Section 1 Scarcity and Choice
(1) Scarcity and economic problems The meaning of scarcity of production resources is relatively limited. Scarcity of resources and economic problems Because of the scarcity of resources, people must consider how to use limited and relatively scarce production resources to meet the infinitely diverse needs. This is the so-called "economic problem". Production resources or production factors mainly include parts. Production resources in economic society are also called production factors, which mainly include capital (whose price is interest), land (whose price is rent) and labor (whose price is salary).
Western economics studies how people and society make the final choice, use scarce production resources that can be used for other purposes, produce present or future products with or without money, and distribute the products to all members of society for consumption. It analyzes the possible costs and benefits of improving resource allocation.
(II) Production Possibility Curve The meaning of production possibility curve is the combination of the maximum output of goods that can be produced under a given resource, that is, the relationship between production possibility curve and resource scarcity. The production possibility curve reflects the characteristics of resource scarcity.
(3) Reasons for choice and opportunity cost The scarcity of resources makes society have to make choices.
The concept of opportunity cost When the scarce resources with multiple uses make the economic subject need to choose, the choice will bring costs. The cost of choice is called opportunity cost. When a resource is used to produce a product, the number of other products abandoned is the opportunity cost, which is the best alternative use to give up when making decisions.
The relationship between solving economic problems and opportunity cost. The solution of economic problems boils down to how to minimize the opportunity cost of choice.
The research object of western economics in the second quarter
(I) Definition of Economics Definition of Western Economics Western economics studies how people and society use scarce production resources to produce valuable goods and distribute them to all members of society.
The most basic ideological resources contained in western economics are scarce, and society must make efficient use of them.
(2) Basic Issues of Economic Research Three basic issues of Western economic research What to produce and how much to produce. Television or computer, cannon or butter (Hitler's choice is: cannon instead of butter); How many TV sets and computers are produced, how many resources are used to produce cannons and how many resources are used to produce butter.
How to produce and how to produce so many outputs and services is directly related to the mode of production and technical level.
For who? In what way are the output and services produced distributed to all members of society, that is, how are they distributed.
(C) the efficiency of resource utilization and its changes In addition to the above three basic issues, Western economics also studies the following three aspects:
Whether the scarce resources of society are fully utilized.
Changes in the total social resources.
The stability of currency.
Section 3 Resource Allocation and Economic System
(1) laissez-faire market economic system means that individuals act independently without government intervention. Market economy refers to an economy in which resource allocation is determined by market supply and demand.
The characteristics of this system First of all, from the perspective of decision-making structure, the laissez-faire market economy system is decentralized decision-making. Secondly, in the laissez-faire market economy, everyone or economic unit is endowed with the motivation to pursue personal interests. Third, in a laissez-faire market economy, information is transmitted through price fluctuations.
How to solve the problem of resource allocation under the laissez-faire market economy system? In the laissez-faire market economy, families or individuals take their own satisfaction as the motivation and market price as the information to decide the purchase amount of each product independently; Producers, motivated by profit, decide the mode of production and the quantity of purchasing inputs according to the market price; The interaction between families and producers determines the price and production quantity of commodities.
(2) Central planned economic system The central planned economic system refers to the plan that the central organ or institution decides what to produce, determines the production target and mode, and stipulates the distribution rules.
The characteristic of centralized decision-making is based on public property rights. How to solve the problem of resource allocation? The central planned economy determines the allocation of social resources through plan adjustment.
(3) Mixed economic system The meaning of mixed economic system refers to the economic system in which the government and the private sector make decisions according to certain principles. The mixed economy is characterized by the combination of decentralized decision-making and centralized decision-making The driving force of decision-making units can be both their own economic interests and the information transmission of social goals, including spontaneous price fluctuations and feedback of planning instructions.
(4) How to solve the problem of resource allocation under the mixed economy system. In the mixed economy, the economy and society solve the basic problems of what to produce and how much to produce, how to produce it and for whom. When there is a problem with the market mechanism, the government intervenes to promote the efficiency of resource utilization, enhance social equality and maintain economic stability and growth.
