微观经济学原理曼昆英文第四章课件.ppt

1、Economics4What factors affect buyers demand for goods?What factors affect sellers supply of goods?How do supply and demand determine the price of a good and the quantity sold?How do changes in the factors that affect demand or supply affect the market price and quantity of a good?How do markets allo

2、cate resources?2THE MARKET FORCES OF SUPPLY AND DEMAND3Markets and CompetitionMarkets and CompetitionA marketmarket is a group of buyers and sellers of a particular product.A competitive marketcompetitive market is one with many buyers and sellers,each has a negligible effect on price.In a perfectly

3、 competitiveperfectly competitive market:All goods exactly the sameBuyers&sellers so numerous that no one can affect market price each is a“price takerprice taker”In this chapter,we assume markets are perfectly competitive.THE MARKET FORCES OF SUPPLY AND DEMAND4DemandDemandThe quantity demandedquant

4、ity demanded of any good is the amount of the good that buyers are willing and able to purchase.Law of demandLaw of demand:the claim that the quantity demanded of a good falls when the price of the good rises,other things equal THE MARKET FORCES OF SUPPLY AND DEMAND5The Demand ScheduleThe Demand Sch

5、eduleDemand scheduleDemand schedule:a table that shows the relationship between the price of a good and the quantity demanded Example:Helens demand for lattes.Price of lattesQuantity of lattes demanded$0.00161.00142.00123.00104.0085.0066.004Notice that Helens preferences obey the Law of Demand.THE M

6、ARKET FORCES OF SUPPLY AND DEMAND6Price of LattesQuantity of LattesHelens Demand Schedule&CurveHelens Demand Schedule&CurvePrice of lattesQuantity of lattes demanded$0.00161.00142.00123.00104.0085.0066.004Market Demand versus Individual DemandMarket Demand versus Individual DemandThe quantity demand

7、ed in the market is the sum of the quantities demanded by all buyers at each price.Suppose Helen and Ken are the only two buyers in the Latte market.(Q Qd d=quantity demanded)46810121416Helens Qd 2345678Kens Qd+=691215+=18+=21+=24Market Q Qd d$0.006.005.004.003.002.001.00Price 7THE MARKET FORCES OF

8、SUPPLY AND DEMAND8P PQ QThe Market Demand Curve for LattesThe Market Demand Curve for LattesPQd(Market)$0.00241.00212.00183.00154.00125.0096.006THE MARKET FORCES OF SUPPLY AND DEMAND9Demand Curve ShiftersDemand Curve ShiftersThe demand curve shows how price affects quantity demanded,other things bei

9、ng equal.These“other things”are non-price determinants of demand(i.e.,things that determine buyers demand for a good,other than the goods price).Changes in them shift the D D curve THE MARKET FORCES OF SUPPLY AND DEMAND10Demand Curve Shifters:#of BuyersDemand Curve Shifters:#of BuyersIncrease in#of

10、buyers increases quantity demanded at each price,shifts D D curve to the right.THE MARKET FORCES OF SUPPLY AND DEMAND11PQSuppose the number of buyers increases.Then,at each P P,Q Qd d will increase(by 5 in this example).Demand Curve Shifters:#of BuyersDemand Curve Shifters:#of BuyersTHE MARKET FORCE

11、S OF SUPPLY AND DEMAND12Demand for a normal goodnormal good is positively related to income.Increase in income causes increase in quantity demanded at each price,shifts D D curve to the right.(Demand for an inferior goodinferior good is negatively related to income.An increase in income shifts D D c

12、urves for inferior goods to the left.)Demand Curve Shifters:IncomeDemand Curve Shifters:IncomeTHE MARKET FORCES OF SUPPLY AND DEMAND13Two goods are substitutessubstitutes if an increase in the price of one causes an increase in demand for the other.Example:pizza and hamburgers.An increase in the pri

13、ce of pizza increases demand for hamburgers,shifting hamburger demand curve to the right.Other examples:Coke and Pepsi,laptops and desktop computers,CDs and music downloads Demand Curve Shifters:Demand Curve Shifters:Prices of Prices of Related GoodsRelated GoodsTHE MARKET FORCES OF SUPPLY AND DEMAN

