2. Supply and Demand：How Markets Work
经济学原理英文版第九版课程设计
Principles of Economics, 9th Edition: Course Design Course OverviewThe Principles of Economics course is designed to introduce students to the fundamental concepts of economics. Students will learn about microeconomics, which studies the behavior of individual economic actors such as consumers and firms, and macroeconomics, which focuses on the aggregate behavior of the entire economy. The course is based on the 9th edition of Principles of Economics, written by N. Gregory Mankiw.The course is divided into 14 modules, with each module covering a different topic. The first part of the course covers microeconomics, while the second part focuses on macroeconomics. The modules are designed to build upon each other, so that students can develop a clear understanding of the concepts and theories that underpin economic behavior.Learning ObjectivesAt the end of this course, students will be able to:1.Expln the basic concepts of economics and how they relate toreal-world situations2.Analyze the behavior of individual economic actors such asconsumers, firms, and markets3.Understand the factors that influence the level of economicactivity and growth in the economy4.Evaluate fiscal and monetary policy and their effects on theeconomyCourse ContentModule 1: Ten Principles of EconomicsThis module introduces students to the ten basic principles of economics, such as how people make decisions and how markets work.Module 2: Thinking Like an EconomistThis module teaches students how to think like an economist, including how to make assumptions, use graphs, and analyze data.Module 3: Interdependence and the Gns from TradeThis module explores the concepts of interdependence and trade, and how countries can benefit from specialization and trade.Module 4: The Market Forces of Supply and DemandThis module explns the basic principles of supply and demand and how they interact in markets.Module 5: Elasticity and Its ApplicationThis module delves deeper into the concept of elasticity and how it affects the behavior of buyers and sellers in markets.Module 6: Supply, Demand, and Government PoliciesThis module looks at how governments can influence markets through policies such as price controls and taxes.Module 7: Consumers, Producers, and the Efficiency of MarketsThis module examines the concept of market efficiency and how it can be measured.Module 8: Application: The Costs of TaxationThis module applies the concepts of supply and demand to taxation, analyzing the effects of taxes on the behavior of buyers and sellers.Module 9: International TradeThis module explores the benefits and costs of international trade and analyzes the factors that influence trade patterns between countries.Module 10: ExternalitiesThis module introduces the concept of externalities and how they can affect market outcomes.Module 11: Public Goods and Common ResourcesThis module examines public goods and common resources, analyzingthe role of government in addressing the problems associated with their provision.Module 12: The Design of the Tax SystemThis module discusses the principles of tax design and how they can be applied to create an efficient and fr tax system.Module 13: The Costs of ProductionThis module explores the factors that determine the costs of production and how firms make decisions about production.Module 14: Firms in Competitive MarketsThis module looks at the behavior of firms in competitive marketsand analyzes the factors that influence their decisions about pricingand output.Course RequirementsStudents are expected to attend all lectures and complete all assignments on time. Assignments will include readings from the textbook, problem sets, and written assignments. Grades will be based on class participation, assignments, and exams.ConclusionThe Principles of Economics course provides students with a comprehensive understanding of the fundamental concepts and theoriesthat underpin economic behavior. Students will learn about micro and macroeconomics, market forces, taxation, international trade, and more. Through this course, students will be able to apply economic principles to real-world situations and make informed decisions about economic issues.。
Chap-4-Supply-and-Demand
Input prices Technology Expectations Number of sellers
Reslut.
Represents a movement along the supply curve
Shifts the supply curve
6.Market Supply
Market supply refers to the sum of all individual supplies for all sellers of a particular good or service. Graphically, individual supply curves are summed horizontally to obtain the market supply curve.
1.definition
Quantity demanded is the amount of a good that buyers are
willing and able to purchase.
2.Demand Schedule
Price Quantity
$0.50
10
1.00
8
1.50
6
2.00
$3.00
2.50
2.00
1.50
1.00
Price $
0.50 1.00 1.50 2.00 2.50 3.00
Quantity
10 8 6 4 2 0
0.50
0 1 2 3 4 5 6 7 8 9 10 11 12
Quantity of Ice-Cream Cones
The Demand Curve
4
The Market Forces of Supply and Demand课件讲义
0.50 1.00 1.50 2.00 2.50 3.00
0 1 2 3 4 5 6 7 8 9 10 11 12
Quantity 12 10 8 6 4 2 0
Quantity of Ice-Cream Cones
Ceteris Paribus
Ceteris paribus is a Latin phrase that
Competition: Perfect and Otherwise
Monopoly
One seller, and seller controls price
Oligopoly
Few sellers Not always aggressive competition
Competition: Perfect and Otherwise
ቤተ መጻሕፍቲ ባይዱ
Demand Schedule
The demand schedule is a table that shows the relationship
between the price of the good and the quantity demanded.
Demand Schedule
Price $0.00
of a good that buyers are willing and able to purchase.
Law of Demand
The law of demand states that there is an inverse
relationship between price and quantity demanded.
0.50 1.00 1.50 2.00 2.50 3.00
demand and supply 需求与供应
TOPIC 2
Key concepts
• Defining demand • Changes to demand if price or other factors change • Defining supply • Changes to supply if prices or other factors change • Defining market equilibrium • Understanding and explaining the causes and changes in market equilibrium
9
Changes to demand
If one of these factors causes a decrease in demand, the result will be: If one of these factors causes an increase in demand, the result will be:
a decrease in quantity demanded.
