Microeconomics

1. how many whenChoices :A whatB howC for whom

2. law of Scarcity

3. Resources human resources natural resources capital resources--- N --- L--- K--- E

4.

0369121512345ABCDEF 5.PPF:Production Possibility Frontier A 0 15 B 1 14 C 2 12 D 3 9 E 4 5 F 5 0

5. Opportunity Costs0369121512345ABCDEFABCDEF

0369121512345ABCDEFG

0369121512345ABCDEFHEconomic Institutions

Macroeconomics ---

John Maynard Keynes 20 1883-1946

1929-1933 1929-1933

MicroeconomicsInvisible hand Resource allocation

Adam Smith (1723-1790)

2F. 1758 -1623-168717761817D. 1T.J.-B.

3. 1920A.lfred Marshll 1842192418701890

193019201933

4 F.von John Maynard Keynes 1883194619301936

Paul Anthony Samuelson 1915 19701940

1 economical man2

what ought to bethe way things are

1. 2.

(

(1) A B C D (2) A B C D B D

(3) A B C D(4) A B C DB C

1 DemandSupply

Demand willing needswantsdesires able

Demand Function

PQd

! Qd = P

:The Law of DemandPQPQ0P QDab

1.A Shift in the Demand Curve0P QDabP0Q0P1Q1

2.A Shift of the Demand Curve 0

P

QD0P0Q0Q1D1Q2D2

PQD

A B C D D

1.Giffens Goods PQ1845

2. Conspicuous goodsPositional GoodsPQ0PQD

1. --- --- Supply

Supply Function 2.3. Q s = + P1.

PQ PQ 0P QSab

1.0P QSabP1Q1P2Q2

2.0

P

QS0P0Q0Q1S1Q2S23.

1. A B C D 2. 3.A B C D AAB

4. ABCD5.xyxA x B x C yD y 6.A B C D

ADB

Elasticity

PQDPDQOO

elasticity

price elasticity of demand1.Ed

2.

ab544008005445

abba QPPQ

3. E = 0 perfect inelastic

E = perfect elasticPQD2O

E = 1 unitary elastic =

E < 1 inelastic

E > 1 elastic D56%9%POQ

1.8620301P18P26Q120Q2302

2.0.151.210Ed=0.15P1.2 P=0.8()0.810

4.dQ/dP

CCO

PQF

CGQd=f(P)A

BdPdQ

Q=f(P)OPQDCBEAed=ed>1ed=1ed

PQOABCAB1C

A B C D B

3.1.2.4.

5.

TR = P * Q 3101. (Total revenue

2. E > 1Ed=2P1=500/Q1=100 10% 10%20% P2=500 500*10%=450/ Q2=100+100*20%=120 TR2=P2Q2=450120=54000 TR1=50000 TR2 TR1=54000 50000=4000 TR2 >TR1

10%20%P3=500 +50010%=550/Q3=100 -10020%=80 10%TR3

E > 1,,; ,,1QOP

ABC

3. E < 1Ed=0.5P1=0.2/Q1=100 10%10%5%P2= 0.2 0.210%=0.18/Q2=100+1005%=105TR1=P1Q1=0.2100=20TR2=P2Q2=0.18105=18.9TR2 TR1=18.920= -1.1TR2

10%10%5%P3=0.2 +0.2*10%=0.22/Q3=100 -100*5%=95 TR3=P3Q3=0.2295=20.9TR3 TR1=20.9 20= 0.9TR3>TR1Ed=0.5P1=0.2/Q1=100

E < 1,,;,,QPO

12

Cross-Elasticity of Demand 1. 1

2.

3.Ec0 YP XQXY Ec0 YP XQ XY Ec =0

Income Elasticity of Demand1.10%5%0.5

QM

2.5A. Em1superior goods luxury, luxurious goodsEm0 B. Em1 C. 0 Em1essential necessary goodsnormal goods

D. Em =0 E. inferior goodsGiffen goodsEm0

Price Elasticity of Supply1. A

P

QO

2.

3.>1

Es=1Q ES=P ES=04. O

Q ES1PEs1PQES0O

5.

Equilibrium of Supply and Demand

1.The Equilibrium Price:

The Law of Supply and Demand 1.Q3P2P1PD1D3D2Q1Q2Q

P3E1

E2E3SO

2. A Supply ShiftS1

S2S3Q3P2P1PDQ1Q2Q

P3E1

E2E3O

DS QP1DD1P SPQD2DD2 P3DD3 P3. S S1P

A B C D

D A

eg:D=122PS=2P P=3 Q=6

Price controls 1.Price floor

PQDSP0OQ0P1Q1Q2 excess supplyE

2.Price ceiling PQDSP0OQ0P1Q1Q2excess demandE

>

()

1EQ3P1P3P2

PPEPtOQQEQ2OSDQ1

2.

3SDEQePeQOPP1Q3P2Q2Q1tOP