14、D14Two goods are complementscomplements if an increase in the price of one causes a fall in demand for the other.Example:computers and software.If price of computers rises,people buy fewer computers,and therefore less software.Software demand curve shifts left.Other examples:college tuition and text

15、books,bagels and cream cheese,eggs and baconDemand Curve Shifters:Demand Curve Shifters:Prices of Prices of Related GoodsRelated GoodsTHE MARKET FORCES OF SUPPLY AND DEMAND15Anything that causes a shift in tastes toward a good will increase demand for that good and shift its D D curve to the right.E

16、xample:The Atkins diet became popular in the 90s,caused an increase in demand for eggs,shifted the egg demand curve to the right.Demand Curve Shifters:TastesDemand Curve Shifters:TastesTHE MARKET FORCES OF SUPPLY AND DEMAND16Expectations affect consumers buying decisions.Examples:If people expect th

17、eir incomes to rise,their demand for meals at expensive restaurants may increase now.If the economy sours and people worry about their future job security,demand for new autos may fall now.Demand Curve Shifters:ExpectationsDemand Curve Shifters:ExpectationsTHE MARKET FORCES OF SUPPLY AND DEMAND17Sum

18、mary:Variables That Influence BuyersSummary:Variables That Influence BuyersVariableVariableA change in this variable A change in this variable Pricecauses a movement along the D D curve#of buyersshifts the D D curveIncomeshifts the D D curvePrice ofrelated goodsshifts the D D curveTastesshifts the D

19、 D curveExpectationsshifts the D D curveA.A.The price of iPods fallsB.B.The price of music downloads fallsC.C.The price of CDs falls18Draw a demand curve for music downloads.What happens to it in each of the following scenarios?Why?THE MARKET FORCES OF SUPPLY AND DEMAND19SupplySupplyThe quantity sup

20、pliedquantity supplied of any good is the amount that sellers are willing and able to sell.Law of supplyLaw of supply:the claim that the quantity supplied of a good rises when the price of the good rises,other things equal THE MARKET FORCES OF SUPPLY AND DEMAND20The Supply ScheduleThe Supply Schedul

21、eSupply scheduleSupply schedule:A table that shows the relationship between the price of a good and the quantity supplied.Example:Starbucks supply of lattes.Notice that Starbucks supply schedule obeys the Law of Supply.Price of lattesQuantity of lattes supplied$0.0001.0032.0063.0094.00125.00156.0018

22、THE MARKET FORCES OF SUPPLY AND DEMAND21Starbucks Supply Schedule&CurveStarbucks Supply Schedule&CurvePrice of lattesQuantity of lattes supplied$0.0001.0032.0063.0094.00125.00156.0018P PQ QMarket Supply versus Individual SupplyMarket Supply versus Individual SupplyThe quantity supplied in the market

23、 is the sum of the quantities supplied by all sellers at each price.Suppose Starbucks and Jitters are the only two sellers in this market.(Q Qs s=quantity supplied)1815129630Starbucks121086420Jitters+=30252015+=10+=5+=0Market Q Qs s$0.006.005.004.003.002.001.00Price 22THE MARKET FORCES OF SUPPLY AND

24、 DEMAND23PQThe Market Supply CurveThe Market Supply CurvePQS(Market)$0.0001.0052.00103.00154.00205.00256.0030THE MARKET FORCES OF SUPPLY AND DEMAND24Supply Curve ShiftersSupply Curve ShiftersThe supply curve shows how price affects quantity supplied,other things being equal.These“other things”are no

25、n-price determinants of supply.Changes in them shift the S S curve THE MARKET FORCES OF SUPPLY AND DEMAND25Supply Curve Shifters:Input PricesSupply Curve Shifters:Input PricesExamples of input prices:wages,prices of raw materials.A fall in input prices makes production more profitable at each output

26、 price,so firms supply a larger quantity at each price,and the S S curve shifts to the right.THE MARKET FORCES OF SUPPLY AND DEMAND26PQSuppose the price of milk falls.At each price,the quantity of Lattes supplied will increase(by 5 in this example).Supply Curve Shifters:Input PricesSupply Curve Shif