An increase in supply
23
A decrease in supply
24
Crude oil supply
OPEC
– Organisation of Petroleum Exporting Countries – Go to: OPEC Press Room – Click on ‘How does OPEC oil production affect oil prices?’ to get a feel for why petrol prices change.
21
广外货币银行学期末重点全英米什金
⼴外货币银⾏学期末重点全英⽶什⾦考试题型以及分数分布：⼀、选择题：1’*20=20’⼆、名词解释：4’*5=20’三、简答题：8’*5=40’四、论述题：20’*1=20’重点制作思路：1.考虑到时间关系，抓⼤放⼩2.结合⽼师提及复习内容进⾏预测3.以理顺书本架构为主，看到⼀个知识点猜⼀下可能会出什么题The economics of money,banking and financial markets----by Kyle Chapter1：Why Study Money, Banking, and Financial Markets？（本章了解⼀下这个问题即可，最多考⼀下选择）Answer：To examine how financial markets such as bond and stock markets workTo examine how financial institutions such as banks workTo examine the role of money in the economyChapter2：An Overview of the Financial System1.Function of Financial MarketsPerform the essential function of channeling funds from economic players that have saved surplus funds to those that have a shortage of fundsDirect finance: borrowers borrow funds directly from lenders in financial markets by selling them securities.Promotes economic efficiency by producing an efficient allocation（分配）of capital（资⾦）, which increases production Directly improve the well-being of consumers by allowing them to time purchases better 2.Structure of Financial Markets Debt and Equity （普通股）MarketsPrimary and Secondary MarketsExchanges and Over-the-Counter (OTC不通过交易所⽽直接售给顾客的) MarketsMoney and Capital Markets（货币和资本市场）3. Financial Market Instruments(要能举出例⼦，很可能考选择)Money markets deal in short-term debt instrumentsCapital markets deal in longer-term debt and equity instruments.4.Internationalization of Financial Markets（重点，选择、名词解释都有可能）Foreign Bonds & EurobondEurocurrencies & EurodollarsWorld Stock Markets5．Function of Financial Intermediaries: Indirect Finance（记⼀下⾦融中介机构的功能，交易成本很可能考名词解释）Lower transaction costs (time and money spent in carrying out financial transactions).Reduce the exposure of investors to riskDeal with asymmetric 不对称information problemsConclusion:Financial intermediaries allow “small” savers and borrowers to benefit from the existence of financial markets.6. Types of Financial Intermediaries（会分类即可）Depository institutionsContractual saving institutionsInvestment intermediaries7.Regulation of the Financial SystemTo increase the information available to investors:To ensure the soundness 健康稳固of financial intermediariesChapter3：What Is Money?1.Meaning of Money（即definition，必考名词解释！！）Money (or the “money supply”): anything that is generally accepted in payment for goods or services or in the repayment of debts.2.Functions of Money（重点）Medium of Exchange:A medium of exchange mustUnit of Account:Store 储藏of Value:3.Evolution of the Payments SystemCommodity 商品MoneyFiat 法定MoneyChecks ⽀票Electronic Payment (e.g. online bill pay).E-Money (electronic money):4.Measuring Money （重中之重，M1/M2都很有可能考名词解释）Construct monetary aggregates using the concept of liquidity:（构建货币总量使⽤流动性的概念）M1 (most liquid assets)= currency + traveler’s checks + demand deposits + other checkable deposits.M2 (adds to M1 other assets that are not so liquid) = M1 + small denomination time deposits + savings deposits and money market deposit accounts + money marketmutual fund shares.Chapter 4：Understanding Interest Rates1.measuring interest rates:Present Value(很可能考察名词解释)A dollar paid to you one year from now is less valuable than a dollar paid to you todaySimple Present Value：PV=CF/(1+i)n次⽅2.Four Types of Credit Market InstrumentsSimple LoanFixed Payment LoanCoupon Bond 附票债券Discount Bond 贴现债券3.Yield to Maturity（重点，很可能名词解释）The interest rate that equates the present value of cash flow payments received from a debt instrument with its value today 计算4种不同信⽤⼯具外加Consol or Perpetuity（⾦边债券或永久债券）的YM4. Yield on a Discount Basis（了解即可）Current Yield当期收益率Yield on a Discount Basis 折价收益率Rate of Return 收益率5.Rate of Return and Interest Rates（收益率与利息率的distinction）The return equals the yield to maturity only if the holding period equals the time to maturityA rise in interest rates is associated with a fall in bond prices, resulting in a capital loss if time to maturity is longer than the holding periodThe more distant a bond’s maturity, the greater the size o f the percentage price change associated with an interest-rate changeThe more distant a bond’s maturity, the lower the rate of return the occurs as a result of an increase in the interest rate Even if a bond has a substantial initial interest rate, its return can be negative if interest rates rise6.Interest-Rate RiskPrices and returns for long-term bonds are more volatile than those for shorter-term bondsThere is no interest-rate risk for any bond whose time to maturity matches the holding period7.Real and Nominal Interest Rates（重点，很可能考察简答题）Nominal interest rate makes no allowance for inflationReal interest rate is adjusted for changes in price level so it more accurately reflects the cost of borrowingEx ante real interest rate is adjusted for expected changes in the price levelEx post real interest rate is adjusted for actual changes in the price level8.Fisher Equation（重点考察）Chapter5：The Behavior of Interest Rates1.Determining the Quantity Demanded of an AssetWealth: the total resources owned by the individual, including all assetsExpected Return: the return expected over the next period on one asset relative to alternative assetsRisk: the degree of uncertainty associated with the return on one asset relative to alternative assetsLiquidity: the ease and speed with which an asset can be turned into cash relative to alternative assets（流动性很有可能考名词解释）2.Theory of Asset Demand（必考，死活都得背下来）Holding all other factors constant:1.The quantity demanded of an asset is positively related to wealth2.The quantity demanded of an asset is positively related to its expected returnrelative to alternative assets3.The quantity demanded of an asset is negatively related to the risk of its returnsrelative to alternative assets4.The quantity demanded of an asset is positively related to its liquidity relative toalternative assets3.Supply and Demand for Bonds（见到看⼀下图）Market Equilibrium4.Shifts in the Demand for BondsWealth: in an expansion with growing wealth, the demand curve for bonds shifts to the rightExpected Returns: higher expected interest rates in the future lower the expected return for long-term bonds, shifting the demand curve to the leftExpected Inflation: an increase in the expected rate of inflations lowers the expected return for bonds, causing the demand curve to shift to the leftRisk: an increase in the riskiness of bonds causes the demand curve to shift to the left Liquidity: increased liquidity of bonds results in the demand curve shifting right 5．