黄新飞 《微观经济学》chapter 3 Basic Elements of Supply and Demand.pptVIP

Chapter 3  Basic Elements of Supply and Demand 黄新飞 International Business School Sun－Yat Sen University Gasoline Prices Move with Demand and Supply Changes A Wry Observation The British philosopher Thomas Carlyle once said: “Teach a parrot the terms supply and demand and you’ve got an economist.” Of course economics is hardly that simple, but the concepts of supply and demand rest at the core of any study of how the market system works. The concept of ceteris paribus is critical to understanding economic analysis. The words ceteris paribus are Latin for “other things constant.” Economists often use this ceteris paribus assumption to draw their diagrams as well as isolate the effects of specific changes in a market. For Example To draw the demand curve in price and quantity space, we have to hold the other things constant like income and tastes and the prices of other products. These other factors are called shift factors because if one of these factors changes, the demand curve will shift inwards or outwards. Average Income Rises The Beef Market Suppose you are analyzing the market for beef and the price of chicken rises. What do you think will happen to the beef demand curve. Consumer IncomeInferior Good Consumer Tastes A third shift factor has to do with consumer tastes. Suppose the American Medical Association publishes a report that says that people who eat prunes regularly live, on average, several years longer while people who eat onion rings every day tend, on average, to live several fewer years. Consumer Tastes Declining Computer Prices Have Fueled an Explosive Growth in Computer Power The Supply Curve The Law Of Supply The implication of an upward sloping supply curve is that the lower the price, ceteris paribus, the less units firms will produce The higher the price, holding other things constant, the more firms will produce. This is the Law of Supply. Input Prices Suppose the price of labor or raw m