27、ters:Input PricesTHE MARKET FORCES OF SUPPLY AND DEMAND27Supply Curve Shifters:TechnologySupply Curve Shifters:TechnologyTechnology determines how much inputs are required to produce a unit of output.A cost-saving technological improvement has the same effect as a fall in input prices,shifts S S cur

28、ve to the right.THE MARKET FORCES OF SUPPLY AND DEMAND28Supply Curve Shifters:#of Sellers Supply Curve Shifters:#of Sellers An increase in the number of sellers increases the quantity supplied at each price,shifts S S curve to the right.THE MARKET FORCES OF SUPPLY AND DEMAND29Supply Curve Shifters:E

29、xpectations Supply Curve Shifters:Expectations Example:Events in the Middle East lead to expectations of higher oil prices.In response,owners of Texas oilfields reduce supply now,save some inventory to sell later at the higher price.S S curve shifts left.In general,sellers may adjust supply*when the

30、ir expectations of future prices change.(*If good not perishable)THE MARKET FORCES OF SUPPLY AND DEMAND30Summary:Variables that Influence Summary:Variables that Influence SellersSellersVariableVariableA change in this variable A change in this variable Pricecauses a movement along the S S curveInput

31、 Pricesshifts the S S curveTechnologyshifts the S S curve#of Sellersshifts the S S curveExpectationsshifts the S S curve31Draw a supply curve for tax return preparation software.What happens to it in each of the following scenarios?A.A.Retailers cut the price of the software.B.B.A technological adva

32、nce allows the software to be produced at lower cost.C.C.Professional tax return preparers raise the price of the services they provide.THE MARKET FORCES OF SUPPLY AND DEMAND32PQSupply and Demand TogetherSupply and Demand TogetherDSEquilibriumEquilibrium:P P has reached the level where quantity supp

33、lied equals quantity demanded THE MARKET FORCES OF SUPPLY AND DEMAND33DSPQEquilibrium price:Equilibrium price:PQDQS$0240121521810315154122059256630the price that equates quantity supplied with quantity demandedTHE MARKET FORCES OF SUPPLY AND DEMAND34DSPQEquilibrium quantity:Equilibrium quantity:PQDQ

34、S$0240121521810315154122059256630the quantity supplied and quantity demanded at the equilibrium priceTHE MARKET FORCES OF SUPPLY AND DEMAND35PQDSSurplus(a.k.a.excess supply):Surplus(a.k.a.excess supply):when quantity supplied is greater than quantity demandedSurplusSurplusExample:If P P =$5,then Q Q

35、D D =9 lattesand Q QS S =25 lattesresulting in a surplus of 16 lattesTHE MARKET FORCES OF SUPPLY AND DEMAND36PQDSSurplus(a.k.a.excess supply):Surplus(a.k.a.excess supply):when quantity supplied is greater than quantity demandedFacing a surplus,sellers try to increase sales by cutting price.This caus

36、es Q QD D to riseSurpluswhich reduces the surplus.and Q QS S to fall THE MARKET FORCES OF SUPPLY AND DEMAND37PQDSSurplus(a.k.a.excess supply):Surplus(a.k.a.excess supply):when quantity supplied is greater than quantity demandedFacing a surplus,sellers try to increase sales by cutting price.This caus

37、es Q QD D to rise and Q QS S to fall.SurplusSurplusPrices continue to fall until market reaches equilibrium.THE MARKET FORCES OF SUPPLY AND DEMAND38PQDSShortage(a.k.a.excess demand):Shortage(a.k.a.excess demand):when quantity demanded is greater than quantity suppliedExample:If P P =$1,then Q QD D =

38、21 lattesand Q QS S =5 lattesresulting in a shortage of 16 lattesShortageShortageTHE MARKET FORCES OF SUPPLY AND DEMAND39PQDSShortage(a.k.a.excess demand):Shortage(a.k.a.excess demand):when quantity demanded is greater than quantity suppliedFacing a shortage,sellers raise the price,causing Q QD D to

