微观经济学MicroEconomics全套英文课件.ppt

Which Curve? The relative importance of the two effects will determine the shape of the curve If Substitution effect Income effect, positive slope If Income effect Substitution effect, negative slope If income effect = Substitution effect, infinite slope Different effects at different wage levels At low wages the substitution effect is likely to be more significant At higher wages the income effect is likely to be more significant The result will be a backward bending supply curve for labour The Backward Bending Supply Curve The Position of the Supply Curve Size of the working age population relative to industrial activity Non-monetary attractiveness of work Amount of training and ability required Shifts in the Supply function The Demand Curve Two issues The shape of the demand function The position of the demand function (relative to the origin) The Shape of the Demand Function The demand function is the downward sloping section of MRP Industry demand is more inelastic than the horizontal summation of firms’ MRP The Demand Function Position of the Demand Function MRP = MPP * P Thus, anything that changes either MPP or P of output will shift the demand curve Shifts in the Demand Function Public goods Two fundamental characteristics 1. Non-rival consumption 2. Non-excludable Quasi public goods Examples Free-to-air TV signals Air traffic control National defence Police Free Rider Problem The characteristics of public goods imply that the good can be accessed free of charge Who will provide such goods? Efficient Provision of Public Goods Since no price is payable, private firms are unlikely to provide sufficient quantities of public goods Since the opportunity cost of using a public good is zero, the marginal cost must be zero An efficient price is also zero Governments are the only organisations to provide sufficient quantities of the public good Monopoly Capitalism Unfettered market may lead to monopoly power Two interpretations 1. Monopoly is created by super