宏微观经济学HDMicro and Macro 01.pptVIP

Supply and Demand Supply - A Review Supply is determined by non-price supply-determining variables as such as the cost of labor, capital, and raw materials. Changes in supply are shown by shifting the entire supply curve. Supply and Demand Supply - A Review Changes in quantity supplied are shown by movements along the supply curve and are caused by a change in the price of the product. Supply and Demand D The demand curve slopes downward demonstrating that consumers are willing to buy more at a lower price as the product becomes relatively cheaper and the consumer’s real income increases. Price ($ per unit) D P Q Q1 P2 Q0 P1 D’ Q2 Change in Demand Supply and Demand Income Increases At P1, produce Q2 At P2, produce Q1 Demand Curve shifts right More purchased at any price on D’ than on D Shifts in Supply and Demand Demand - A Review Demand is determined by non-price demand-determining variables, such as, income, price of related goods, and tastes. Changes in demand are shown by shifting the entire demand curve. Changes in quantity demanded are shown by movements along the demand curve. The Market Mechanism Quantity D S The curves intersect at equilibrium, or market- clearing, price. At P0 the quantity supplied is equal to the quantity demanded at Q0 . P0 Q0 Price ($ per unit) The Market Mechanism(机制) Characteristics of the equilibrium or market clearing price: QD = QS No shortage No excess supply No pressure on the price to change The Market Mechanism Quantity D S P0 Q0 If price is above equilibrium: 1) Price is above the market clearing price 2) Qs Qd 3) Price falls to the market-clearing price P1 Surplus Price ($ per unit) The Market Mechanism The market price is above equilibrium There is excess supply Producers lower prices Quantity demanded increases and quantity supplied decreases The market continues to adjust until the equilibrium price is reached. A Surplus The Market Mechanism D S Q1 Assume the price is P1 , then: 1) Qs : Q2 Qd : Q1