Shifts in the Supply of BondsExpected profitability of investment opportunities: in an expansion, the supply curve shifts to the rightExpected inflation: an increase in expected inflation shifts the supply curve for bonds to the rightGovernment budget: increased budget deficits shift the supply curve to the right6.The Liquidity Preference Framework（重中之重）7.Demand for Money in the Liquidity Preference FrameworkAs the interest rate increases:–The opportunity cost of holding money increases…–The relative expected return of money decreases……and therefore the quantity demanded of money decreases.8.Shifts in the Demand for Money（都很重要）Income Effect:a higher level of income causes the demand for money at each interest rate to increase and the demand curve to shift to the rightPrice-Level Effect: a rise in the price level causes the demand for money at each interest rate to increase and the demand curve to shift to the rightLiquidity preference framework leads to the conclusion that an increase in the money supply will lower interest rates: the liquidity effect.Income effect finds interest rates rising because increasing the money supply is an expansionary influence on the economy (the demand curve shifts to the right). Chapter9:Banking1.The Bank Balance SheetLiabilities–Checkable deposits–Nontransaction deposits–Borrowings–Bank capitalAssets–Reserves(准备⾦)–Cash items in process of collection–Deposits at other banks–Securities–Loans–Other assets2.Basic Banking:Cash Deposit：Opening of a checking account leads to an increase in the bank’s reserves equal to the increase in checkable depositsCheck Deposit3．Inter-businessBank settlementFinance leaseFiduciary businessSafe deposit box4.Off-Balance-Sheet ActivitiesLoan sales (secondary loan participation)Generation of fee income. Examples:Chapter12:Central Banks and the Federal Reserve System(此章省略很多)1.Structure of the Fed(了解即可)12 FRBs（9⼈）Member BanksFOMC (7+1+4⼈)Federal Advisory Council （12⼈）2.Federal Reserve Bank（3+3+3⼈）Functions：Clear checksIssue new currencyWithdraw damaged currency from circulationAdminister and make discount loans to banks in their districtsEvaluate proposed mergers and applications for banks to expand their activitiesAct as liaisons between the business community and the Federal Reserve SystemExamine bank holding companies and state-chartered member banksCollect data on local business conditionsUse staffs of professional economists to research topics related to the conduct of monetary policyChapter13&14：The Money Supply Process:1.Players in the Money Supply ProcessCentral bank (Federal Reserve System)Banks (depository institutions; financial intermediaries)Depositors (individuals and institutions)2．Fed’s Balance Sheet4.Open Market PurchaseThe effect of an open market purchase on reserves depends on whether the seller of the bonds keeps the proceeds from the sale in currency or in depositsThe effect of an open market purchase on the monetary base always increases the monetary base by the amount of the purchaseOpen Market SaleReduces the monetary base by the amount of the saleReserves remain unchangedThe effect of open market operations on the monetary base is much more certain than the effect on reserves5.Fed’s Ability to Control the Monetary BaseSplit the monetary base into two components :MBn= MB - BRthe non-borrowed monetary base :MBnborrowed reserves:BR6.The Formula for Multiple Deposit Creation（很重要！必考,记住公式）7.Factors that Determine the Money SupplyChanges in the nonborrowed monetary base MBnChanges in borrowed reserves from the FedChanges in the required reserves ratioChanges in currency holdingsChanges in excess reserves8.The Money Multiplier(重点)Assume that the desired holdings of currency C and excess reserves ER grow proportionally with checkable deposits D. Then,c = {C/D} = currency ratioe = {ER/D} = excess reserves ratioThe monetary base MB equals currency (C) plus reserves (R):MB = C + R = C + (r x D) + ERM=m*MB=m*(MBn+BR)M=1+c/r+e+cChapter 15：Tools of Monetary Policy1. Tools of Monetary PolicyOpen market operationsChanges in borrowed reservesChanges in reserve requirementsFederal funds rate: the interest rate on overnight loans of reserves from one bank to another 2.Demand in the Market for ReservesSupply in the Market for Reserves3.Affecting the Federal Funds Rate4.Open Market Operations（超级重点）Advantages：The Fed has complete control over the volumeFlexible and preciseEasily reversedQuickly implemented5.Discount Policy（超级重点）Advantages：Used to perform role of lender of last resortdisadvantages：Cannot be controlled by the Fed; the decision maker is the bank6.Reserve Requirements（超级重点）Advantages：No longer binding for most banksdisadvantages：Can cause liquidity problemsIncreases uncertainty for banks7.Monetary Policy Tools of the European Central BankOpen market operationsLending to banksReserve RequirementsChapter16：The Conduct of Monetary Policy: Strategy and Tactics1. Goals of Monetary Policy（1）The Price Stability GoalLow and stable inflationInflationNominal