英文版微观经济学复习提纲Chapter 7. Technology, production and costs
曼昆微观经济学课后练习英文答案(第七章)
✍ how to define and measure consumer surplus.✍ the link between sellers’ costs of producing a good and the supply curve.✍ how to define and measure producer surplus.✍ that the equilibrium of supply and demand maximizes total surplus in a market. CONTEXT AND PURPOSE:Chapter 7 is the first chapter in a three-chapter sequence on welfare economics and market efficiency. Chapter 7 employs the supply and demand model to develop consumer surplus and producer surplus as a measure of welfare and market efficiency. These concepts are then utilized in Chapters 8 and 9 to determine the winners and losers from taxation and restrictions on international trade.The purpose of Chapter 7 is to develop welfare economics—the study of how the allocation of resources affects economic well-being. Chapters 4 through 6 employed supply and demand in a positive framework, which focused on the question, “What is the equilibrium price and quantity in a market?” This chapter now addresses the normative question, “Is the equilibrium price and quantity in a market the best possible solution to the resource allocation problem, or is it simply the price and quantity that balance supply and demand?” Students will discover that under most circumstances the equilibrium price and quantity is also the one that maximizes welfare.KEY POINTS:? Consumer surplus equals buyers’ willingness to pay for a good minus the amount they actually pay for it, and it measures the benefit buyers get from participating in a market.Consumer surplus can be computed by finding the area below the demand curve and above the price.? Producer surplus equals the amount sellers receive for their goods minus their costs of production, and it measures the benefit sellers get from participating in a market. Producer surplus can be computed by finding the area below the price and above the supply curve.? An allocation of resources that maximizes the sum of consumer and producer surplus is said to be efficient. Policymakers are often concerned with the efficiency, as well as the equality, of economic outcomes.? The equilibrium of supply and demand maximizes the sum of consumer and producer surplus.That is, the invisible hand of the marketplace leads buyers and sellers to allocate resources efficiently.? Markets do not allocate resources efficiently in the presence of market failures such as market power or externalities.CHAPTER OUTLINE:I. Definition of welfare economics: the study of how the allocation of resources affects economic well-being.A. Willingness to Pay1. Definition of willingness to pay: the maximum amount that a buyer will pay for a good.2. Example: You are auctioning a mint-condition recording of Elvis Presley’s first album. Four buyers show up. Their willingness to pay is as follows:for John. Because John is willing to pay more than he has to for the album,he derives some benefit from participating in the market.3. Definition of consumer surplus: the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.4. Note that if you had more than one copy of the album, the price in the auction would end up being lower (a little over $70 in the case of two albums) and both John and Paul would gain consumer surplus.B. Using the Demand Curve to Measure Consumer Surplus1. We can use the information on willingness to pay to derive a demand curve for the rare2. . Because the demand curve shows the buyers’ willingness to pay, we can use the demand curve to measure consumer surplus.C. How a Lower Price Raises Consumer Surplusare paying less for the product than before (area A on the graph).b. Because the price is now lower, some new buyers will enter the market and receive consumer surplus on these additional units of output purchased (area B on the graph).D. What Does Consumer Surplus Measure?1. Remember that consumer surplus is the difference between the amount that buyers are willing to pay for a good and the price that they actually pay.2. Thus, it measures the benefit that consumers receive from the good as the buyers themselves perceive it.III. Producer SurplusA. Cost and the Willingness to Sell1. Definition of cost: the value of everything a seller must give up to produce a good .2. Example: You want to hire someone to paint your house. You accept bids for the work from four sellers. Each painter is willing to work if the price you will pay exceeds her opportunity cost. (Note that this opportunity cost thus represents willingness to sell.) The costs are: ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price ceilings from Chapter 6. Redraw the market for two-bedroom apartments in your town. Draw in a price ceiling below the equilibriumprice.Then go through:✍ consumer surplus before the price ceiling is put into place.✍ consumer surplus after the price ceiling is put into place.You will need to take some time to explain the relationship between the producers’ willingness to sell and the cost of producing the good. The relationship between cost and the supply curve is not as apparent as the relationship between the demand curve and willingness to pay. It is important to stress that consumer surplus is measured in monetary terms. Consumer surplus gives us a way to place a monetary cost on inefficient market outcomes (due to government involvement or market failure).except for Grandma. Because Grandma receives more than she would require to paint the house, she derives some benefit from producing in the market.4.Definition of producer surplus: the amount a seller is paid for a good minus the seller’s cost of providing it.5. Note that if you had more than one house to paint, the price in the auction would end up being higher (a little under $800 in the case of two houses) and both Grandma and Georgia would gain producer surplus.B. Using the Supply Curve to Measure Producer Surplus1. We can use the information on cost (willingness to sell) to derive a supply curve for2. marginal seller . Because the supply curve shows the sellers’ cost (willingness to sell), we can use the supply curve to measure producer surplus.are receiving more for the product than before (area C on the graph).b. Because the price is now higher, some new sellers will enter the market and receive producer surplus on these additional units of output sold (area D on the graph).D. Producer surplus is used to measure the economic well-being of producers, much like consumer surplus is used to measure the economic well-being of consumers.ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price floors from Chapter 6. Redraw the market for anagricultural product such as corn. Draw in a price support above the equilibriumprice.Then go through:✍ producer surplus before the price support is put in place.✍ producer surplus after the price support is put in place.Make sure that you discuss the cost of the price support to taxpayers.IV.Market EfficiencyA. The Benevolent Social Planner1. The economic well-being of everyone in society can be measured by total surplus, which is the sum of consumer surplus and producer surplus:Total Surplus = Consumer Surplus + Producer SurplusTotal Surplus = (Value to Buyers – Amount Paid by Buyers) +(Amount Received by Sellers – Cost to Sellers)Because the Amount Paid by Buyers = Amount Received bySellers:2. Definition of efficiency: the property of a resource allocation of maximizing the total surplus received by all members of society .3. Definition of equality: the property of distributing economic prosperity uniformly the members of society .a. Buyers who value the product more than the equilibrium price will purchase the product; those who do not, will not purchase the product. In other words, the free market allocates the supply of a good to the buyers who value it most highly, as measured by their willingness to pay.b. Sellers whose costs are lower than the equilibrium price will produce the product; those whose costs are higher, will not produce the product. In other words, the free market allocates the demand for goods to the sellers who can produce it at the lowest cost.to the marginal buyer is greater than the cost to the marginal seller so total surplus would rise if output increases.b. At any quantity of output greater than the equilibrium quantity, the value of the product to the marginal buyer is less than the cost to the marginal seller so total surplus would rise if output decreases.3. Note that this is one of the reasons that economists believe Principle #6: Markets are usually a good way to organize economic activity.It would be a good idea to remind students that there are circumstances whenthe market process does not lead to the most efficient outcome. Examplesinclude situations such as when a firm (or buyer) has market power over priceor when there are externalities present. These situations will be discussed inlater chapters.Pretty Woman, Chapter 6. Vivien (Julia Roberts) and Edward (Richard Gere)negotiate a price. Afterward, Vivien reveals she would have accepted a lowerprice, while Edward admits he would have paid more. If you have done a goodjob of introducing consumer and producer surplus, you will see the light bulbsgo off above your students’ heads as they watch this clip.C. In the News: Ticket Scalping1. Ticket scalping is an example of how markets work to achieve an efficient outcome.2. This article from The Boston Globe describes economist Chip Case’s experience with ticket scalping.D. Case Study: Should There Be a Market in Organs?1. As a matter of public policy, people are not allowed to sell their organs.a. In essence, this means that there is a price ceiling on organs of $0.b. This has led to a shortage of organs.2. The creation of a market for organs would lead to a more efficient allocation of resources, but critics worry about the equity of a market system for organs.V. Market Efficiency and Market FailureA. To conclude that markets are efficient, we made several assumptions about how markets worked.1. Perfectly competitive markets.2. No externalities.B. When these assumptions do not hold, the market equilibrium may not be efficient.C. When markets fail, public policy can potentially remedy the situation. SOLUTIONS TO TEXT PROBLEMS:Quick Quizzes1. Figure 1 shows the demand curve for turkey. The price of turkey is P1 and the consumer surplus that results from that price is denoted CS. Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. It measures the benefit to buyers of participating in a market.Figure 1 Figure 22. Figure 2 shows the supply curve for turkey. The price of turkey is P1 and the producer surplus that results from that price is denoted PS. Producer surplus is the amount sellers are paid for a good minus the sellers’ cost of providing it (measured by the supply curve). It measures the benefit to sellers of participating in a market.Figure 33. Figure 3 shows the supply and demand for turkey. The price of turkey is P1, consumer surplus is CS, and producer surplus is PS. Producing more turkeys than the equilibrium quantity would lower total surplus because the value to the marginal buyer would be lower than the cost to the marginal seller on those additional units.Questions for Review1. The price a buyer is willing to pay, consumer surplus, and the demand curve are all closely related. The height of the demand curve represents the willingness to pay of the buyers. Consumer surplus is the area below the demand curve and above the price, which equals the price that each buyer is willing to pay minus the price actually paid.2. Sellers' costs, producer surplus, and the supply curve are all closely related. The height of the supply curve represents the costs of the sellers. Producer surplus is