Under the condition of mixed economy, the research object of western economics is how individuals, manufacturers, governments and other economic organizations make choices under the established economic system, and how these choices determine the utilization of social resources.
Section 4 Microeconomics and Macroeconomics
(1) The meaning of microeconomics Through the study of the economic behavior of a single economic subject, microeconomics explains the operation and function of market mechanism in modern economy and the ways to improve this operation. Its core theory is the "invisible hand" price mechanism.
Main contents of microeconomics research
On the first level, it analyzes how a single consumer makes the optimal production decision to obtain the maximum utility, and how a single producer obtains the maximum profit through the optimal economic decision.
The second level is to analyze the decision of price and output in a single market, which is the result of the interaction between consumers and producers (demand and supply) in a certain market under the condition of pursuing their own economic interests.
The third level analyzes the price and output decisions of all single markets, which in turn depend on the interaction of all single markets (such as product market, labor market and capital market).
(II) Macroeconomics The meaning of macroeconomics Macroeconomics takes the overall behavior of the whole economy as the research object, examines the market performance as a whole, and explains how the total amount of social resources is determined.
The main content of macroeconomic research is how consumers and manufacturers choose to decide the quantity of consumption and investment, thus determining the total demand.
How consumers and manufacturers choose supply and input determines the total supply of the whole economy.
How does the total demand and supply in the economy determine the total resources and the total price level?
Long-term change trend of total resources and total price level.
(3) The connection between microeconomics and macroeconomics First of all, microeconomics and macroeconomics are complementary. Secondly, microeconomics is the foundation of macroeconomics. Third, macroeconomics is not a simple generalization or repetition of microeconomics. Finally, the two are isomorphic and become the whole of western economics.
chapter two
Section 1 Overview of Microeconomics
(A) the composition of the economic system, the market as the basic way to allocate resources, an integral part of the economic system.
The relationship between family or consumer and manufacturer or producer, product market and factor market connects family or consumer with manufacturer or producer, which together form an organic economic system.
(II) Main contents of microeconomics Chapter II: supply, demand and price theory; Chapter 3: Introduce the consumer behavior theory; Chapter four: production analysis Chapter five: profit and cost of manufacturers Chapter six: market supply of manufacturers; Chapter seven: distribution theory; Chapter 8: General Equilibrium Theory and Welfare Economics Chapter 9: Market Failure and Microeconomic Policy
Section 2 requirements
(1) Definition of demand Demand is the quantity of goods that consumers are willing and able to buy at a given price level within a certain period of time.
Demand representation: demand table, demand curve and demand function.
Demand table: it is a numerical sequence table of the relationship between various prices of a commodity and the commodity demand corresponding to various prices.
Demand curve: the demand curve is a curve fitted on the plane according to the combination of different prices and demand of goods in the demand table.
Demand function: assuming that the changes of commodity prices and demand are infinitely separable, with commodity prices as independent variables and demand as dependent variables, then: D=f (P). Is a demand function.
(II) The Law of Demand The meaning of the Law of Demand Under the condition that other factors affecting the demand of commodities remain unchanged, the demand of commodities decreases with the increase of commodity prices and increases with the decrease of commodity prices. This is what we often call the law of demand.
Special case of demand curve
(3) Factors affecting demand: the price of the commodity itself. Generally speaking, the price of goods changes in the opposite direction to the demand, that is, the higher the price, the less the demand, and vice versa.
The price of related commodities, when the price of a commodity itself remains unchanged and the prices of other related commodities change, the demand for this commodity will also change.
Consumer's income level, when the consumer's income increases, it will increase the demand for goods, and vice versa, except inferior products.
Consumer preference, when the consumer's preference for a commodity increases, the demand for the commodity will increase, and conversely, when the preference decreases, the demand will decrease.
Consumers' price expectations for future commodities. When consumers expect the price of a commodity to rise soon, society will increase the current demand for the commodity, because rational people will buy the product before the price rises. On the contrary, it will reduce the expected demand for the commodity.
The distinction between commodities with normal population size and inferior commodities When the income of consumers increases, if the demand for commodities increases, they are normal commodities.
