1 / 17

Lecture 3

Lecture 3. Reading: Chapter 4 and part of Chapter 5. Let us think of price for a moment.

jin-garrison
Télécharger la présentation

Lecture 3

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Lecture 3 Reading: Chapter 4 and part of Chapter 5

  2. Let us think of price for a moment • Quantitify objects – height, weight, distance, price tag, price resulted from auction, gross national product, (average) wage level, (general) price level, (national) income level • (1) use market force to affect price • (2) use price to analyze the market • Former: auction, prices rise after hurricane • Latter: focusing on D and S curves

  3. Market demand; market supply • Price system • Qd := F(P, income, other prices, health, status, religion, …)use a functional form to describe the behavioral assumption how about quantities of other goods demanded? • Qs := G(P, input prices, prices of other products, technology, market conditions, business environment, …) how about quantities of other goods supplied? • Qd := f(P) and Qs := g(P) mkt demand; mkt supply • Why Q-P not P-Q?

  4. Two ways of interpreting curves (see board) • Starting at some price -- go horizontally • Starting at some level -- go vertically • Market equilibrium • Excess demand • Excess supply • soon: slope, change in percentage, elasticity

  5. An example of Critical thinking • What is wrong with discussion on pp.70-71? • Two ways to reduce the quantity of smoking demanded • (1) warning on pack; 公益廣告shift D inward • (2) tax – move along D upward

  6. Incorporating (加入) the supply curve • individual supply curve and individual demand curve?Individual equilibrium? • market supply curve and market demand curve • market equilibrium (Qx*, Px*) 均衡交易量與價格 市場供給函數market supply function, 以h表示 Qx := h(Px) 市場需求函數market demand function, 以f表示 Qx := f(Px) • Intersection (相交) of two curves on Qx-Px space

  7. example • market demand curve Qx = a + bPx (略上標d ) • market supply curve Qx = c + dPx (略上標s ) • 如何對參數a, b, c, and d 施以最小的限制，保證存在唯一且有意義之市場均衡？ • Hint: 應確保Qx* 與Px* 為正; 注意曲線與兩軸之交點 (依序作圖 見黑板)

  8. solving; characterizing (see board) • Meaning of (market) equilibrium (市場均衡的意義) • Key:quantity demanded equals quantity supplied 由a + bPx = c + dPx解得Px = (a - c)/(d - b) > 0 (why?) 代入任一式，知 Qx = a + b[(a - c)/(d - b)] = [(ad - ab) + (ab - bc)]/(d - b) = (ad - bc)/(d - b). [討論正負] Note: • b < 0 (to satisfy law of demand) • d > 0 (to satisfy law of supply) • d - b > 0 for sure; c < 0 (why?); a > 0 (why?) [hence a - c > 0] • ad > bc (to make px* and Qx* positive)

  9. 自我練習題 market demand curve Px = a + bQx market supply curve Px = c + dQx 如何對參數a, b, c, and d 施以最小的限制，保證存在唯一且有意義之市場均衡？也求出消費者剩餘 market demand function f(Px) = a - bPx market supply function h(Px) = -c + dPx 如何對參數a, b, c, and d 施以最小的限制，保證存在唯一且有意義之市場均衡？也求出消費者剩餘

  10. Consumers’ surplus and producers’ surplus • Also see the first few pages in Ch.7 • Recall our “vertical view” • Willingness to pay; willingness to produce (slide no.4) • Graphical illustration (below) 課堂顯示

  11. 針對市場需求對商品分類 (also see Ch.4) recall slide no.3 • Qd := F(P1, income, P2, health, status, religion,…) (-) (+) (-) (0) (+) (-) (0) (+) Find examples!

  12. 針對市場需求對商品分類 (continued) • Qd := F(P1, income, P2, health, status, religion,…) (-) law of demand (+) normal good (-) inferior good (0) neutral good (+) both are substitutes (-) both are complements (0) e.g.? (+) Giffen good Economic intuition?

  13. On demand curve: slope and elasticity • consider: Q = 10 - P slope 為-1最簡例子 • 繪圖標示 (0, 10), (10, 0), (5, 5), (6, 4), (4, 6) 需求量變化之比例/價格變化之比例？

  14. Elasticity: Misunderstanding • P Q text:(DQ/Q)/(DP/P) = [(Q1 - Q0)/Q0]/[(P1 - P0)/P0] ? • 10 0 • 0 10 • 5 5 elasticity is • 4 6 elasticity is • 6 4

  15. slope and elasticity (續) • 由(4, 6)到(5, 5) DP = 5 - 6 = -1, DQ = 5 - 4 = 1 DP/P = -1/6, DQ/Q = 1/4 (DQ/Q)/(DP/P) = -3/2 < -1 彈性？not yet • 由(5, 5)到(6, 4) DP = 4 - 5 = -1, DQ = 6 - 5 = 1 DP/P = -1/5, DQ/Q = 1/5 (DQ/Q)/(DP/P) = -1 • 由(6, 4)到(5, 5) DP = 5 - 4 = 1, DQ = 5 - 6 = -1 DP/P = 1/4, DQ/Q = -1/6 (DQ/Q)/(DP/P) = -2/3 > -1 心得?

  16. slope and elasticity (續) • 由(Qo, Po)到(Q1, P1) -- 變化後紅色 DP := P1 - Po, DQ := Q1 - Qo (DQ/Q)/(DP/P) = [(Q1 - Qo)/Qo]/[(P1 - Po)/Po] = [(Q1 - Qo)/(P1 - Po)][Po/Qo] (曲線斜率之倒數)(Po/Qo) if it is a straight line (limit of DQ/DP)/(Po/Qo) if it is not a straight line微分 這才是 point elasticity 之由來與定義 係針對(Qo, Po)進行評估

  17. Midterm exam info • Ch.1 to Ch.5 plus everything covered during lectures • Next Monday, April 25, 2005, 1:30 pm – 2:45 pm • Open books/notes exam • Can bring anything in hard copy with you • Borrowing items is strictly prohibited • Lecture notes will be uploaded on web site by April 19.

More Related