the area below the price and above the supply curve, which equals the price received minus each seller's costs of producing the good.Figure 43. Figure 4 shows producer and consumer surplus in a supply-and-demand diagram.4. An allocation of resources is efficient if it maximizes total surplus, the sum of consumer surplus and producer surplus. But efficiency may not be the only goal of economic policymakers; they may also be concerned about equity the fairness of the distribution of well-being.5. The invisible hand of the marketplace guides the self-interest of buyers and sellers into promoting general economic well-being. Despite decentralized decision making and self-interested decision makers, free markets often lead to an efficient outcome.6. Two types of market failure are market power and externalities. Market power may cause market outcomes to be inefficient because firms may cause price and quantity to differ from the levels they would be under perfect competition, which keeps total surplus from being maximized. Externalities are side effects that are not taken into account by buyers and sellers. As a result, the free market does not maximize total surplus.Problems and Applications1. a. Consumer surplus is equal to willingness to pay minus the price paid. Therefore, Melissa’s willingness to pay must be $200 ($120 + $80).b. Her consumer surplus at a price of $90 would be $200 ? $90 = $110.c. If the price of an iPod was $250, Melissa would not have purchased one because the price is greater than her willingness to pay. Therefore, she would receive no consumer surplus.2. If an early freeze in California sours the lemon crop, the supply curve for lemons shifts to the left, as shown in Figure 5. The result is a rise in the price of lemons and a decline in consumer surplus from A + B + C to just A. So consumer surplus declines by the amount B + C.Figure 5 Figure 6In the market for lemonade, the higher cost of lemons reduces the supply of lemonade, as shown in Figure 6. The result is a rise in the price of lemonade and a decline in consumer surplus from D + E + F to just D, a loss of E + F. Note that an event that affects consumer surplus in one market often has effects on consumer surplus in other markets.3. A rise in the demand for French bread leads to an increase in producer surplus in the market for French bread, as shown in Figure 7. The shift of the demand curve leads to an increased price, which increases producer surplus from area A to area A + B + C.Figure 7The increased quantity of French bread being sold increases the demand for flour, as shown in Figure 8. As a result, the price of flour rises, increasing producer surplus from area Dto D + E + F. Note that an event that affects producer surplus in one market leads to effects on producer surplus in related markets.Figure 84. a.Figure 9b. When the price of a bottle of water is $4, Bert buys two bottles of water. His consumer surplus is shown as area A in the figure. He values his first bottle of water at $7, but pays only $4 for it, so has consumer surplus of $3. He values his second bottle of water at $5, but pays only $4for it, so has consumer surplus of $1. Thus Bert’s total consumer surplus is $3 + $1 = $4, which is the area of A in the figure.c. When the price of a bottle of water falls from $4 to $2, Bert buys three bottles of water, an increase of one. His consumer surplus consists of both areas A and B in the figure, an increase in the amount of area B. He gets consumer surplus of $5 from the first bottle ($7 value minus $2 price), $3 from the second bottle ($5 value minus $2 price), and $1 from the third bottle ($3 value minus $2 price), for a total consumer surplus of $9. Thus consumer surplus rises by $5 (which is the size of area B) when the price of a bottle of water falls from $4 to $2.5. a.Figure 10b. When the price of a bottle of water is $4, Ernie sells two bottles of water. His producer surplus is shown as area A in the figure. He receives $4 for his first bottle of water, but it costs only $1 to produce, so Ernie has producer surplus of $3. He also receives $4 for his second bottle of water, which costs $3 to produce, so he has producer surplus of $1. Thus Ernie’s total producer surplus is $3 + $1 = $4, which is the area of A in the figure.c. When the price of a bottle of water rises from $4 to $6, Ernie sells three bottles of water, an increase of one. His producer surplus consists of both areas A and B in the figure, an increase by the amount of area B. He gets producer surplus of $5 from the first bottle ($6 price minus $1 cost), $3 from the second bottle ($6 price minus $3 cost), and $1 from the third bottle ($6 price minus $5 price), for a total producer surplus of $9. Thus producer surplus rises by $5 (which is the size of area B) when the price of a bottle of water rises from $4 to $6.6. a. From Ernie’s supply schedule and Bert’s demand schedule, the quantityequilibrium quantity of two.b. At a price of $4, consumer surplus is $4 and producer surplus is $4, as shown in Problems 3 and 4 above. Total surplus is $4 + $4 = $8.c. If Ernie produced one less bottle, his producer surplus would decline to $3, as shown in Problem 4 above. If Bert consumed one less bottle, his consumer surplus would decline to $3, as shown in Problem 3 above. So total surplus would decline to $3 + $3 = $6.d. If Ernie produced one additional bottle of water, his cost would be $5, but the price is only $4, so his producer surplus would decline by $1. If Bert consumed one additional bottle of water, his value would be $3, but the price is $4, so his consumer surplus would decline by $1. So total surplus declines by $1 + $1 = $2.7. a. The effect of falling production costs in the market for stereos results in a shift to the right in the supply curve, as shown in Figure 11. As a result, the equilibrium price of stereos