Chapter 2 The Price SystemWord下载.docx

Chapter 2 The Price SystemWord下载.docx

《Chapter 2 The Price SystemWord下载.docx》由会员分享，可在线阅读，更多相关《Chapter 2 The Price SystemWord下载.docx（30页珍藏版）》请在冰豆网上搜索。

IndividualDemand&

Marketdemand

•Theindividualdemandistherelationshipbetweenthequantitydemandedbyasinglebuyeranditsprices

•Themarketdemandistherelationshipbetweenthetotalquantitydemandedbyallconsumersinthemarketanditsprice.

Themarketdemandcurveisthehorizontalsumoftheindividualdemandcurves!

ChangesinQuantityDemanded&

ChangesinDemand

•Changesinquantitydemandedresultinmovementalongthedemandcurvedueachangeinpricewhileotherfactorsremainconstant.（upward/downwardmovement）CeterisParabus!

!

•Changeindemandistheshiftofthedemandcurvedueachangeinotherfactorswhilepriceremainsconstant.（leftward/rightwardshift）

•OtherFactorsthatinfluencedemand

•Thefinancialabilitytopay

•Effectivedemand

•Ourattitudestotheproductitself

•Psychological

•Speculativedemand

•Theprice,availabilityandattractivenessofrelatedproducts

•Substitutegoods,complementarygoods,jointdemand

ShiftsinTheDemandCurve

•Wehaveseenthatachangeinthepriceofanormalgoodwillcauseachangeinthequantitydemanded

•Buttherearethingsotherthanpricethatinfluencedemandforaproduct

•What?

•ChangeinDemand

•Ashiftinthedemandcurveeithertotheleftorrightcausedbyanychangesthataltersthequantitydemandedateveryprice.Suchas:

•Income

•Pricesofrelatedgoods

•Tastes

•Expectations

•Numberofbuyers

ChangesinConsumerIncome

•Goodscanbeclassifiedintotwobroadcategories:

▪Normalgoods:

thedemandincreaseswhenincomeincreasesanddecreaseswhenincomedecreases

▪Inferiorgoods:

thedemanddecreaseswhenincomeincreasesandincreaseswhenincomedecreases

•Thinkofsomeexamplesofnormalgoodsandinferiorgoods

•Normal

•Smoothies/FreshJuice

•LevisJeans

•Taxis

•BusinessClassairfares?

•Inferior

•Supermarketownbrandgoods

•PublicTransport

•InstantNoodles

•SecondHandcars

•Economyclassairfares?

•Payasyougo,Mobilephones?

•TinnedFood?

ChangesinPriceofRelatedGood

（i）SubstituteGoods

-Aproductthatcanbeusedinplaceofanotherproduct

-Achangeinthepriceofsubstituteproductsaffectthedemandfortheproductinthesamedirectioninwhichthepricechange.

-E.g:

teavscoffee;

abusridevsanLRTride

（Pcoffee↑Qddcoffee↓DDtea↑）

•ChangesinPriceofRelatedGood

（ii）ComplementaryGoods

-Aproductthatisusedinconjunctionwithanotherproduct.

-Thechangeinthepriceofacomplementaryproductaffectsthedemandfortheproductintheoppositedirectiontothechangeprice.

adiskandcomputer,penandink.

（Ppen↑Qddpen↓DDink↓）

Taste&

Preference

–Tastesandpreferencesofconsumerschangesignificantly.

–Ifaproductbecomemorefashionable,thedemandforitwillincreaseandifthesameproductbecomesoutdated,thedemandforitwillfall.

–E.g:

Changesinmusic,apparelorrecreation.

Expectations

–Thehighertheexpectedfuturepriceofaproduct,thehigherthecurrentdemandforthatproductandviceversa.

Whenthegovernmentplanstoincreasethepriceofsugarthefollowingweek,thedemandforsugarwillimmediatelyincrease.

PopulationorNumberofBuyers

–Alargerpopulationwithahighrateofgrowthcreatesgreaterdemandforgoodsandservices.

AnincreaseinthepopulationofUTARwouldincreasethedemandforhouses,F&

B,andothergoodsandservices.

ExceptionstotheLawofdemand

•VeblinGoods

•OstentatiousGoods/

•Snobaffect

•Conspicuousconsumption

•FerrariCars

•RolexWatches

•VanGoghPainting!

•Diamonds

•Ifthepricewaslowpeoplewouldbuyless?

•Arethesegoodsmuchdifferentfromothergoods?

•GiffenGoods

•TheoreticalModel,basedonIrishPotatofamine

•Duringthefaminethepeoplesstaple（main）dietwaspotatoes!

Theycouldaffordalittlemeatbutmainlyatepotatoes.Asthefaminehit,thepriceofpotatoeswentup,therewerenosubstitutes!

Theystoppedbuyinganymeatandboughtmorepotatoes,despitethepricebeinghigherthanbefore!

