AP微观经济学结1.pptVIP

Change in both D and S Change in demand Change in supply Effect on equilibrium P Effect on equilibrium Q → → Unknown + ← ← Unknown - → ← + Unknown ← → - Unknown Equilibrium Price Quantity Demand Supply P’ P0 P’’ Excess supply Excess demand Equilibrium (E): no excess supply or demand The Characteristics of Equilibrium There is no tendency for change The demand function and supply function stay the same or constant. The amounts demanded equal the amounts supplied (at the intersection of supply and demand). There is no surplus or shortage; the equilibrium price “clears” the market. Price Ceilings P Q S Ceiling price (max) 15 25 80 60 D Excess demand Ceiling Equilibrium P* P* Price Ceilings Price ceiling will lead to: Consumers may have to wait in long lines to make purchases. They pay a price (an opportunity cost) in terms of the time they spend in line. Suppliers may engage in discrimination, such as selling to friends and relatives first. Suppliers “officially” sell at the ceiling price but take bribes to do so. Suppliers may also reduce the quality of the goods produced to a level commensurate with the ceiling price. Black market Price Floors Floor price (min) 100 200 150 P Q S D Excess supply Floor Equilibrium P* P* Ps Price Floors Price floor will lead to: Supply over demand Case: minimum wage causes unemployment * * * Quant Equity FX and gold Derivatives Fixed income Portfolio * * Assume an economy can only produce guns and butter with its national resources. Given limited resources, many combinations of guns and better with different amounts can be realized and a production possibilities frontier is thus formed. All the points along the frontier are viewed as equal. Points inside the frontier mean resources are not fully used. Points outside the frontier cannot be reached under current resource constraint. * * Price ceiling prohibits prices from rising above a certain level. Price was placed under the equilibrium price because of the price ceiling. Demand of