declines and the equilibrium quantity increases.Figure 11b. The decline in the price of stereos increases consumer surplus from area A to A + B + C + D, an increase in the amount B + C + D. Prior to the shift in supply, producer surplus was areas B + E (the area above the supply curve and below the price). After the shift in supply, producer surplus is areas E + F + G. So producer surplus changes by the amount F + G – B, which may be positive or negative. The increase in quantity increases producer surplus, while the decline in the price reduces producer surplus. Because consumer surplus rises by B + C + D and producer surplus rises by F + G – B, total surplus rises by C + D + F + G.c. If the supply of stereos is very elastic, then the shift of the supply curve benefits consumers most. To take the most dramatic case, suppose the supply curve were horizontal, as shown in Figure 12. Then there is no producer surplus at all. Consumers capture all the benefits of falling production costs, with consumer surplus rising from area A to area A + B.Figure 128. Figure 13 shows supply and demand curves for haircuts. Supply equals demand at a quantity of three haircuts and a price between $4 and $5. Firms A, C, and D should cut the hair of Ellen, Jerry, and Phil. Oprah’s willingness to pay is too low and firm B’s costs are too high, so they do not participate. The maximum total surplus is the area between the demand and supply curves, which totals $11 ($8 value minus $2 cost for the first haircut, plus $7 value minus $3 cost for the second, plus $5 value minus $4 cost for the third).Figure 139. a. The effect of falling production costs in the market for computers results in a shift to the right in the supply curve, as shown in Figure 14. As a result, the equilibrium price of computers declines and the equilibrium quantity increases. The decline in the price of computers increases consumer surplus from area A to A + B + C + D, an increase in the amount B + C + D.Figure 14 Figure 15Prior to the shift in supply, producer surplus was areas B + E (the area above thesupply curve and below the price). After the shift in supply, producer surplus isareas E + F + G. So producer surplus changes by the amount F + G – B, whichmay be positive or negative. The increase in quantity increases producer surplus,while the decline in the price reduces producer surplus. Because consumer surplusrises by B + C + D and producer surplus rises by F + G – B, total surplus rises byC +D + F + G.b. Because typewriters are substitutes for computers, the decline in the price of computers means that people substitute computers for typewriters, shifting the demand for typewriters to the left, as shown in Figure 15. The result is a decline in both the equilibrium price and equilibrium quantity of typewriters. Consumer surplus in the typewriter market changes from area A + B to A + C, a net change of C – B. Producer surplus changes from area C + D + E to area E, a net loss of C + D. Typewriter producers are sad about technological advances in computers because their producer surplus declines.c. Because software and computers are complements, the decline in the price and increase in the quantity of computers means that the demand for software increases, shifting the demand for software to the right, as shown in Figure 16. The result is an increase in both the price and quantity of software. Consumer surplus in the software market changes from B + C to A + B, anet change of A – C. Producer surplus changes from E to C + D + E, an increase of C + D, so software producers should be happy about the technological progress in computers.Figure 16d. Yes, this analysis helps explain why Bill Gates is one the world’s richest people, because his company produces a lot of software that is a complement with computers and there has been tremendous technological advance in computers.10. a. With Provider A, the cost of an extra minute is $0. With Provider B, the cost of anextra minute is $1.b. With Provider A, my friend will purchase 150 minutes [= 150 – (50)(0)]. WithProvider B, my friend would purchase 100 minutes [= 150 – (50)(1)].c. With Provider A, he would pay $120. The cost would be $100 with Provider B.Figure 17d. Figure 17 shows the friend’s demand. With Provider A, he buys 150 minutes andhis consumer surplus is equal to (1/2)(3)(150) – 120 = 105. With Provider B, hisconsumer surplus is equal to (1/2)(2)(100) = 100.e. I would recommend Provider A because he receives greater consumer surplus.11. a. Figure 18 illustrates the demand for medical care. If each procedure has a price of $100, quantity demanded will be Q1 procedures.Figure 18b. If consumers pay only $20 per procedure, the quantity demanded will be Q2 procedures. Because the cost to society is $100, the number of procedures performed is too large to maximize total surplus. The quantity that maximizes total surplus is Q1 procedures, which is less than Q2.c. The use of medical care is excessive in the sense that consumers get procedures whose value is less than the cost of producing them. As a result, the economy’s total surplus is reduced.d. To prevent this excessive use, the consumer must bear the marginal cost of the procedure. But this would require eliminating insurance. Another possibility would be that the insurance company, which pays most of the marginal cost of the procedure ($80, in this case) could decide whether the procedure should be performed. But the insurance company does not get the benefits of the procedure, so its decisions may not reflect the value to the consumer.。
微观经济学-曼昆英文版本
A Firm’s Long-Run Decision to Exit
• Cost of exiting the market: revenue loss = TR
• Benefit of exiting the market: cost savings = TC (zero FC in the long run) • So, firm exits if TR < TC
Because of 1 & 2, each buyer and seller is a
“price taker” – takes the price as given.