When the income of consumers increases, if the demand for goods is reduced, it is inferior goods.
Substitutes and complementary products First of all, substitutes refer to two commodities that can be substituted for each other. For example, when the price of steamed bread remains unchanged and the price of flower rolls rises, the demand for steamed bread rises.
Second, complementary products refer to two complementary commodities, camera and film, which are closely related to the price of camera. Generally speaking, the price of cameras goes up and the demand for film goes down, which are in opposite directions.
The expanded form of demand function Qd=D(P, m, P 1).
In the formula, p stands for commodity price, m stands for consumer income, and P 1 stands for other commodity prices.
(IV) Changes in demand and changes in demand The meaning of changes in demand and changes in demand refers to the quantity of goods purchased by households (consumers) at a certain price level in a certain period of time, and changes in commodity prices cause changes in the quantity of purchases, which we call changes in demand. It shows the change of points on the curve. Demand is a group of purchases at a series of price levels. Under the condition of constant commodity price, the change of purchase quantity caused by the change of non-price factors (such as the change of income) is called the change of demand. It shows the movement of the demand curve.
(5) From the demand of a single family to the market demand, the market demand of a commodity is the sum of the needs of all families in a certain period. The process of obtaining the market demand curve according to the demand curve of a single family is shown in the following figure:
Section III Supply
(1) The definition of supply refers to the quantity of goods that producers are willing and able to produce at a given price level in a certain period of time.
Representation of supply: supply table, supply curve and supply function supply table: it is a numerical sequence table of the relationship between commodity price and corresponding supply.
Supply curve: it is a curve drawn on the plan according to the combination of the price and supply of goods in the supply table.
Supply function: Assuming that the supply of commodities and the price of commodities are infinitely separable, taking the price of commodities as the independent variable and supply as the dependent variable, then S=f (p) is the supply function.
(II) The Meaning of the Law of Supply Under the condition that other factors affecting the supply of goods remain unchanged, the supply of goods increases with the rise of commodity prices and decreases with the decline of commodity prices. This is the law of supply.
Special case of supply curve
(3) Other factors affecting supply Factors affecting supply The price of the commodity itself. Generally speaking, the higher the price of goods, the greater the output provided by producers. On the contrary, the lower the price of goods, the smaller the output provided by producers.
The prices of related commodities that manufacturers can produce, when the price of one commodity remains unchanged, and the prices of other commodities that they can produce change, the supply of the commodity will change. For example, when the price of corn remains unchanged and the price of wheat rises, farmers may produce more wheat and reduce the supply of corn.
Production cost. In the case of constant commodity prices, the increase in production costs will reduce profits, thus making commodity producers unwilling to produce, thus reducing supply.
Technical level. Generally speaking, the improvement of technical level can reduce production costs and increase the profits of producers, who are willing to provide more output.
Producers' price expectations for future commodities. If producers are optimistic about future expectations, such as rising prices, they will increase production supply when making production plans. On the other hand, if producers are pessimistic about future expectations, they will reduce production supply when making production plans.
General form of supply function Qs =S (P, t, P 1)
In the formula, p stands for commodity price, t stands for production technology level, and P 1 stands for related commodity price.
(4) Changes in supply and changes in supply The meaning of changes in supply and changes in supply refers to the quantity of goods provided by manufacturers at a certain price level in a certain period of time. The change of commodity price causes the expansion or contraction of production capacity, which is called the change of supply, and it shows the change along the supply curve.
Supply is a set of output at a series of price levels. Under the condition of constant commodity prices, the output changes caused by changes in non-price factors such as technological progress and price changes of production factors are called supply changes, which show the movement of supply curve.
Use the supply curve to indicate the increase and decrease of supply and the increase and decrease of supply.
On the supply curve, the supply increase moves to the upper right and the supply decrease moves to the lower left along the same supply curve; The increase of supply means that the whole supply curve moves to the right, and the decrease of supply means that the whole supply curve moves to the upper left.
(5) From the supply of a single producer to the market supply, a level of market supply is the corresponding relationship between the sum of the quantities provided by all producers and commodity prices.