anchor to contain inflation expectationsTime-inconsistency problem（2）Other Goals of Monetary PolicyHigh employmentEconomic growthStability of financial marketsInterest-rate stabilityForeign exchange market stability2.Monetary TargetingAdvantages–Almost immediate signals help fix inflation expectations and produce less inflation –Almost immediate accountability Disadvantages–Must be a strong and reliable relationship between the goal variable and the targeted monetary aggregat e3.Inflation TargetingPublic announcement of medium-term numerical target for inflationInstitutional commitment to price stability as the primary, long-run goal of monetary policy and a commitment to achieve the inflation goalInformation-inclusive approach in which many variables are used in making decisions AdvantagesDoes not rely on one variable to achieve targetEasily understoodReduces potential of falling in time-inconsistency trapStresses transparency and accountabilityDisadvantagesDelayed signalingToo much rigidityPotential for increased output fluctuationsLow economic growth during disinflation4.Monetary Policy with an Implicit Nominal AnchorThere is no explicit nominal anchor in the form of an overriding concern for the Fed.Forward looking behavior and periodic “preemptive strikes”The goal is to prevent inflation from getting started.Advantages–Uses many sources of information–Avoids time-inconsistency problemDisadvantages–Lack of transparency and accountability–Strong dependence on the preferences, skills, and trustworthiness of individuals in charge–Inconsistent with democratic principles5.Tactics: Choosing the Policy InstrumentTools–Open market operation–Reserve requirements–Discount ratePolicy instrument (operating instrument)–Reserve aggregates–Interest rates–May be linked to an intermediate targetInterest-rate and aggregate targets are incompatible (must chose one or the other).6.Linkages Between Central Bank Tools, Policy Instruments, Intermediate Targets, and Goals of Monetary Policy(中间⽬标是超级重点，死活都要背下来)Chapter19:The Demand for Money1.Velocity of Money and The Equation ofExchangeV=P*Y/MM*V=P*Y2.Quantity Theory of Money DemandSO: Demand for money is determined by:The level of transactions generated by the level of nominal income PYThe institutions in the economy that affect the way people conduct transactions and thus determine velocity and hence k 3.Keynes’s Liquidity Preference TheoryTransactions motivePrecautionary motiveSpeculative motiveVelocity is not constant:4.Friedman’s Modern Quantity Theory of Money(记住该公式及其含义)5.Differences between Keynes’s and Friedman’s Model (cont’d)Friedman–Includes alternative assets to money–Viewed money and goods as substitutes–The expected return on money is not constant; however, r b – r m does stay constant as interest rates rise–Interest rates have little effect on the demand for moneyFriedman (cont’d)–The demand for money is stable–velocity is predictable–Money is the primary determinant of aggregate spendingChapter23：Transmission Mechanisms of Monetary Policy: The Evidence1.Framework(1)Structural Modelwhether one variable affects anotherTransmission mechanism–The change in the money supply affects interest rates–Interest rates affect investment spending–Investment spending is a component of aggregate spending (output) Advantages and Disadvantages(2)Reduced-FormAnalyzes the effect of changes in money supply on aggregate output (spending) to see if there is a high correlation Advantages and Disadvantages2.Transmission Mechanisms of Monetary Policy(1)Asset Price EffectsTraditional interest rate effectsExchange rate effects on net exports...(2)Credit ViewChapter24:Money and Inflation1.meaning of inflation(死活背下来)extremely high for a sustained period of time, its rate of money supply growth is also extremely highMoney Growth–High money growth produces high inflationFiscal Policy–Persistent high inflation cannot be driven by fiscal policy aloneSupply Shocks–Supply-side phenomena cannot be the source of persistent high inflation ?Conclusion: always a monetary phenomenon 2.Origins of Inflationary Monetary PolicyCost-push inflation–Cannot occur without monetary authorities pursuing an accommodating policy ?Demand-pull inflationBudget deficits–Can be the source only if the deficit is persistent and is financed by creating money rather than by issuing bondsTwo underlying reasons–Adherence of policymakers to a high employment target–Presence of persistent government budget deficits3.The Discretionary (Activist)/ Nondiscretionary (Nonactivist) Policy Debate（1）Advocates of discretionary policy：regard the self-correcting mechanism as slowPolicy lags slow activist policy（2）Advocates of nondiscretionary policy:believe government should not get involvedDiscretionary policy produces volatility in both the price level and output。
2、TheMarketForcesofSupplyandDemand
Key words
Perfect competition完全竞争 Price taker价格接受者 Law of demand（supply）需求（供给）法则 Income effect收入效应 Substitution effect替代效应 Quantity demanded （supplied）需求（供给） 量 Demanded schedule for an individual个人需求 表
All goods exactly the same可供销售的物品是完全相同的
Buyers & sellers so numerous that no one can affect market price – each is a “price taker”买者与卖者人数众多，以至于没有任何一个买 者或卖者可以影响市场价格，也就是说，每个人都是“价格接受者 ”
需求=愿意购买+能够购买 欲望是指人的需要，欲望是人类一切经济活动的 原动力。欲望产生需求。
一个人对什么都需要，但不是对什么都需求。
需求(demand)
光是制造出令人满意的肥皂还不够，还必须 诱导大家洗澡。
——约瑟夫.熊彼特 创造出口臭、体臭的概念。 制造需求
需求(demand)
价格
需
相关产品的价格：替代品、互补品
需求的因素有哪些？
What factors affect sellers’ supply of goods?影响卖者物品供给
的因素有哪些？
How do supply and demand determine the price of a good and the quantity sold?供给与需求怎么决定物品出售的价格与数量
Tsinghua_2005MBA_Lecture_02(Market Demand and Supply)(ppt 148页)(英文)
The supply curve shows graphically the quantity of good at each price, with which other factors that affect quantity supplied held constant. The supply curve is typically upward-sloping.
