overproduction. To correct this, we can regulate all other stalls to cut down on noise level and pollution.

All in all, the GT stall is able to present most mircoecnomics points and this will be able to help future s61 stalls when they set up their stalls in the street market during CNY. =)