Section 4 Market Equilibrium
(A) the meaning of equilibrium, the meaning of economic equilibrium in the economic system, the Economic Affairs Office
In the interaction of various economic forces, if various forces related to all aspects of economic affairs can restrict or offset each other, then economic affairs will be in a relatively static state and will remain unchanged. At this time, we call economic affairs in a state of balance.
The concept of market equilibrium in the market, the state of market supply and demand reaching equilibrium is called market equilibrium.
Classification of Equilibrium Local Equilibrium and General Equilibrium
(2) The determination of equilibrium price and equilibrium quantity determines the meaning of equilibrium price and equilibrium quantity.
Consumers and producers decide the quantity of goods they are willing and able to buy or provide according to market prices. Consumers and producers make their own calculations, enter the market together, and finally decide the market equilibrium.
The DD line represents the demand curve and the SS curve represents the supply curve. We define point E where supply and demand are equal as the equilibrium point, and the price level corresponding to point E is the equilibrium price (Pe), that is, the price when supply and demand are balanced. The output corresponding to point E is defined as the equilibrium output Qe, that is, the output with balanced supply and demand.
The interaction between demand and supply determines the process of equilibrium price and quantity 1. Let the market price p1>; Pe, as shown in the figure: QS>；; The distance between QD and QDQS is the quantity of products whose supply exceeds demand, that is, the quantity of remaining products. If the market is fully competitive, the existence of surplus products will inevitably lead to price decline. As the price drops, the demand will expand, the supply will decrease, and finally it will reach point E. Therefore, the price drop can reduce the backlog of products in the market and maintain the balance between supply and demand.
2. Set the market price P2>；; Pe, as shown in figure 2-3. At this time, the distance between qdq is the shortage (demand exceeds supply). At this point, the rise in prices can expand production and output and curb consumption. Therefore, the price increase can clear the shortage in the market, thus maintaining the consistency between supply and demand.
(C) the impact of price and quantity changes and demand changes on market equilibrium.
The increase of demand leads to the increase of equilibrium price, while the decrease of demand leads to the decrease of equilibrium price.
The increase in demand leads to an increase in equilibrium output, while the decrease in demand leads to a decrease in equilibrium output.
The change of demand leads to the change of equilibrium price and equilibrium output in the same direction.
Influence of supply change on market equilibrium
The increase of supply leads to the decrease of equilibrium price, while the decrease of supply leads to the increase of equilibrium price.
An increase in supply leads to an increase in equilibrium output, while a decrease in supply leads to a decrease in equilibrium output.
The change of supply leads to the change of equilibrium price in the opposite direction, and the change of supply leads to the change of equilibrium output in the same direction.
The law of supply and demand affects the relationship between supply and demand of commodities. The influence of non-price factors on price and output is called the theorem of supply and demand.
Section 5 elasticity theory
(1) The definition of elasticity in conceptual economics refers to the percentage change of one variable relative to another.
The percentage change of a variable reflects the sensitivity of changes between variables, such as the price change of 1% and the percentage change of demand.
Elasticity can be measured by elastic coefficient, and elastic coefficient = Y change percentage /X change percentage.
(II) Price Elasticity of Demand The definition of price elasticity of demand is simply called demand elasticity or price elasticity, indicating the degree of demand change caused by a certain degree of price change in a certain period of time. We usually use price elasticity coefficient to express it: demand price elasticity coefficient = demand change percentage/price change percentage: q represents the demand of a commodity; P stands for the price of goods; DQ represents the changing value of demand; DP represents the value of price changes; Ed stands for price elasticity coefficient, then:
According to the elasticity coefficient of demand price, commodity demand can be divided into five categories: complete inelastic, inelastic, unit elastic, elastic and infinite elastic.
Factors Affecting Price Elasticity of Demand
The nature of products, generally speaking, the elasticity of demand necessary for life is small, and the elasticity of demand for luxury goods is large.
The number of commodity substitutes, the more substitutes, when the price of a commodity increases, the easier it is for consumers to turn to other commodities, so the greater the flexibility, and vice versa.
