Lecture 5 to midterm Flashcards
What does Monopoly Rent refer to?
The profits a monopoly makes above MC.
What happens when we add more members to a consumer co-op?
The demand curve shifts out
CS gains and loses so depends on the curve what the final outcome is
Price increases (as does Q*)
Q old members buy decreases
Profit changes but more members to make patronage payments to.
Are there profits at optimal membership?
no
Where do we find optimal membership in a producer co-op?
S = NARP = MVP
Is aggregate PS higher or lower with optimal membership?
Aggregate PS is lower, but per-unit PS is at it’s maximum.
How is MW captured when a co-op is at it’s optimal membership?
All MW is captured through regular transactions because there is no profit where NARP = MVP or where AC = MC
Define fair trade
Trade between companies in developed countries and producers in developing countries in which fair prices are paid to the producers.
What are the three main points of fair trade?
- members must be small-scale producers
- democracy
- enabling strong producer organizations
Why are so many fair trade producers in co-ops?
The values happen to align well.
What are the fees that fair trade purchasers pay used for?
- advertising
- evaluating new producer group applicants
- educating producer groups
- offices and staff
What does FLO stand for?
Fairtrade Labelling Organization
Who does FLO work with?
Producer co-ops
international traders
roasting companies
What is “National Initiative”?
The FLO member who deals with consumers of fair trade.
Is the consumer country % of revenues higher or lower with fair trade?
Higher! But the producer still gets a larger $ amount.
Does the extra cost of a fair trade product generally get to the producer?
Some but most tends to stay at the retailer lever.