【正文】 nd is price inelastic 169。2020 Pearson Education, Inc. Chapter 1 66 Elasticities of Supply and Demand ? Not only are we concerned with what direction price and quantity will move when the market changes, but we are concerned about how much they change ? Elasticity gives a way to measure by how much a variable will change with the change in another variable ? Specifically, it gives the percentage change in one variable resulting from a one percent change in another 169。2020 Pearson Education, Inc. Chapter 1 62 Market for a College Education Q (millions enrolled)) P (annual cost in 1970 dollars) D1970 S1970 S2020 D2020 $3,917 New equilibrium was reached at $4,573 and a quantity of million students $2,530 169。2020 Pearson Education, Inc. Chapter 1 58 D’ S D Q3 P3 Changes in Market Equilibrium ? Ine Increases ?Demand increases to D’ ?Shortage at P1 of Q1 to Q2 ?Equilibrium at P3 and Q3 P Q Q1 P1 Q2 169。2020 Pearson Education, Inc. Chapter 1 54 The Market Mechanism D QS QD P2 Quantity Price ($ per unit) 1. At P2, price is below the market clearing price 2. QD QS 3. Price rises to the marketclearing price 4. Market adjusts to equilibrium Q3 P3 Shortage 169。2020 Pearson Education, Inc. Chapter 1 50 The Market Mechanism ?In equilibrium ?There is no shortage or excess demand ?There is no surplus or excess supply ?Quantity supplied equals quantity demanded ?Anyone who wants to buy at the current price can and all producers who want to sell at that price can 169。2020 Pearson Education, Inc. Chapter 1 46 D P Q D’ Q1 P2 Q0 P1 Q2 Change in Demand ? Ine Increases ?Purchased Q0, at P2 and Q1 at P1 ?Now purchased Q1 at P2 and Q2 at P1 ?Same for all prices ?Demand curve shifts right 169。2020 Pearson Education, Inc. Chapter 1 42 The Supply Curve ?Change in Quantity Supplied ?Movement along the curve caused by a change in price ?Change in Supply ?Shift of the curve caused by a change in something other than the price of the good ? Change in costs of production 169。2020 Pearson Education, Inc. Chapter 1 38 Supply and Demand ?The Supply Curve ?The relationship between the quantity of a good that producers are willing to sell and the price of the good ?Measures quantity on the xaxis and price on the yaxis (P ) SS ?169。2020 Pearson Education, Inc. Chapter 1 33 Emission Standards ?1970 Clean Air Act imposed emissions standards and have bee increasingly stringent ?Questions: ? What are the impacts on consumers? ? What are the impacts on producers? ? How should the standards be enforced? ? What are the benefits and costs? Chapter 2 The Basics of Supply and Demand 169。2020 Pearson Education, Inc. Chapter 1 29 Why Study Microeconomics? ?Microeconomic concepts are used by everyone to assist them in making choices as consumers and producers ?Examples show the numerous levels of microeconomic questions necessary in many decisions 169。2020 Pearson Education, Inc. Chapter 1 25 Real Versus Nominal Prices ?Calculating Real Prices ye a rcu r r e n t ye a rcu r r e n t ye a rb a se Pr i ce N o mi n a l x C PIC PI R e a l Pr i ce ?ba s e y e a r169。2020 Pearson Education, Inc. Chapter 1 21 Market Definition ?Market Definition ?Which buyers and sellers should be included in a given market? ?This depends on the extent of the market – boundaries, geographical and by range of products, to be included in it ? Market for housing in New York or Indianapolis ? Market for all cameras or digital cameras 169。2020 Pearson Education, Inc. Chapter 1 17 What is a Market? ?Defining the Market ?Many of the most interesting questions in economics concern the functioning of markets ? Why are there a lot of firms in some markets and not in others? ? Are consumers better off with many firms? ? Should the government intervene in markets? 169。2020 Pearson Education, Inc. Chapter 1 14 Positive amp。2020 Pearson Education, Inc. Chapter 1 11 Theories and Models ?Theories are used to make predictions ?Economic models are created from theories ?Models are mathematical representations used to make quantitative predictions 169。2020 Pearson Education, Inc. Chapter 1 7 Themes of Microeconomics ?Firms ?What types of products do firms produce? ? Constraints on production capacity and financial resources create needs for tradeoffs ?Theory of the Firm – describes how these tradeoffs are best made 169。2020 Pearson Education, Inc. Chapter 1 3 Themes of Microeconomics ?Microeconomics deals with limits ?Limited budgets ?Limited time ?Limited ability to produce ?How do we make the most of limits? ?How do we allocate scarce resources? 169。2020 Pearson Education, Inc. Chapter 1 2 Introduction ?What are the key themes of microeconomics? ?What is a market? ?What is the difference between real and nominal prices? ?Why study microeconomics? 169。2020 Pearson Education, Inc. Chapter 1 6 Themes of Microeconomics ?Workers ?Individuals decide when and if to enter the workforce ? Tradeoffs of working now or obtaining more education/training ?What choices do individuals make in terms of jobs or workplaces? ?How many hours do individuals choose to work? ? Tradeoff of labor and leisure 169。2020 Pearson Education, Inc. Chapter 1 10 Theories and Models ?Economics is concerned with explanation of observed phenomena ?Theories are used to explain observed phenomena in terms of a set of basic rules and assumptions: ? The Theory of the Firm ? The Theory of Consumer Behavior 169。 Normative Analysis ?Positive Analysis – statements that describe the relationship of cause and effect ?Questions that deal with explanation and prediction ? What will be the impact of an import