39、 fallwhich reduces the shortage.and Q QS S to rise,ShortageTHE MARKET FORCES OF SUPPLY AND DEMAND40PQDSShortage(a.k.a.excess demand):Shortage(a.k.a.excess demand):when quantity demanded is greater than quantity suppliedFacing a shortage,sellers raise the price,causing Q QD D to falland Q QS S to ris

40、e.ShortageShortagePrices continue to rise until market reaches equilibrium.THE MARKET FORCES OF SUPPLY AND DEMAND41Three Steps to Analyzing Changes in EqmThree Steps to Analyzing Changes in EqmTo determine the effects of any event,1.1.Decide whether event shifts S S curve,D D curve,or both.2.2.Decid

41、e in which direction curve shifts.3.3.Use supply-demand diagram to see how the shift changes eqm P P and Q Q.THE MARKET FORCES OF SUPPLY AND DEMAND42EXAMPLE:EXAMPLE:The Market for Hybrid CarsThe Market for Hybrid CarsPQD1S1P1Q1price of hybrid carsquantity of hybrid carsTHE MARKET FORCES OF SUPPLY AN

42、D DEMAND43STEP 1:STEP 1:D D curve shifts because price of gas affects demand for hybrids.S S curve does not shift,because price of gas does not affect cost of producing hybrids.STEP 2:STEP 2:D D shifts rightbecause high gas price makes hybrids more attractive relative to other cars.EXAMPLE 1:EXAMPLE

43、 1:A Shift in DemandA Shift in DemandEVENT TO BE EVENT TO BE ANALYZED:ANALYZED:Increase in price of gas.PQD1S1P1Q1D2P2Q2STEP 3:STEP 3:The shift causes an increase in price and quantity of hybrid cars.THE MARKET FORCES OF SUPPLY AND DEMAND44EXAMPLE 1:EXAMPLE 1:A Shift in DemandA Shift in DemandPQD1S1

44、P1Q1D2P P2 2Q Q2 2Notice:When P P rises,producers supply a larger quantity of hybrids,even though the S S curve has not shifted.Terms for Shift vs.Movement Along CurveTerms for Shift vs.Movement Along CurveChange in supply:Change in supply:a shift in the S S curveoccurs when a non-price determinant

45、of supply changes(like technology or costs)Change in the quantity supplied:Change in the quantity supplied:a movement along a fixed S S curve occurs when P P changes Change in demand:Change in demand:a shift in the D D curveoccurs when a non-price determinant of demand changes(like income or#of buye

46、rs)Change in the quantity demanded:Change in the quantity demanded:a movement along a fixed D D curveoccurs when P P changes 45THE MARKET FORCES OF SUPPLY AND DEMAND46STEP 1:STEP 1:S S curve shifts because event affects cost of production.D D curve does not shift,because production technology is not

47、 one of the factors that affect demand.STEP 2:STEP 2:S S shifts rightbecause event reduces cost,makes production more profitable at any given price.EXAMPLE 2:EXAMPLE 2:A Shift in SupplyA Shift in SupplyPQD1S1P1Q1S2P2Q2EVENT:EVENT:New technology reduces cost of producing hybrid cars.STEP 3:STEP 3:The

48、 shift causes price to fall and quantity to rise.THE MARKET FORCES OF SUPPLY AND DEMAND47EXAMPLE 3:EXAMPLE 3:A Shift in Both Supply A Shift in Both Supply and Demand and DemandPQD1S1P1Q1S2D2P2Q2EVENTS:EVENTS:price of gas rises AND new technology reduces production costsSTEP 1:STEP 1:Both curves shif

49、t.STEP 2:STEP 2:Both shift to the right.STEP 3:STEP 3:Q Q rises,but effect on P P is ambiguous:If demand increases more than supply,P P rises.THE MARKET FORCES OF SUPPLY AND DEMAND48EXAMPLE 3:EXAMPLE 3:A Shift in Both Supply A Shift in Both Supply and Demand and DemandSTEP 3STEP 3,cont.PQD1S1P1Q1S2D

50、2P2Q2EVENTS:EVENTS:price of gas rises AND new technology reduces production costsBut if supply increases more than demand,P P falls.49Use the three-step method to analyze the effects of each event on the equilibrium price and quantity of music downloads.Event A:A fall in the price of CDsEvent B:Sell