KINH TẾ VI MÔ Chapter 2 for student

Chapter DEMAND AND SUPPLY Content + Demand
+ Supply
+ Market equilibrium
I Demand Definitions
The law of demand
Demonstrating demand
Determinants in demand function
Movement and shift of demand curve
I Demand Definitions - Demand (D): The quantity of goods and services that consumer is willing to buy and afford to buy at various price level in a certain time, ceteris paribus - Quantity demanded (QD): The quantity of goods and services that consumer is willing to buy and afford to buy at a price level in a certain time, ceteris paribus - Individual demand - Market demand
I Demand The law of demand P QD P QD
I Demand Demonstrating demand - Demand schedule - Demand curve - Demand function P = - aQD + b QD = - aP + b QD = f (Px, Py, I, T, E, N)
P A P1 P2 B Q1 Q2 Q I Demand Determinants in demand function 4.1 Price of related goods (PY) - Substitutes goods: A and B are substitutes if the usage of A can be replaced by the usage of B, provided that the initial consumption target is unchanged I Demand Determinants in demand function 4.1 Price of related goods (PY) - Complements goods: A and B are complements if the usage of A must go together with the usage of B to ensure the initial utility of both goods I Demand Determinants in demand function 4.2 Income of consumer (I) I QD Normal goods QD I I QD Inferior goods I QD I Demand Determinants in demand function 4.2 Income of consumer (I) - Engel curve: Attitude I toward any goods depends on buyer’s income, not on goods’ quality Q I Demand Determinants in demand function 4.3 Taste of consumer (T) 4.4 Expectation of consumer (E) 4.5 Number of consumer (N)
I Demand Movement and shift of the demand curve - Movement: PX - Shift: The rest determinants P P Q Q Question Chicken and fish are substitutes goods a The decrease in chicken’s price causes a movement in fish’s demand curve b The increase in chicken’s price causes a left shift in fish’s demand curve  II Supply Definitions
The law of supply
Demonstrating supply
Determinants in supply function
Movement and shift of supply curve
II Supply Definitions Supply (S): The quantity of goods and services that supplier is willing to supply and able to supply at various price level in a certain time, ceteris paribus - Quantity supplied (QS): The quantity of goods and services that supplier is willing to supply and able to supply at a price level in a certain time, ceteris paribus - Individual’s supply (firm’s supply) - Market supply
II Supply The law of supply P QS P QS
II Supply Demonstrating supply - Supply schedule P - Supply curve P - Supply function P = aQS + b P QS=aP + b QS = f (Px, Pi, G, Te, E, N) Q  1 Q2 Q II Supply Determinants in supply function 4.1 Price of inputs (Pi) Pi Pi C C Profit QS Profit QS 4.2 Government’s policies 4.3 Technology 4.4 Expectation 4.5 Number of supplier
II Supply Movement and shift of the supply curve - Movement: PX: - Shift: The rest determinants P P S S1 -
Q Q III Market equilibrium Equilibrium status
Surplus and shortage
Price controlling
10 III Market equilibrium Equilibrium status - Status in which quantity demanded equals to quantity supplied - - Merger demand schedule and supply schedule P S PE E D P = -aQD + b P = cQS + d E (PE, QE) QE Q - Intersection of (S) and (D) -
III Market equilibrium Surplus and shortage - Shortage + P2 < PE + QS < QD => shortage + Appear market’s pressure to make P2 return to the equilibrium price PE QE Shortage 11 III Market equilibrium Surplus and shortage - Surplus: + P1 > PE P1 + QS > QD => surplus PE + Appear market’s pressure to make P2 return to the equilibrium price  QE Surplus III Market equilibrium Price controlling - Controlled by the Government - Ceiling price (PC) + The highest price allowed in the market + For the sake of buyer + Appear shortage + Government’s responsibility PE E QE 12 III Market equilibrium Price controlling - Floor price (PF) + The lowest price allowed in the market PE + For the sake of supplier + Appear surplus + Government’s responsibility QE 13 ... goods and services that consumer is willing to buy and afford to buy at various price level in a certain time, ceteris paribus - Quantity demanded (QD): The quantity of goods and services that... P1 P2 B Q1 Q2 Q I Demand Determinants in demand function 4.1 Price of related goods (PY) - Substitutes goods: A and B are substitutes if the usage of A can be replaced by the usage of B, provided... of goods and services that consumer is willing to buy and afford to buy at a price level in a certain time, ceteris paribus - Individual demand - Market demand
I Demand The law of demand P QD