S
Curve Graphically
P2 P1
Chapter 1
The supply curve slopes upward demonstrating that
at higher prices firms will increase output
Q1
Q2
Quantity
Slide 18
Supply and Demand
buyers and potential buyers of a good.
The quantity demanded of a good is the amount
that buyers are willing to buy in some period(day or year, for example). Quantity demanded depends on the price of the good and on other factors, including the price of other goods and buyer’s incomes and tastes.
Demand function:
Q df(P ,P r,P e,I,F ,t,.....
Qd: Quantity demanded; P: Commodity price Pr: Relevant Commodity price; Pe: Commodity expected future price; I: Consumer income; F: Consumer preference; T: Time
Demand,Supply,andMarketEquilibrium：需求，供给，市场均衡
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d To o l sO’S u l liva n ,Sh e f f rin,Pe r ez6/e .1of 40Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d T o o l sO’S u l liva n , Sh e f f rin,Pe r ez6/e.2of 40Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. E Demand, Supply, andMarket Equilibriumc on o m ic s:P r inc ipl es ,App l icat ion s ,a n d T o o l sO’S u l liva n , Sh e f f rin, P e r ez6/e.3of 40F ERNANDO Q UIJANO, Y VONN Q UIJANO, AND X IAO X UAN X UP R E P A R E D B Y The price of vanilla is bouncing.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ip l es ,App l ica t ion s ,a n d T o o l sO’S u l liv a n ,Sh e f f rin ,Pe r ez6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium4of 40A P P L Y I N G T H E C O N C E P T S 12How do changes in demand affect prices?Hurricane Katrina and Baton Rouge Housing Prices How do changes in supply in one market affect other markets?Honey Bees and the Price of Ice Cream How does the adoption of new technology affect prices?Electricity from the WindHow do changes in supply affect prices?The Bouncing Price of Vanilla BeansHow do producers respond to higher prices?Drought in Australia and the Price of Rice345Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d T o o l sO’S u l liv a n , Sh e f f rin,Pe r ez6/e. C H A P T E R 4Demand, Supply , and Market Equilibrium DEMAND, SUPPLY, AND MARKET EQUILIBRIUM 5of 40●perfectly competitive market A market with so many buyers and sellers that no single buyer or seller can affect the market price.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. E c o n o m i cs:P r inc ipl es ,App l icat ion s ,a n d T o o l sO’S u l l iva n ,Sh e f f rin, Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 6of 40THE DEMAND CURVE 4.1●quantity demanded The amount of a product that consumers are willing and able to buy.●demand schedule A table that shows the relationship between the price of a product and the quantity demanded, ceteris paribus.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ip l es ,Ap p l ica t ion s ,a n d To o l sO ’S u l liva n ,Sh e f f rin ,Pe r ez6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium 7of 40THE DEMAND CURVE 4.1Here is a list of the variables that affect an individual consumer’sdecision, using the pizza market as an example:•The price of the product (for example, the price of a pizza)•The consumer’s income•The price of substitute goods (for example, the prices of tacos or sandwiches or other goods that can be consumed instead of pizza)•The price of complementary goods (for example, the price of lemonade or other goods consumed with pizza)•The consumer’s preferences or tastes and advertising that may influence preferences•The consumer’s expectations about future prices Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics :P r inc i pl es ,Ap p l icat io n s ,a n d T o o l sO ’S u l liva n , S h e f f rin,Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 8of 40THE DEMAND CURVE 4.1The Individual Demand Curve and the Law of Demand ●law of demand There is a negative relationship between price and quantity demanded, ceteris paribus .●change in quantity demanded A change in the quantity consumers are willing and able to buy when the price changes; represented graphically by movement along the demand curve.●individual demand curve A curve that shows the relationship between the price of a good and quantity demanded by an individual consumer, ceteris paribus .Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. E c o n o m i c s : P r i n c i p l e s ,App l icat ion s , a n d T o o l sO’S u l liva n ,S h e f f rin, Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 9of 40THE DEMAND CURVE 4.1The Individual Demand Curve and the Law of Demand FIGURE 4.1The Individual Demand Curve According to the law of demand, the higher the price, the smaller the quantity demanded, everything else being equal. Therefore, the demandcurve is negatively sloped: Whenthe price increases from $6 to $8, the quantity demanded decreases from seven pizzas per month (point c ) to four pizzas per month (point b ).Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. E c on o m ic s:P r in c ip l es ,Ap p l i cat ion s ,a n d To o l sO ’S u l liv a n ,Sh e f f rin ,P e r e z6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium 10of 40THE DEMAND CURVE 4.1From Individual Demand to Market Demand●market demand curve A curve showing the relationship between price and quantity demanded by all consumers, ceteris paribus .FIGURE 4.2From Individual toMarket DemandThe market demand equals the sum of the demands of all consumers. In this case, there are only two consumers, so at each pricethe market quantity demanded equals the quantity demanded by Al plus the quantity demanded by Bea. At a price of $8, Al’s quantity is four pizzas (point a ) andBea’s quantity is two pizzas(point b ), so the market quantity demanded is sixpizzas (point c ).Each consumer obeys thelaw of demand, so the marketdemand curve is negatively sloped.