The Revenue of a Competitive Firm
• Total revenue (TR)
• Average revenue (AR)
Qa Q 1 Qb
Q
MC and the Firm’s Supply Decision
If price rises to P2, then the profitmaximizing quantity rises to Q2.
Costs MC P2 MR2 MR
The MC curve determines the firm’s Q at any price. P1 Hence,
Introduction: A Scenario
• Three years after graduating, you run your own business. • You must decide how much to produce, what price to charge, how many workers to hire, etc. • What factors should affect these decisions?
范里安微观经济学(第九版)Chapter 7
Cost Minimizing Input Choice
How does a firm select inputs to produce a given output at minimum cost? Assumptions
◦ Two Inputs: Labor (L) and capital (K) ◦ Price of labor: wage rate (w) ◦ The price of capital (r)
In the short run, some costs are fixed In the long run, firm can change anything including plant size
◦ Can produce at a lower average cost in long run than in short run ◦ Capital and labor are both flexible
input added to the production process will add an equivalent amount of output.
MPL
MPK
Cost in the Long Run
Cost minimization with Varying Output Levels
Q1
C2
Labor per year
Input Substitution When an Input Price Change
If the price of labor changes, then the slope of the isocost line changes, -(w/r) It now takes a new quantity of labor and capital to produce the output If price of labor increases relative to price of capital, and capital is substituted for labor
微观经济学 英文课件Week 7_II
relationship between inputs and outputs, which expressed in the mathematical form. q = f(K,L,M,….) The function tells that output (q) is a function to capital input (K), labor (L), raw material (M) and others. In essence, a firm must know how to allocate resources K,L,M… to yield output, q.
Diminishing Marginal Product: Although adding inputs into the production is generally viewed can increase output. However, firms cannot continuously add inputs to its production process.
Suppose AP is 400 units when 25 labors are used with total output = 10000 units. If labor increases to 50 people, AP falls to 200 units. Since MP is falling with additional labor, AP is also falling. With 50 workers, MP may be zero if TP is maximum, but AP is still positive figure.
曼昆的《微观经济学基础》课业笔记 英文版
曼昆的《微观经济学基础》课业笔记英文版IntroductionThis document presents my notes on "Microeconomics: Principles and Applications" by N. Gregory Mankiw. These notes summarize key concepts and ideas covered in the book, aiming to provide a helpful overview of microeconomics.Chapter 1: Ten Principles of Economics- People face trade-offs: individuals and societies must make choices due to scarcity.- The cost of something is what you give up to get it: when making decisions, considering both the direct and opportunity costs is crucial.- Rational people think at the margin: making decisions by evaluating incremental benefits and costs.- People respond to incentives: incentives can influence individuals' behavior and decision-making.- Trade can make everyone better off: voluntary exchange benefits all parties involved.- Markets are usually a good way to organize economic activity: markets coordinate exchanges efficiently.- A country's standard of living depends on its ability to produce goods and services: productivity is key.- Prices rise when the government prints too much money: inflation can be caused by excessive money supply growth.- Society faces a short-run trade-off between inflation and unemployment: the Phillips curve illustrates this trade-off.Chapter 2: Thinking Like an Economist- Economists use models to simplify reality and understand economic behavior.- Assumptions in economic models help focus on essential elements.- Opportunity cost is the true cost of something and is measured by what we give up to obtain it.Chapter 3: Interdependence and the Gains from Trade- Specialization and international trade result in greater production efficiency and consumption possibilities.- Both parties benefit from trade even if one has an absolute advantage in both goods.- Prices reflect the opportunity cost and guide resources to their most valued uses.Chapter 4: The Market Forces of Supply and Demand- Markets consist of buyers and sellers, and their interactions determine prices and quantities.- Demand curve shows the relationship between price and quantity demanded, while supply curve reflects the relationship between price and quantity supplied.- Market equilibrium occurs when quantity demanded equals quantity supplied.- Changes in demand or supply shift their respective curves, leading to changes in equilibrium price and quantity.ConclusionThese notes provide a brief summary of the key concepts covered in "Microeconomics: Principles and Applications." Studying this bookallows for a deeper understanding of microeconomic principles and their applications in the real world.。
【复旦大学本科讲义-平狄克微观经济学PPT】lecture07-英文版
where nX gives the number of consumers who purchase X. Note: • We suppressed other prices and income. • Could also depend on who consumes the good. Circularity: • Market demand is sum of individual demands which in turn depend on
h Dh(pX ; pY, Ih) where consumers/households indexed by h=1,…,N
HORIZONTAL SUMMATION
Consumer Surplus
• Consumers buy goods because it makes them better off
MARKET DEMAND
WITH NETWORK EFFECTS
Demand dependence: • The utility of a good derived by a consumer depends on how many other
consumers buy/use the good • Consequently individual and market demand depends on aggregate number
market demand. • Key role of expectations: expected popularity of a “network good” critical in
ensuring its popularity. • “Chicken and egg” problem: how to sell the first unit when it has little/no
经济英语知识点总结
