微观经济学The Basics of Supply and Demand.pptVIP

Chapter 2 Chapter 2 The Basics of Supply and Demand Introduction What are supply and demand? What is the market mechanism? What are the effects of changes in market equilibrium? What are elasticities of supply and demand? Topics to Be Discussed How do short-run and long-run elasticities differ? How do we understand and predict the effects of changing market conditions? What are the effects of government intervention – price controls? Supply and Demand Supply and demand analysis can: Help us understand and predict how real world economic conditions affect market price and production Analyze the impact of government price controls, minimum wages, price supports, and production incentives on the economy Determine how taxes, subsidies, tariffs and import quotas affect consumers and producers Supply and Demand The Supply Curve The relationship between the quantity of a good that producers are willing to sell and the price of the good Measures quantity on the x-axis and price on the y-axis The Supply Curve The Supply Curve Other Variables Affecting Supply Costs of Production Labor Capital Raw Materials Lower costs of production allow a firm to produce more at each price and vice versa Change in Supply The cost of raw materials falls Produced Q1 at P1 and Q0 at P2 Now produce Q2 at P1 and Q1 at P2 Supply curve shifts right to S’ The Supply Curve Change in Quantity Supplied Movement along the curve caused by a change in price Change in Supply Shift of the curve caused by a change in something other than the price of the good Change in costs of production Supply and Demand The Demand Curve The relationship between the quantity of a good that consumers are willing to buy and the price of the good Measures quantity on the x-axis and price on the y-axis The Demand Curve The Demand Curve Other Variables Affecting Demand Income Increases in income allow consumers to purchase more at all prices Consumer Tastes Price of Related Goods Substitutes Complements Change in Demand Incom