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ic s:P r in c ipl es ,App l icat io n s ,a n d T o o l sO’S u l li va n , S h e f f r in,P e r ez6/e. C H A P T E R 4Demand, Supply , and Market Equilibrium 11of 40THE SUPPLY CURVE 4.2Suppose you ask the manager of a firm, “How much of your product are you willing to produce and sell?” The manager’s decision about how much to produce depends on many variables, including the following, using pizza as an example:•The price of the product (for example, the price per pizza)•The wage paid to workers •The price of materials (for example, the price of dough and cheese)•The cost of capital (for example, the cost of a pizza oven)•The state of production technology (for example, the knowledge used in making pizza)•Producers’ expectations about future prices•T axes paid to the government or subsidies (payments from thegovernment to firms to produce a product)Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics :P r i nc ip l es ,App l icat ion s ,a n d T o o l sO’S u l liv a n ,Sh e f f rin, Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 12of 40THE SUPPLY CURVE 4.2The Individual Supply Curve and the Law of Supply ●supply schedule A table that shows the relationship between the price of a product and quantity supplied,ceteris paribus.●individual supply curve A curve showing the relationshipbetween price and quantity supplied by asingle firm,ceteris paribus.●quantity supplied The amount of a product that firms are willing and able to sell.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l ic at io n s , a n d T o o l sO’S u l liva n ,S h e f f rin,Pe r ez6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium 13of 40THE SUPPLY CURVE 4.2The Individual Supply Curve and the Law of Supply FIGURE 4.3The Individual Supply Curve The supply curve of an individual supplier is positively sloped, reflecting the law of supply. As shown by point a , the quantitysupplied is zero at a price of $2, indicating that the minimum supply price is just above $2. An increase in price increases the quantity supplied to 100 pizzas ata price of $4, to 200 pizzas at aprice of $6, and so on.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ic s:P r inc ipl es ,App l i cat io n s , a n d T o o l sO’S u l liv a n , Sh e f f rin,Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 14of 40THE SUPPLY CURVE 4.2The Individual Supply Curve and the Law of Supply ●law of supply There is a positive relationship between price and quantity supplied,ceteris paribus.●change in quantity supplied A change in the quantity firms are willing and able to sell when the price changes; represented graphically by movement along the supply curve.●minimum supply price The lowest price at which a product will be supplied.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,Ap p l ic at io n s ,a n d T o o l sO’S u l liva n ,Sh e f f rin , Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 15of 40THE SUPPLY CURVE 4.2Why Is the Individual Supply Curve Positively Sloped?From Individual Supply to Market Supply ●market supply curveA curve showing the relationshipbetween the market price and quantitysupplied by all firms, ceteris paribus.M A R G I N A L P R I N C I P L EIncrease the level of an activity as long as its marginal benefit exceeds its marginal cost. Choose the level at which the marginal benefit equals the marginal cost.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d To o l sO ’S u l liv a n ,Sh e f f r in,P e r ez6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium 16of 40THE SUPPLY CURVE 4.2From Individual Supply to Market Supply ②FIGURE 4.4From Individual to Market SupplyThe market supply is the sum of the supplies of all firms. In Panel A, Lola is a low-costproducer who produces the first pizza once the price rises above $2 (shown by point a ).In Panel B, Hiram is a high-cost producer who doesn’t produce pizza until the price rises above $6 (shown by point f ).To draw the market supply curve, we sum the individual supply curves horizontally. At a price of $8, market supply is 400 pizzas (point m ), equal to 300 from Lola (point d ) plus 100from Hiram (point g ).Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es , Ap p l ic at io n s ,a n d T o o l sO ’S u l liva n , S h e f f rin,Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 17of 40THE SUPPLY CURVE 4.2From Individual Supply to Market Supply ④FIGURE 4.5The Market Supply Curve with Many Firms The market supply is the sum of the supplies of all firms. The minimum supply price is $2 (point a ), and the quantity supplied increases by 10,000 for each $2 increase in price to 10,000 at a price of $4(point b ), to 20,000 at aprice of $6 (point c ), and soon.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l ica t ion s ,a n d T o o l sO’S u l liva n ,Sh e f f rin, Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 18of 40THE SUPPLY CURVE 4.2Why Is the Market Supply Curve Positively Sloped?T o explain the positive slope, consider the two responses by firms to an increase in price:•Individual firm.As we saw earlier, a higher price encourages a firm to increase its output by purchasing more materials and hiring more workers.•New firms.In the long run, new firms can enter the market and existing firms can expand their production facilities to produce more output.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics :P r inc i pl es ,App l ica t ion s ,a n d T o o l sO’S u l liv a n ,Sh e f f rin,Pe r ez6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium 19of 40MARKET EQUILIBRIUM: BRINGING DEMAND AND SUPPLY TOGETHER 4.3Excess Demand Causes the Price to Rise●excess demand (shortage)A situation in which, at the prevailing price, the quantity demanded exceedsthe quantity supplied.Excess Supply Causes the Price to Drop●excess supply (surplus)A situation in which the quantity suppliedexceeds the quantity demanded at the prevailing price.●market equilibrium A situation in which the quantity demanded equals the quantity supplied at the prevailing market price.