经济英语知识点总结一、经济学基础知识1. Microeconomics（微观经济学）Microeconomics focuses on the interactions between individual buyers and sellers and the factors that influence their decisions. It examines how individuals and businesses make choices regarding the allocation of resources, production, and consumption. Key concepts in microeconomics include supply and demand, elasticity, market structures, and externalities.（微观经济学侧重研究个体买卖双方之间的互动以及影响他们决策的因素。
它研究个人和企业如何在资源分配、生产和消费方面做出选择。
微观经济学的关键概念包括供求关系、弹性、市场结构和外部性。
）2. Macroeconomics（宏观经济学）Macroeconomics looks at the overall performance of a national or global economy and the factors that influence it. It examines the behavior of major economic aggregates such as GDP, unemployment, inflation, and national income. Key concepts in macroeconomics include monetary and fiscal policy, economic growth, and international trade.（宏观经济学研究国家或全球经济的总体表现以及影响它的因素。
宏微观知识点总结英语
宏微观知识点总结英语This article will provide a comprehensive summary of key concepts in both macroeconomics and microeconomics, including the principles of supply and demand, market structures, fiscal and monetary policy, and international trade.MacroeconomicsGross Domestic Product (GDP)GDP is the total value of all goods and services produced within a country's borders in a specific time period. It is a measure of a country's economic output and is used as an indicator of the overall health of the economy. GDP can be calculated using three different approaches:1. The production approach, which measures the total value of all goods and services produced.2. The expenditure approach, which measures the total amount spent on goods and services by consumers, businesses, and the government.3. The income approach, which measures the total income earned by individuals and businesses.UnemploymentUnemployment refers to the number of people who are actively seeking work but are unable to find employment. There are several types of unemployment, including:1. Frictional unemployment, which occurs when individuals are in between jobs and are searching for new employment opportunities.2. Structural unemployment, which occurs when there is a mismatch between the skills of workers and the requirements of available jobs.3. Cyclical unemployment, which occurs as a result of fluctuations in the business cycle.InflationInflation refers to the rate at which the general price level of goods and services in an economy is rising. The Consumer Price Index (CPI) is a commonly used measure of inflation and is used to track changes in the cost of living over time. Inflation can have both positive and negative effects on the economy. Moderate levels of inflation can stimulate economic growth, while high levels of inflation can erode the purchasing power of consumers and lead to economic instability.Economic GrowthEconomic growth refers to an increase in the output of goods and services in an economy over time. It is commonly measured using the annual percentage change in real GDP. Economic growth is driven by factors such as technological innovation, investment in physical and human capital, and improvements in productivity.Monetary PolicyMonetary policy is the management of a country's money supply and interest rates by the central bank. The primary objective of monetary policy is to control inflation, stabilize the currency, and promote economic growth. Central banks use tools such as open market operations, reserve requirements, and discount rates to achieve these objectives.Fiscal PolicyFiscal policy refers to the use of government spending and taxation to influence the economy. The main objectives of fiscal policy are to stabilize the economy, promote economic growth, and achieve full employment. Fiscal policy can be expansionary, involving increased government spending and lower taxes, or contractionary, involving reduced government spending and higher taxes.International TradeInternational trade refers to the exchange of goods and services between countries. Comparative advantage, which states that countries should specialize in producing goods and services in which they have a lower opportunity cost, is a central concept in international trade theory. Trade barriers such as tariffs, quotas, and subsidies can impact the volume and pattern of international trade.Exchange RatesExchange rates refer to the value of one currency in terms of another currency. Floating exchange rates are determined by market forces, while fixed exchange rates are set by governments. Changes in exchange rates can have significant implications for international trade, investment, and monetary policy.MicroeconomicsSupply and DemandSupply and demand are the fundamental forces that drive markets. The law of demand states that as the price of a good or service increases, the quantity demanded decreases, ceteris paribus. The law of supply states that as the price of a good or service increases, the quantity supplied increases, ceteris paribus. Equilibrium price and quantity occur when the quantity demanded equals the quantity supplied.ElasticityPrice elasticity of demand measures the responsiveness of quantity demanded to changes in price. Price elasticity of supply measures the responsiveness of quantity supplied to changes in price. Elastic goods and services have a price elasticity greater than one, while inelastic goods and services have a price elasticity less than one.Market StructuresThere are four main types of market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. Perfect competition is characterized by a large number of small firms producing identical products, with no barriers to entry or exit. Monopoly is characterized by a single firm dominating the market, with high barriers to entry. Monopolistic competition is characterized by a large number of firms producing differentiated products, with low barriers to entry. Oligopoly is characterized by a small number of large firms dominating the market, with high barriers to entry.Production and CostThe short-run production function describes the relationship between the