【正文】 2020 Pearson Education, Inc. Chapter 1 105 D P0 S Q0 Quantity Price A freeze or drought decreases the supply of coffee S’ Q1 An Application Coffee Price increases significantly due to inelastic supply and demand P1 169。2020 Pearson Education, Inc. Chapter 1 97 Demand for Automobiles 169。2020 Pearson Education, Inc. Chapter 1 89 ShortRun Versus LongRun Elasticity ?Price elasticity varies with the amount of time consumers have to respond to a price ?Shortrun demand and supply curves often look very different from their longrun counterparts 169。2020 Pearson Education, Inc. Chapter 1 81 Point vs. Arc Elasticities ?Point elasticity of demand ?Price elasticity of demand at a particular point on the demand curve ?Arc elasticity of demand ?Price elasticity of demand calculated over a range of prices ? ? ???????QPPQE DP ΔΔ169。2020 Pearson Education, Inc. Chapter 1 73 Price Elasticity of Demand Q Price 4 8 2 4 Ep = 1 Ep = 0 EP = ? Elastic Inelastic Demand Curve Q = 8 – 2P 169。2020 Pearson Education, Inc. Chapter 1 65 Resource Market ?Conclusion ?Decreases in the costs of production have increased the supply by more than enough to offset the increase in demand 169。2020 Pearson Education, Inc. Chapter 1 57 S’ Changes in Market Equilibrium ? Raw material prices fall ?S shifts to S’ ?Surplus at P1 between Q1, Q2 ?Price adjusts to equilibrium at P3, Q3 P Q S D P3 Q3 Q1 P1 Q2 169。2020 Pearson Education, Inc. Chapter 1 49 The Market Mechanism D S The curves intersect at equilibrium, or market clearing, price. Quantity demanded equals quantity supplied at P0 P0 Q0 Quantity Price ($ per unit) 169。2020 Pearson Education, Inc. Chapter 1 41 Change in Supply ? The cost of raw materials falls ?Produced Q1 at P1 and Q0 at P2 ?Now produce Q2 at P1 and Q1 at P2 ?Supply curve shifts right to S’ P S Q P1 P2 Q1 Q0 S’ Q2 169。2020 Pearson Education, Inc. Chapter 1 32 Ford SUV’s ?Questions (cont.) ?Ford had to develop pricing strategy and determine petitors’ reactions ?Risk analysis ? Uncertainty of future prices: gas, wages ?Organizational decisions ? Integration of all divisions of production ?Government regulation ? Emissions standards 169。2020 Pearson Education, Inc. Chapter 1 24 Real Versus Nominal Prices ?Consumer Price Index (CPI) is often used as a measure of aggregate prices ?Records the prices of a large market basket of goods purchased by a “typical” consumer over time ?Percent changes in CPI measure the rate of inflation 169。2020 Pearson Education, Inc. Chapter 1 16 What is a Market? ?Market Definition ?Determination of the buyers, sellers, and range of products that should be included in a particular market ?Arbitrage ?The practice of buying a product at a low price in one location and selling it for more in another location 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。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 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 14 Positive amp。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 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 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 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 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 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 70 Price Elasticity of Demand ?The primary determinant of price elasticity of demand is the availability of substitutes ?Many substitutes, demand is price elastic ? Can easily move to another good with price increases ?Few substitutes, demand is price inelastic