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es , Ap p l ic at io n s , a n d T o o l sO’S u l liva n , S h e f f rin,Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 20of 40MARKET EQUILIBRIUM: BRINGING DEMAND AND SUPPLY TOGETHER 4.3 FIGURE 4.6Market Equilibrium At the market equilibrium (point a , with price = $8 and quantity = 30,000), the quantity supplied equals the quantity demanded.At a price below the equilibrium price ($6), there is excess demand —the quantity demanded at point c exceeds the quantity supplied at point b .At a price above the equilibriumprice ($12), there is excesssupply —the quantity supplied atpoint e exceeds the quantitydemanded at point d .Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. E c o n o m i c s : P r i n c i p l e s ,Ap p l ic at i on s ,a n d T o o l sO ’S u l liv a n ,Sh e f f rin , P e r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 21of 40MARKET EFFECTS OF CHANGES IN DEMAND 4.4Change in Quantity Demanded versus Change in Demand FIGURE 4.7Change in Quantity Demanded versus Change in Demand●change in demandA shift of the demand curve caused by a change ina variable other than the price of the product.(A) A change in price causes a change in quantity demanded, amovement along a single demand curve.For example, a decrease in price causes a move from point a to point b , increasing the quantity demanded.(B) A change in demandcaused by changes in avariable other than the price of the good shiftsthe entire demandcurve. For example, an increase in demandshifts the demand curve from D to D .Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ic s:P r inc ipl es ,Ap p l i cat i on s , a n d To o l sO ’S u l liva n ,S h e f f rin,Pe r ez6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium 22of 40MARKET EFFECTS OF CHANGES IN DEMAND 4.4Increases in Demand Shift the Demand Curve ●normal good A good for which an increase in income increases demand.●inferior goodA good for which an increase in incomedecreases demand.●substitutesTwo goods for which an increase in theprice of one good increases the demandfor the other good.●complements Two goods for which a decrease in the price of one good increases the demandfor the other good.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d T o o l sO’S u l liva n , Sh e f f rin,Pe r ez6/e. C H A P T E R 4Demand, Supply , and Market Equilibrium 23of 40MARKET EFFECTS OF CHANGES IN DEMAND 4.4Increases in Demand Shift the Demand Curve Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. E c o n o m i c s : P r i n c i p l e s ,Ap p l i cat ion s ,a n d T o o l sO ’S u l liv a n ,S h e f f rin, Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 24of 40MARKET EFFECTS OF CHANGES IN DEMAND 4.4Increases in Demand Shift the Demand Curve FIGURE 4.8An Increase in Demand Increases the Equilibrium PriceAn increase in demand shifts thedemand curve to the right: At each price, the quantitydemanded increases.At the initial price ($8), there is excess demand, with the quantity demanded (point b ) exceeding the quantity supplied (point a ).The excess demand causes the price to rise, and equilibrium isrestored at point c .To summarize, the increase in demand increases the equilibriumprice to $10 and increases theequilibrium quantity to 40,000pizzas.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ic s:P r in c ipl es , Ap p l ic at io n s ,a n d T o o l sO ’S u l liva n ,S h e f f rin,Pe r ez6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium 25of 40MARKET EFFECTS OF CHANGES IN DEMAND 4.4Decreases in Demand Shift the Demand Curve ④FIGURE 4.9A Decrease in Demand Decreases the Equilibrium PriceA decrease in demand shifts the demand curve to the left: At each price, the quantitydemanded decreases. At the initial price ($8), there is excess supply, with the quantitysupplied (point a ) exceeding the quantity demanded (point b ).The excess supply causes theprice to drop, and equilibrium isrestored at point c .To summarize, the decrease in demand decreases theequilibrium price to $6 and decreases the equilibriumquantity to 20,000 pizzas.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d T o o l sO’S u l liva n , Sh e f f r i n , P e r e z6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 26of 40MARKET EFFECTS OF CHANGES IN DEMAND 4.4Decreases in Demand Shift the Demand Curve Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. E c o n o m i c s : P r i n c i p l e s ,App l icat ion s ,a n d T o o l sO ’S u l liva n , Sh e f f rin, Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 27of 40MARKET EFFECTS OF CHANGES IN SUPPLY 4.5Change in Quantity Supplied versus Change in Supply ②FIGURE 4.10Change in Quantity Supplied versus Change in Supply (A) A change in price causes a change in quantity supplied, a movement along a single supplycurve. For example, an increase in price causes a move from point a to point b .(B) A change in supply (caused by a change in something other than the price of the product) shifts the entire supply curve. For example, an increase in supply shifts the supply curve from Sto S. For any given price (for example, $6), a larger quantity is supplied (25,000 pizzas at point c instead of 20,000 at point a ). The price required to generate any given quantity decreases. For example, the price required to generate 20,000 pizzas drops from $6 (point a ) to $5 (point d ).Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d To o l sO’S u l liva n ,Sh e f f rin,Pe r ez6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium 28of 40MARKET EFFECTS OF CHANGES IN SUPPLY 4.5Increases in Supply Shift the Supply Curve Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ic s:P r in c ipl es , Ap p l ic at io n s ,a n d T o o l sO ’S u l liva n , S h e f f rin,Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 29of 40MARKET EFFECTS OF CHANGES IN SUPPLY 4.5An Increase in Supply Decreases the Equilibrium Price FIGURE 4.11An Increase in Supply Decreases the Equilibrium Price An increase in supply shifts the supply curve to the right: At each price, the quantity supplied increases. At the initial price ($8), there is excess supply, with the quantity supplied (point b ) exceeding the quantity demanded (point a ). The excess supply causesthe price to drop, andequilibrium is restored at pointc .To summarize, the increase in supply decreases theequilibrium price to $6 and increases the equilibriumquantity to 36,000 pizzas.