Widespread use of goods, if a commodity has a wide range of uses, when the price of goods increases, consumers can appropriately reduce the demand for various uses, so that the greater the flexibility, the smaller the opposite.
The proportion of commodity consumption expenditure to consumer budget expenditure, when a commodity accounts for a small proportion of consumer budget expenditure, consumers will not pay much attention to its price changes. For example, if you buy a pack of chewing gum, you may not pay much attention to the price change.
Generally speaking, the shorter the time for consumers to adjust their demand, the smaller the price elasticity of demand. On the contrary, the longer the adjustment time, the greater the price elasticity of demand. For example, if the price of gasoline rises, it will not affect their demand in the short term, but in the long run, people may look for substitutes, which will have a significant impact on demand.
Calculation of elasticity coefficient of demand price: meaning and expression of arc elasticity and point elasticity
1) arc elasticity is the price elasticity calculated according to the price and demand between two points on a commodity demand curve.
Suppose that the two points on the consumer's demand curve for a commodity are A and B respectively, and the combination of its price and purchase amount is
(P 1Q 1) and (P2Q2) are shown in the figure, so DP and DQ can be obtained immediately, but when considering the percentage of price and demand change, the results are different whether P1,Q1or P2 and Q2 are selected. In order to solve this problem, economists have adopted a flexible but very effective scheme, which is represented by the midpoint of AB, because
2) point elasticity measures the reaction degree of a point on the demand curve to the infinitesimal change rate of price, and its calculation formula is
This elastic coefficient is only related to the slope dQ/dP of the point (p, q) on the demand curve, so it is called point elasticity, which can accurately reflect the elastic value of each point on the demand curve.
(III) Other Definitions of Demand Elasticity income elasticity of demand and income elasticity of demand are referred to as income elasticity for short, which indicates the reaction degree between consumer income and commodity demand in a certain period: income elasticity of demand coefficient = percentage change of demand/percentage change of income, where Em stands for income elasticity of demand coefficient, M stands for income and DM stands for income increase or decrease.
So for normal goods, Em>0, if em
The meaning of demand cross-elasticity refers to the extent that the price change of related commodities affects the change of demand in a certain period of time.
The degree of influence.
Cross elasticity coefficient of demand = percentage change of demand/percentage change of related commodity prices.
Where Ec represents the cross elasticity coefficient of demand.
DPx represents the increase or decrease of demand for X commodities, Qx represents the demand for X commodities, DPy represents the price change of Y commodities, Py.
Represents the price of y goods.
If Ec>0, two commodities X and Y are substitutes.
If the EC
If Ec=0, the two commodities X and Y are irrelevant.
(IV) Elasticity of supply The definition of elasticity of supply means that the price changes by 1% and the supply changes by X% in a certain period of time. We use the supply elasticity coefficient to measure the supply elasticity.
Supply elasticity = percentage change of supply/percentage change of price We use Es= to represent supply elasticity, P represents commodity price, and Q represents supply.
(DQ and DP represent the changing values of supply and price respectively)
As the higher the price, the more willing producers are to provide output, so Es is generally positive.
The classification of supply elasticity ①Es=0 means that the supply is completely inelastic, that is, the price changes at will and the supply remains unchanged (DQ=0), and its supply curve is a downward vertical line.
(2) ES = 1, which is called the unit elasticity of supply. At this time, the price changes 1% and the supply changes 1%, and the supply curve is a 450 line.
Es =, called providing it with infinite elasticity. At this point, when DP=0, the supply of goods changes at will, and its supply curve is a horizontal line.
④0
⑤Es & gt； 1 is called supply elasticity, which means that if the commodity price changes by 1% and the supply changes by more than 1%, the supply is more sensitive to price changes.
Factors affecting the elasticity of supply price
Generally speaking, the more complex and advanced the production technology, the greater the fixed capital, the longer the production cycle and the smaller the supply elasticity. When prices fall, such factors of production cannot be easily transferred.
The utilization degree of production capacity, for producers with the same technology, the supply of producers with excess capacity will be more flexible, because it is easier to adjust the output when the price changes, especially when the price rises.