Goods

•SubstituteGoods:

Productsthatgivepossiblealternativesforconsumers

•Complementarygoods:

Twogoodsforwhichthequantitydemandedofoneisnegativelyrelatedtothepriceoftheother

•Normalgood:

Agoodwherethequantitydemandedincreasesasincomeincreases

•Inferiorgood:

Agoodwhosedemandfallsasincomeincreases

DerivedDemand

•Demandaproductusedtomakeanotherproduct

•i.e.Demandforlabour

•Wherethedemandforonegoodisdependentonthedemandforanotherrelatedgood

•Constructionindustry–demandfornewofficeconstruction–demandforofficespace

•Demandforconstructionworkers–demandforconstructionwork

•Factormarkets–deriveddemand

•Thinkofsomederiveddemandforthefollowing

•Wheat–fertilizer,water…

•Cars–acetylene,paint,tyres…

JointDemand（compliments）

•Thedemandforonewilldirectlyaffectthedemandfortheother

∙I.e.Shoesandshoelaces,CD’sandCDplayers

CompositeDemand

•Appliestoproductswhichareusedformorethanonepurpose

∙I.e.Maizecanbeafoodorbio-fuel.Increasedharvestingforbio-fuelwillleadtoapriceincreaseforfoodstuff

•Wheregoodshavemorethanoneuse–anincreaseinthedemandforoneleadstoafallinsupplyoftheother

•Milk–usedforcheese,yoghurts,cream,butter,gasoline,oil,plastic,nylonetc.

•Land,ifyouusemorelandforfarmingthereislesslandforfactoriesetc.

•Ifmoremilkisusedforcheese,ceterisparibusthereislessavailableforbutter

•CowsareREALLYuseful.

•Youcanusethemformilk,leather,art,ridingorBEEF.

•Youcan’tdothisallatonce

•DONOTTRYTOMILKAMOVINGCOW

•Byusingcowsforonepurpose,wegiveuptheotherusesithas（opportunitycost）.

•Therefore,ifweuseacowforart,wecannotuseitforleather,sowhentheDEMANDforCowArtincreases,theSUPPLYofleatherdecreases.

Supply

•Supplyindicateshowmuchofagoodproducersarewillingandabletoofferforsaleperperiodateachpossibleprice,otherthingsconstant

•Lawofsupplystatesthatthequantitysuppliedisusuallydirectlyrelatedtoitsprice,otherthingsconstant

▪Thelowertheprice,thesmallerthequantitysupplied

▪Thehighertheprice,thegreaterthequantitysupplied

SupplySchedule&

SupplyCurve

–Thesupplyscheduleisatablethatshowinghowmuchofaproductfirmswillsetatdifferentprices.

–Thesupplycurveisagraphillustratinghowmuchofaproductafirmwillsetatdifferentprices.

•Upwardslopping&

totherightduetothelawofsupply.

IndividualSupply&

MarketSupply

–Theindividualsupplyistherelationshipbetweenpriceofgoodandthequantityanindividualproduceriswillingandabletosellperperiod,otherthingsconstant.

–Themarketsupplyisthesumofallthatissuppliedeachperiodbyallproducersofasingleproduct.

MarketSupplyCurve

ChangesinQuantitySupplied&

ChangesinSupplied

–Achangesinquantitysuppliedresultinthemovementalongthesupplycurvedueachangeinpricewhileotherfactorsremainconstant.

–Changeinsupplyisshiftofsupplycurveresultingfromachangeinoneofthedeterminantsofsupplyotherthanpriceofthegoods.

ChangeinQuantitySupplied

ChangedinSupply

Ashiftofthesupplycurve,eithertotheleftorright.

Determinantsofsupplyotherthanthepriceofthegood

▪Costofproduction

▪Technology

▪Pricesofrelatedgoods

▪Expectation

▪Numberofsellers

ShiftsinTheSupplyCurve

TheCostofProduction

–Responsetothefactorofproduction（labor,land,capita,energy,andsoon）.

–Supplyofagoodsarenegativelyrelatedtothepriceoftheinputsusedtomakethegood.

–Objectiveistomaximizeprofit.

–Example:

toproduceice-cream,sellersusevariousinputssuchascream,sugar,flavoring,ice-creammachines.Whenpriceofoneormoreoftheseinputsrises,producingice-creamislessprofitable&

firmsupplylessice-cream.

Technology

–Representstheeconomy’sknowledgeabouthowtocombineresourcesefficiently.

–Ifabettertechnologyisdiscovered,productioncostswillfall.Thus,supplierswillbemorewilling&

abletosupplythegoodateachprice.

whennewtechnologyareintroducedintheproductionofsushi,supplyofsushiwillincreaseandshiftthesupplycurve.

PriceofRelatedGoods

–SubstitutesGoods

•Ifthereisanincreaseinthepriceofsubstitutegoodsinproduction,supplyofagoodwilldecrease.

•Example:

PepsiandCoke

（Ppepsi↑QSSpepsi↑SScoke↓）

–