《微观经济学英》PPT课件.ppt

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1、Week 1:Microeconomics II,Topic:Microeconomics and Application,Outline,Essential Microeconomics PrinciplesUses of MicroeconomicsApplication 1,Subtopic 1:Economic Principles,Economic is an academic discipline of social science that provides discourse about the allocation of limited resources in econom

2、y to produce goods and services to satisfy unlimited wantsEconomics,indeed,is a broad discipline itself.Microeconomics and macroeconomics are two separated but interrelated branches of economics.There are many more fields that each served to focus on a particular area of study.,Continuously,Social S

3、cience,Economics,Microeconomics,Macroeconomics,Industrial,financial,Human Capital,Environmental,Others,Mathematical Economics,Econometrics,Applied Statistics,Edited by Yong,E.L.,Continuously,Microeconomics Focuses on the study of choice and decision making for an individual household and firm,while

4、macroeconomics studies the behaviour of the economic as a whole.There is a few principles about microeconomics in some books,while more in others,Continuously,Basically,the general principles are:Scarcity of resourcesOpportunity costsIncreasing opportunity costReal Opportunity CostReal Opportunity c

5、ost and inefficiency,Edited by Yong,E.L.,Continuously,0,Quantity of Apple,Quantity of Apple Pie,a,b,c,d,6,7,12,13,10,9,6,2,Edited by Yong,E.L.,Continuously,Assumptions inside the Production possibility Frontier(PPF)Factors of production is fixed;labour and capital and no technology developmentAgent

6、involved is firm/producer who face economic problems and questionsThe concept of increasing opportunity applied.Producers are rational.Normal good:Apple and Apple pieAt a particular price,place and time(PPPT),Edited by Yong,E.L.,Continuously,If the firm produces 10 units of apple and 6 units of appl

7、e pie wants to increase the production of apple pie by one unit to the 7th unit.It has to forgo 1 unit of apple so that resources can be shifted to produce the additional apple pie;Opportunity Cost is thus 1.,Edited by Yong,E.L.,Continuously,If the firm produces 6 units of apple and 12 units of appl

8、e pie wants to increase the production of apple pie by one unit to the 13th unit.It has to forgo 2 units of apple so that resources can be shifted to produce the additional apple pie;Opportunity Cost is thus 2.,Edited by Yong,E.L.,Continuously,Thus,it is obvious that opportunity cost has increased f

9、rom 1 to 2 unitsWhat should the opportunity cost should be measured in real term than in money term?If it is measured in money term,see what happen:Suppose apple costs$10 per unit and apple pie costs$20 per unit.Thus,the opportunity cost remains 1.Suppose cost of both goods doubled,$20 for apple and

10、$40 for apple pie.Thus,the opportunity cost remains 1.,Edited by Yong,E.L.,Continuously,Now,ask yourself if the production by the firm efficiently or equally produced?Firstly,tell which one do you think is possible:Efficient or equal or both.Secondly,tell the reason for it to be efficient or equal o

11、r both.Thirdly,give your creative point of view of how such equal and efficient condition can be disturbed or achieved.,Edited by Yong,E.L.,Continuously,1)In this example,you should choose to say that the PPF is efficient 2)In the sense that resources are utilized in maximum amount to produce both g

12、oods,as shown at point a,b,c and d.However,any point inside the PPF should not be efficient due to unused resources.Points beyond the PPF are unreachable due to insufficient resources.3)Give a point to how this might be disturbed.-If Health Ministry imposes a new law to reduce apple pie due to obesi

13、ty in children and increase apple production,the producer may not be able to find the best combination of resources for the new plan of production set by the government.,Edited by Yong,E.L.,Subtopic 2:Uses of Microeconomics,Microeconomics has its essential application in every aspect of human behavi

14、our,which related to scarcity,choice and decision making,PPPT.However,it doesnt mean that every decision making process based on economic principles must be right and the best.EX:The fund-hedge collapse by two Economics Nobel Prize Winner,Edited by Yong,E.L.,Continuously,The study of microeconomics

15、can help one to conceptualize important decisions that concern to ones life and this is ho it offers a way to make better decision.One obvious application of microeconomics is in the business field;firmsA firm that wants to enter the biotechnology industry,for instance,must at least know the degree

16、of demand for biotechnology products in the market,the resources available to produce the products and the opportunity cost of using the resources in the production.,Edited by Yong,E.L.,Continuously,Microeconomics is also used for evaluating broad question in regards to government policy(although th

17、is is more to macroeconomics).Changes into new law and regulation may cause economic resources allocated inefficiently as shown at the previous example.,Edited by Yong,E.L.,Subtopic 3:Application,Consider the market for minivans.If people decide to have more children,what would happen to the price a

18、nd quantity in the minivan market?Three level of responsesAssumptionsDescription of your answerYour judgement about equity and efficiency,Edited by Yong,E.L.,Continuously,AssumptionFactors involved are minivan and price of minivans and there are more children now;ceteries paribus.Agents involved are

19、 minivan producers and households,who face economic problems and questions.EX;of basic economic problems:Each household is constraint with limited income,thus minivan is the best choice compared to other better vehicles,which now the opportunity cost.EX;of basic economic questions:(What)Each househo

20、ld demands minivan for maximizing utility.(How Much)Each household demands the number of quantity of minivan is determined by the price and income.(How)Households must allocate income efficiently to purchase minivan.(For who)Households purchase the minivan from the minivan producers for family usage

21、.,Edited by Yong,E.L.,Continuously,The law of demand and supply applied Normal goods Rationality,Edited by Yong,E.L.,Continuously,Price per unit of Minivan,Quantity of Minivan,S,S,D0,D,0,E0,D1,D1,E1,Q1,Q0,P1,P0,0,Edited by Yong,E.L.,Continuously,Now ask yourself if this is efficient or equity.Why?I

22、think this is an equity because total demand is equal to total supply.If country restricts the number of children for each family,the equilibrium condition may no longer hold.,Edited by Yong,E.L.,Continuously,Price per unit of Minivan,Quantity of Minivan,S,S,D0,D,0,E0,D1,D1,E1,Q1,Q0,P1,P0,0,Edited b

23、y Yong,E.L.,E2,Q2,P2,Further Revision,Principle of Microeconomics _ Chapter 1&2Students are expected to do at least 3 hours revision or frequent revision for this chapter as for preparation for assignments,mid-term,final examination and further education benefit.Each Student is required to submit at least one page report to the instructor for this chapter before final exam.,Edited by Yong,E.L.,