The factor of production cost, when the output increases, the cost increases rapidly and the supply elasticity decreases. On the contrary, the cost of production expansion increases slowly and the supply elasticity increases.
Time for producers to adjust supply (production time). When commodity prices change, producers need some time to adjust the supply. The shorter the time, the less time producers have to adjust their supply. If we look at the supply of watermelon within one month, it may lack flexibility, but if we look at the changes of watermelon supply across years, its supply elasticity may be great. Therefore, the target agricultural products with long production cycle are: PT = F (Qt); Qt=f(Pt- 1), in short, this year's price is determined by this year's products, and this year's output is determined by last year's price. (Interested students can check the cobweb principle in related textbooks, which may be very enlightening. )
Calculation of elastic coefficient of supply
The calculation of (1) arc elasticity, the price arc elasticity of a commodity supply is calculated according to the price and supply between two points on the commodity supply curve, and its formula is:
(2) point elasticity, the point elasticity of supply is measured at a certain point on the supply curve, corresponding to the infinitesimal change of price and the reaction degree of supply change rate, and its calculation method is:
Section VI Simple Application of Supply and Demand Analysis
(I) Meaning of Support Price and Maximum Price Support Price, also known as minimum price, means that the government sets a minimum price higher than the equilibrium price for the market price in order to support the production of a certain commodity.
The economic impact of supporting prices Under the condition of supporting prices, there will be oversupply in the market.
Meaning of ceiling price ceiling price, also known as the highest price, refers to the government setting a highest price for the market price that is lower than the equilibrium price in order to prevent the price of a certain commodity from being too high.
The economic impact of the price ceiling Under the condition of the price ceiling, some market demands will not be met, and some form of black market transactions will often occur.
(II) Analysis of Tax Burden For a given quantity tax, the burden ratio of consumers and producers is directly related to the shape of demand curve and supply curve. In the figure, the quantitative tax is (P 1-P2), the part borne by consumers is (P 1-Pe), and the part borne by producers is (Pe-P2).
(3) The relationship between demand elasticity and sales revenue. When the price of a commodity changes, its demand elasticity is closely related to the change of the total income sold to merchants caused by the price change, because the total income (TR) is equal to the sales volume (Q) multiplied by the price (P).
PR=QxP① If a commodity is flexible, the decrease in the price of the commodity will increase the demand (sales volume) more than the decrease in the price, and the total income will increase. When the price of this commodity rises, the demand (sales volume) decreases more than the price increases, so the total income decreases.
Example: Suppose |Ed|=2 is used for TV sets, and the original price is $500. At this time, the sales volume is Q 1= 100 sets.
Tr1= p1xq1= 500 $ x100 = 50,000 yuan. Now the price has dropped by 10%, which means P2=450 yuan. Because |Ed|=2, the sales volume increased by 20%, that is, Q2= 120 sets. At this time,
Conclusion: In this way, if a commodity is flexible, the price will change in the opposite direction to the total income, that is, the total income will decrease when the price rises and increase when the price falls.
(2) If a commodity is inelastic, when the commodity price falls, the increase in demand (sales volume) is less than the decrease in price, then the total income will decrease. When the price of this commodity rises, the decrease in demand (sales volume) is less than the increase in price, so the total income will increase.
Example: suppose the demand for flour is inelastic, |Ed| =0.5, and the original price is P 1=0.2. At this time, the sales volume is Q 1= 100 kg, and tr = p1xq1= 0.3x10kg.
The current price has increased by 10%, that is, P2=0.22 yuan. Because |Ed| =0.5, the sales volume decreased by 35%, Q2=95 kg, TR=P2xQ2=20.90 yuan.
TR2-TR 1=20.90 yuan -20 yuan =0.90 yuan at this time, the total income of flour increased. Examples of falling prices can be found by students themselves.
Conclusion: If the demand of a commodity is inelastic, the price and total income will change in direction, that is, the price will increase, the total income will increase, the price will decrease, and the total income will decrease.
Analysis of the marketing strategy of "small profits but quick turnover" The marketing strategy of "small profits but quick turnover" is not applicable in all cases. Only when the price is flexible can we make small profits but quick turnover.
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