Bài giảng kinh tế vi mô microeconomics

Chapter 1: Preliminaries Slide 6Preliminaries  Microeconomics deals with:  Behavior of individual units When Producing • How we choose what to produce... Chapter 1: Preliminaries Slid

Chapter 1

Preliminaries

Chapter 1: Preliminaries Slide 2

Micro versus Macroeconomics

What is the difference between micro and macro

economics?

 Microeconomics: behavior of individual economic units like consumers, producers, landowners,

families, etc How and why do they make the

decisions they make?

 Macroeconomics: analyzes how the entire national economy performs It analyzes unemployment,

inflation, price levels, interest rates (many things we take as given in microeconomics).

 Microeconomics deals with:

 Behavior of individual units

When Consuming

• How we choose what to buy

Chapter 1: Preliminaries Slide 6

Preliminaries

 Microeconomics deals with:

 Behavior of individual units

When Producing

• How we choose what to produce

 Microeconomics deals with:

 Markets: The interaction of consumers and producers

Chapter 1: Preliminaries Slide 8

Preliminaries

 Macroeconomics deals with:

 Analysis of aggregate issues:

Economic growth

Inflation

Unemployment

Chapter 1: Preliminaries Slide 10

The Themes of Microeconomics

The Themes of Microeconomics

 Microeconomics and Optimal Trade-offs

1 Consumer Theory

2 Workers

3 Theory of the Firm

Chapter 1: Preliminaries Slide 12

The Themes of Microeconomics

 Microeconomics and Prices

 The role of prices in a market economy

 How prices are determined

Theories and Models

 Microeconomic Analysis

 Theories are used to explain observed phenomena in terms of a set of basic rules and assumptions

 For example

The Theory of the Firm

The Theory of Consumer Behavior

Chapter 1: Preliminaries Slide 14

Theories and Models

 Microeconomic Analysis

 Models:

 a mathematical representation of a theory used to make a prediction

Theories and Models

Chapter 1: Preliminaries Slide 16

Theories and Models

 Microeconomic Analysis

 Evolving the Theory

Testing and refining theories is central to the development of the science of

economics

Chapter 1: Preliminaries Slide 18

trade-What is a Market?

 Markets

 A geographically defined area where buyers and sellers interact to determine the price of a product or a set of products

Chapter 1: Preliminaries Slide 20

What is a Market?

 Markets vs Industries

 Industries are the supply side of the market

What is a Market?

 Defining the Market

 The market parameters must be set before

an analysis of the market can take place

Chapter 1: Preliminaries Slide 22

What is a Market?

 Arbitrage

 Buying a product at a low price in one location and selling at a high price in another

Example: Most agricultural markets

Chapter 1: Preliminaries Slide 24

What is a Market?

 Market Price

 Competitive markets establish one price

 Noncompetitive markets may set many prices for the same product

Chapter 1: Preliminaries Slide 26

Chapter 1: Preliminaries Slide 28

What is a Market?

 Examples

 Range of Products

 Gasoline: regular, super, & diesel

 Cameras: SLR’s, point & shoot, digital

Chapter 1: Preliminaries Slide 30

What is a Market?

 Examples

 Markets for Prescription Drugs

 Well-defined markets - therapeutic drugs

 Ambiguous markets - painkillers

Real Versus Nominal Prices

 Nominal price is the absolute or current

dollar price of a good or service when it

is sold.

 Real price is the price relative to an

aggregate measure of prices or

constant dollar price.

Chapter 1: Preliminaries Slide 32

Why Study Microeconomics?

 Microeconomic concepts are used by everyone to assist them in making

choices as consumers and producers.

Why Study Microeconomics?

 Two Examples

 Ford and the development of its SUV’s

 Public Policy Design

Automobile emission standards for the 21st century

Chapter 1: Preliminaries Slide 34

Why Study Microeconomics?

 Ford and the development of its SUV’s

 Questions

Consumer acceptance and demand

Production cost

Pricing strategy

Why Study Microeconomics?

 Ford and the development of its SUV’s

 Questions

Risk analysis

Organizational decisions

Government regulation

Chapter 1: Preliminaries Slide 36

Why Study Microeconomics?

 Auto emission standards for the 21st century

 Questions

Impact on consumers

Impact on producers

How to enforce the standards

What are the benefits and costs?

Chapter 1: Preliminaries Slide 38

Summary

 Microeconomics is concerned with

positive questions and normative analysis.

 A market refers to a collection of buyers

and sellers who interact and to the possibility for sales and purchases that results from that interaction.

Chapter 1: Preliminaries Slide 40

 The study of how people make choices under conditions of scarcity and of the results of those choices for society.

 In a market system, allocation of

resources occur via the price system, incomes and preferences

Rationality assumption and

The Incentive Principle

 People have goals and try to fulfill them

as best as they can.

 The Incentive Principle: An agent

(person, firm or society) is more likely to take an action if its benefit rises, and

less likely to take it if its cost rises

Incentives matter in our analysis of behavior and in designing economic policies

The Cost-Benefit Principle

 An individual (or a firm or a society) should take

an action if, and only if, the extra benefits from taking the action are at least as great as the

instruction = C(x)

Some relevant costs:

 Faculty salary: $90,000 per course

 Per student faculty salary cost:

 1 section: $90,000/300 = $300

 12 sections: $90,000/25 = $3600

Optimal class size

 Observations

 The “best” class from an economic point of

view will generally not be the same as the

“best” size from the point of view of an

educational psychologist

 People will feel differently about the value

of smaller classes

Benefits and costs

 Benefit of increasing class size from 25 students to 300 students = ($3600 -

Chapter 1: Preliminaries Slide 48

Optimal class size

 Who will opt for smaller classes:

 Those who value smaller classes more.

 Those who are less financially constrained.

 Observations:

 We have colleges of different class size.

 Colleges of smaller class size generally charge higher tuition fees.

Example 1.1

Should I turn down my

stereo?

listening to your stereo when you realize that the next two tracks on the album are ones you dislike

control, you would have programmed them not to play

up and turn the music down, or to stay put and wait it out.

Example 1.1

Should I turn down my stereo?

Suppose C(x) = $1.00 = the minimum amount it would take to get you out of your chair

B(x) = the maximum you would be willing to pay someone to turn down the volume

If B(x) > $1, then turn your stereo down by

yourself

If B(x) < $1, then don't

The Cost-Benefit Principle

should take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs.

object that people don’t really calculate costs and benefits when deciding what to do.