quantity of inputs and the quantity of output, while the long-run production function allows all factors of production to vary. The cost function measures the relationship between the quantity of output and the cost of production. Marginal cost is the cost of producing an additional unit of output, while average total cost is the total cost per unit of output.Market FailuresMarket failures occur when the allocation of resources by a free market is inefficient. The main types of market failures include externalities, public goods, and asymmetric information. Externalities occur when the actions of one party impose costs or benefits on others without compensation. Public goods are non-excludable and non-rivalrous, meaning that they cannot be provided by the market. Asymmetric information occurs when one party in a transaction has more information than the other party.Consumer and Producer SurplusConsumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and the price they actually pay. Producer surplus is the difference between the minimum price a producer is willing to accept for a good or service and the price they actually receive. Total surplus is the sum of consumer surplus and producer surplus in a market.Utility and DemandUtility is the satisfaction or benefit that consumers derive from consuming goods and services. The law of diminishing marginal utility states that as a consumer consumes more of a good or service, the additional satisfaction derived from each additional unit decreases. The demand curve shows the relationship between the price of a good or service and the quantity demanded by consumers.Costs of ProductionThe costs of production include fixed costs, variable costs, total costs, average total costs, and marginal costs. Fixed costs do not change with the level of output, while variable costs do change with the level of output. Total costs equal the sum of fixed costs and variable costs. Average total costs equal total costs divided by the quantity of output, while marginal costs equal the change in total costs divided by the change in quantity of output.ConclusionMacroeconomics and microeconomics are essential fields of study for understanding the behavior of economies at both the aggregate and individual level. The concepts and principles outlined in this article provide a foundational understanding of how economic systems function, and the factors that influence overall economic performance and individual decision-making. By examining the interplay of supply and demand, market structures, fiscal and monetary policy, international trade, and consumer behavior, economists can gain valuable insights into economic phenomena and inform policy decisions that impact the welfare of societies and nations.。
曼昆微观经济学经济学十大原理 英文版
教材（英文版）：Principles of Economics, 7ed.
written by N. Gregory Mankiw
中文版：《经济学原理（微观经济学分册）》，梁小明、
梁砾译，北京大学出版社
参考书：《经济学原理学习指南》，大卫· 哈克斯著，梁小
民译，北京大学出版社；《曼昆<经济学原理（微观经济学 分册）>笔记和课后习题（含考研真题）详解》，圣才考研 网主编，中国石化出版社
万美元时，高中篮球明星科 比.布赖恩特（Kobe Bryant ）决定不读大学而直接进入 职业篮球联盟（ NBA ）。
TEN PRINCIPLES OF ECONOMICS
11
Examples:
Choice A B C D E Revenue 200$ 150$ 180$ 201$ 200$ opportunity cost 201$ 201$ 201$ 200$ 201$
1
CHAPTER
1
Ten Principles of Economics （经济学十大原理）
Economics
PRINCIPLES OF
N. Gregory Mankiw
© 2015 CUFE
In this chapter, look for the answers to these questions:
society gets the most from its scarce resources
Equality:经济成果在社会成员中公平分配的特性 when
prosperity is distributed uniformly among society’s members.
Tradeoff: To achieve greater equality, income could be
微观经济学复习提纲
Outline for Reviewing Microeconomics (2013)3. Short Answer（3×10，30 points）Chapter 2questions for review: 5, 65. Explain why for many goods, the long-run price elasticity of supply is larger than theshort-run elasticity.The price elasticity of supply is the percentage change in the quantity supplied divided by the percentage change in price. In the short run, an increase in price induces firms to produce more by using their facilities more hours per week, paying workers to work overtime and hiring new workers. Nevertheless, there is a limit to how much firms can produce because they face capacity constraints in the short run. In the long run, however, firms can expand capacity by building new plants and hiring new permanent workers. Also, new firms can enter the market and add their output to total supply. Therefore, the price elasticity of supply is larger in the long run than in the short run.6. Why do long-run elasticities of demand differ from short-run elasticities? Consider two goods: paper towels and televisions. Which is a durable good? Would you expect the price elasticity of demand for paper towels to be larger in the short run or in the long run? Why? What about the price elasticity of demand for televisions?Long-run and short-run elasticities differ based on how rapidly consumers respond toprice changes and how many substitutes are available. If the price of paper towels, anon-durable good, were to increase, consumers might react only minimally in the shortrun- because it takes time for people to change their consumption habits. In the longrun, however, consumers might learn to use other products such as sponges or kitchentowels instead of paper towels. In this case, then, the price elasticity would be larger inthe long run than in the short run. In contrast, the quantity demanded of durablegoods, such as televisions, might change dramatically in the short run following a pricechange. For example, the initial result of a price increase for televisions would causeconsumers to delay purchases because they could keep using their current TVs longer.Eventually consumers would replace their televisions as they wore out or becameobsolete. Therefore, we expect the demand for durables to be more elastic in the shortrun than in the long run.Chapter 3questions for review:1, 5；exercise: 21. What are the four basic assumptions about individual preferences? Explain the significance or meaning of each.