微观经济学 第三讲

ture Two
1. Fallacies
– Post hoc • A occurs before B, therefore A is the cause of B. • And there is no sufficient evidence to actually guarantee such a claim. – Failure to hold other things constant – Fallacy of composition • When you assume that what is true for the part is also true for the whole, you are committing the fallacy of composition.
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2.1 The Market Mechanism
• How the market mechanism simultaneously solve the three economic problems of what, how, and for whom. • Consumers indicate their preferences over what is produced through their willingness to pay for a good or service. • Firms respond to this by considering the mix of final products that will maximize their own profits (revenues from sales minus production costs). This must involve the question how, since firm production costs are determined by the prices of inputs and technology used in the production process. • Once these questions have been addressed, for whom is found to be those consumers who have the money to pay for the goods and services produced. 11
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3. The production-possibility frontier
Review of Lecture Two
4. Opportunity costs
– Measure the cost of doing something in terms of the nextbest alternative that is given up.
5. Productive efficiency
– occurs when an economy cannot produce more of one good without producing less of another good – This implies that the economy is on its PPT.
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Review of Lecture Two
2. Fundamental questions of economic organization
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What commodities are produced? How these goods are made? For whom they are produced?
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Chapter three: basic elements of supply and demand
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Chapter 2
The Modern Mixed Economy
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2.1 The Market Mechanism
• A market economy has at its heart the actions of buyers and sellers who exchange goods and services with one another. • There is no higher authority that directs the behavior of these economic agents; • Rather, it is the invisible hand of the marketplace that allocates final goods and services, as well as factors of production.
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2.1 The Market Mechanism
• Market equilibrium occurs when the price is such that • the quantity that buyers are interested in buying is equal to • the quantity that sellers are interested in supplying to the market.
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Outline
• Chapter two : the modern mixed economy
– – The invisible hand of market The visible hand of government the demand curve The supply curve Equilibrium with supply and demand
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2.1 The Market Mechanism
What is the invisible hand of the market?
• Buyers and sellers receive signals from one another in the form of prices. • If buyers want to buy more of a good, prices rise and sellers respond by supplying more to the marketplace. • If buyers want to buy less of a good, prices fall and sellers respond by supplying less to the marketplace. • Prices rise and fall naturally as people change their behavior; • Price signals tell sellers what to do with their production levels. • So there is no need for a higher authority.
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2.2 Trade, Money, and Capital
• Capital accumulation is an important determinant of economic growth. • An economic system that builds a strong capital base is investing in a factor of production that will make all other factors more productive, or useful. • Capital is typically privately owned in a market economy, so that private individuals can make decisions about its use. • Because these individuals will directly benefit from the use of their capital, they have some incentive to make sure that it is employed efficiently.
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2.2 Trade, Money, and Capital
• Money is not an input or factor of production. Consumers and firms use money in order to more efficiently carry out market transactions; it is a kind of lubricating oil that allows the machinery of an economy to operate with a minimum of friction. • In this course, the term capital does not refer to money. Instead, the term refers to productive inputs that have, themselves, been manufactured.
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Go over Problem Set 1 Review key concepts Each student has an opportunity to provide answers
– – – Provide answers one by one Select some students to answer questions Answer questions initiatively/actively
Lecture Three
2012.09.25
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About Recitation One
• • Held on this Friday, Sep. 28 Compete the homework on Problem Set 1