Bài giảng MicroEconomics - Chapter 03 Demand, Supply, and Market Equilibrium

Demand, Supply, and Market EquilibriumChapter 3 Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinChapter ObjectivesDemand and its determinantsSupply and its determinantsSupply, demand, & market equilibriumChanges in supply and demand Government-set prices3-2A MarketInteraction between buyers and sellersBuyers demand goodsSellers supply goodsAssumptionsStandardized goodCompetitive market3-3DemandSchedule or curveAmount consumers willing and able to purchase at a given priceOther things equalIndividual demand Market demand3-4Law of DemandOther things equal, as price falls quantity demanded risesExplanations:Diminishing marginal utilityIncome effectSubstitution effect3-5Individual Demand 6 5 4 3 2 1 010 20 30 40 50 60 70 80 Quantity Demanded (bushels per week)Price (per bushel)PQd$543211020355580Individual DemandPQD3-6Determinants of DemandFactors that shift the demand curveCause more or less to be bought at any possible priceIncrease or decrease in demandTastesNumber of buyers3-7Determinants of DemandIncomeNormal goodsInferior goodsPrice of related goodsSubstitute goodComplementary goodUnrelated goodsConsumer expectations3-8Individual Demand 6 5 4 3 2 1 0Quantity Demanded (bushels per week)Price (per bushel)PQd$543211020355580IndividualDemandPQD12 4 6 8 10 12 14 16 18Demand Can Increase or DecreaseIncrease in DemandDecrease in DemandD2D33-9Individual Demand 6 5 4 3 2 1 0Quantity Demanded (bushels per week)Price (per bushel)PQd$543211020355580IndividualDemandPQD12 4 6 8 10 12 14 16 18Demand Can Increase or DecreaseDecrease in DemandD2D3Change in DemandChange in Quantity Demanded3-10SupplySchedule or curveAmount producers willing and able to sell at a given priceIndividual supplyMarket supply 3-11Law of SupplyOther things equal, as price rises the quantity supplied risesExplanations:Revenue implicationsMarginal cost3-12Individual Supply 6 5 4 3 2 1 0Quantity Supplied (bushels per week)Price (per bushel)PQs$54321605035205IndividualSupplyPQS110 20 30 40 50 60 703-13Determinants of SupplyResource pricesTechnologyTaxes and subsidiesPrices of other goodsProducer expectationsNumber of sellers3-14Individual Supply 6 5 4 3 2 1 0Quantity Supplied (bushels per week)Price (per bushel)PQs$54321605035205IndividualSupplyPQS1Supply Can Increase or DecreaseS2S310 20 30 40 50 60 70 3-15Individual Supply 6 5 4 3 2 1 0Quantity Supplied (bushels per week)Price (per bushel)PQs$54321605035205IndividualSupplyPQS1Supply Can Increase or DecreaseS2S310 20 30 40 50 60 70 Change in Quantity SuppliedChange in Supply3-16Market EquilibriumEquilibrium price and quantitySurplus and shortageRationing function of priceEfficient allocationProductive efficiencyAllocative efficiency3-17Market Equilibrium 6 5 4 3 2 1 02 4 6 8 10 12 14 16 18Bushels of Corn (thousands per week)Price (per bushel)PQd$543212,0004,0007,000 11,00016,000MarketDemand200 BuyersPQs$5432112,00010,0007,0004,0001,000MarketSupply200 Sellers200 Buyers & 200 Sellers73DS$4 Price Floor6,000 BushelSurplus$2 Price Ceiling7,000 BushelShortage3-18Market EquilibriumChange in demandShift of the demand curveChange in supplyShift of the supply curveChange in equilibrium price and quantity3-19Market EquilibriumSupply increase; Demand decreaseSupply decrease; Demand increaseSupply increase; Demand increaseSupply decrease; Demand decreasePriceQuantity????3-20Government-Set PricesPrice ceilings on gasolineRationing problemBlack marketsRent controlsPrice floors on wheatOptimal allocation of resources3-21A Market for Human OrgansWaiting list for transplantsDemand for organsSupply of organs—two possibilitiesMarket eliminates shortage Moral objectionsLegalize and regulate?3-22A Market for Human OrgansPQS2S1D1P1P0Q1Q2Q3Supply of OrgansShortage at Zero PriceQ1 – Q3At Price P1 theShortage is ReducedBy Q1 – Q2 Demand for Organs3-23Key Termsdemanddemand schedulelaw of demanddiminishing marginal utilityincome effectsubstitution effectdemand curvedeterminants of demandnormal goodsinferior goodssubstitute goodcomplementary goodchange in demandchange in quantity demandedsupplysupply schedulelaw of supplysupply curvedeterminants of supplychange in supplychange in quantity suppliedequilibrium priceequilibrium quantitysurplusshortageprice ceilingprice floor3-24Next Chapter PreviewThe U.S. Economy: Public and Private Sectors3-25