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d T o o l sO’S u l liva n ,Sh e f f rin, Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 30of 40MARKET EFFECTS OF CHANGES IN SUPPLY 4.5Decreases in Supply Shift the Supply CurveCopyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ic s:P r in c ipl es , Ap p l ic at io n s ,a n d T o o l sO ’S u l liva n ,S h e f f rin,Pe r ez6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium 31of 40MARKET EFFECTS OF CHANGES IN SUPPLY 4.5A Decrease in Supply Increases the Equilibrium Price ④FIGURE 4.12A Decrease in Supply Increases the Equilibrium Price A decrease in supply shifts the supply curve to the left. At each price, the quantity supplied decreases. At the initial price ($8), there is excess demand, with the quantity demanded (point a ) exceeding the quantity supplied (point b ). The excess demandcauses the price to rise, andequilibrium is restored at pointc .To summarize, the decrease in supply increases theequilibrium price to $8 and decreases the equilibrium quantity to 24,000 pizzas.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d T o o l sO’S u l liv a n , Sh e f f rin,Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 32of 40MARKET EFFECTS OF CHANGES IN SUPPLY 4.5Simultaneous Changes in Demand and Supply ②FIGURE 4.13Market Effects of Simultaneous Changes in Demand and Supply (A) Larger increase in demand. If the increase in demand is larger than the increase in supply (if the shift of the demand curve is larger than the shift of the supply curve), both the equilibrium price and the equilibrium quantity will increase.(B) Larger increase in supply. If the increase in supply is larger than the increase in demand (if the shift of the supply curve is larger than the shift of the demand curve), the equilibrium price willdecrease and the equilibrium quantity will increase.Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d T o o l sO’S u l liva n ,Sh e f f rin, Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 33of 40PREDICTING AND EXPLAINING MARKET CHANGES 4.6Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l icat ion s ,a n d To o l sO’S u l liv a n , Sh e f f rin,Pe r ez6/e . C H A P T E R 4Demand, Supply , andMarket Equilibrium 34of 40APPLICATIONS OF DEMAND AND SUPPLY 4.7We can apply what we’ve learned about demand and supply to realmarkets. We can use the model of demand and supply to predictthe effects of various events on equilibrium prices and quantities. We can also explain some observed changes in equilibrium prices and quantities. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Ec on o m ics:P r inc ipl es ,App l ica t ion s ,a n d T o o l sO’S u l liva n , S h e f f rin, Pe r ez6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 35of 40HURRICANE KA TRINA AND BA TON ROUGE HOUSING PRICES APPLYING THE CONCEPTS #1: How do changes in demand affect prices?④FIGURE 4.14Hurricane Katrina and Housing in Baton Rouge An increase in the population of Baton Rouge increases thedemand for housing, shifting the demand curve to right.The equilibrium price increases from $130,000 (point a ) to $156,000 (point b ) A P P L I C A T I O N 1Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. E c o n o m i c s : P r i nc ipl es ,Ap p l ica t ion s ,a n d T o o l sO’S u l liva n ,Sh e f f rin, P e r e z6/e. C H A P T E R 4Demand, Supply , andMarket Equilibrium 36of 40②FIGURE 4.15Honeybees and the Price of Ice Cream HONEYBEES AND THE PRICE OF ICE CREAMAPPLYING THE CONCEPTS #2: How do changes in supply inone market affect other markets?A decrease in pollination by bees decreases the output of fruit andnuts, increasing the prices of some ingredients for ice cream. The resulting increase in the cost of producing ice cream shifts the supply curve upward, increasingthe equilibrium price and decreasing the equilibrium quantity.A P P L I C A T I O N 2。
Unit two demand and supply
Part one basic concepts and theories
1.
How are prices determined? Prices are determined by the choices and decisions made by consumers and producers . Price mechanism: the process by which prices rise and fall as a result of changes in demand and supply Law of demand: Buyers are likely to buy more of an item as the price falls. Law of supply: Sellers would like to sell more as prices rise.
3.when analyzing how some event affect a market, we proceed in three steps. First, we decide whether the event shifts the supply curve, the demand curve, or , in some cases, both curves. Second, we decide whether the curve shifts to the right or left. Third, we use the supply-andsupply-anddemand diagram to examine how the shift affects the equilibrium.
经济学原理 曼昆第七版第四讲讲义：Supply and Demand PPT
• What are the long-run perspectives of Chinese real estate markets?
The Market Mechanism
– Price; market equilibrium; efficiency
Markets and Competition
• Supply and demand
– Words economists use most often – The forces that make market economies
大家有疑问的，可以询问和交流
可以互相讨论下，但要小
Markets and Competition
• Monopoly
– The only seller in the market – Sets the price
• Other markets
– Between perfect competition and monopoly
Chapter 4 Supply and Demand
Fall 2017
Questions
• If you are making real estate investment decisions, how would you predict the effect of the policy changes?
• The “indivisible hand”
– No single individual or organization or government is responsible for solving the economic problems in a market economy