(1) Preferences are complete: this means that the consumer is able to compare andrank all possible baskets of goods and services. (2) Preferences are transitive: thismeans that preferences are consistent, in that if bundle A is preferred to bundle Band bundle B is preferred to bundle C, then bundle A is preferred to bundle C. (3)More is preferred to less: this means that all goods are desirable, and that theconsumer always prefers to have more of a good. (4) Diminishing marginal rate ofsubstitution: this means that indifference curves are convex, and that the slope ofthe indifference curve increases (becomes less negative) as we move down along thecurve.As a consumer moves down along her indifference curve she is willing to give up fewer units of the good on the vertical axis in exchange for one more unit of the good on the horizontal axis.This assumption also means that balanced market baskets are generally preferred to baskets that have a lot of one good and very little of the other good.5. What happens to the marginal rate of substitution as you move along a convex indifference curve? A linear indifference curve?The MRS measures how much of a good you are willing to give up in exchange for one more unit of the other good, keeping utility constant. The MRS diminishes along a convex indifference curve. This occurs because as you move down along the indifference curve, you are willing to give up less and less of the good on the vertical axis in exchange for one more unit of the good on the horizontal axis. The MRS is also the negative of the slope of the indifference curve, which decreases (becomes closer to zero) as you move down along the indifference curve. The MRS is constant along a linear indifference curve because the slope does not change. The consumer is always willing to trade the same number of units of one good in exchange for the other.Chapter 4 questions for review:1, 3, 111. Explain the difference between each of the following terms:a. a price consumption curve and a demand curveThe difference between a price consumption curve (PCC) and a demand curve is that the PCC shows the quantities of two goods that a consumer will purchase as the price of one of the goods changes, while a demand curve shows the quantity of one good that a consumer will purchase as the price of that good changes. The graph of the PCC plots the quantity of one good on the horizontal axis and the quantity of the other good on the vertical axis. The demand curve plots the quantity of the good on the horizontal axis and its price on the vertical axis.b. an individual demand curve and a market demand curveAn individual demand curve plots the quantity demanded by one person at various prices. A market demand curve is the horizontal sum of all the individual demand curves for the product. It plots the total quantity demanded by all consumers at various prices.c. an Engel curve and a demand curveAn Engel curve shows the quantity of one good that will be purchased by a consumer at different income levels. The quantity of the good is plotted on the horizontal axis and the consumer’s income is on the vertic al axis. A demand curve is like an Engel curve except that it shows the quantity that will be purchased at different prices instead of different income levels.d. an income effect and a substitution effectBoth the substitution effect and income effect occur because of a change in the price of a good. The substitution effect is the change in the quantity demanded of the good due to the price change, holding the consumer’s utility constant. The income effect isthe change in the quantity demanded of the good due to the change in purchasingpower brought about by the change in the good’s price.3. Explain whether the following statements are true or false.a. The marginal rate of substitution diminishes as an individual movesdownward along the demand curve.True. The consumer maximizes his utility by choosing the bundle on his budget linewhere the price ratio is equal to the MRS. For goods 1 and 2, P1/P2 = MRS. As theprice of good 1 falls, the consumer moves downward along the demand curve for good1, and the price ratio (P1/P2) becomes smaller. Therefore, MRS must also becomesmaller, and thus MRS diminishes as an individual moves downward along thedemand curve.b. The level of utility increases as an individual moves downward along thedemand curve.True. As the price of a good falls, the budget line pivots outward, and the consumeris able to move to a higher indifference curve.c. Engel curves always slope upwards.False. If the good is inferior, then as income increases, quantity demandeddecreases, and therefore the Engel curve slopes downwards.11. Explain which of the following items in each pair is more price elastic.a. The demand for a specific brand of toothpaste and the demand for toothpaste in generalThe demand for a specific brand is more elastic because the consumer can easilyswitch to another brand if the price goes up.b. The demand for gasoline in the short run and the demand for gasoline in the longrunDemand in the long run is more elastic since consumers have more time to adjust toa change in price. For example, consumers can buy more fuel efficient vehicles, movecloser to work or school, organize car pools, etc.Chapter 6 questions for review:1, 5, 71. What is a production function? How does a long-run production function differ from a short-run production function?A production function represents how inputs are transformed into outputs by a firm.In particular, a production function describes the maximum output that a firm canproduce for each specified combination of inputs. In the short run, one or more factorsof production cannot be changed, so a short-run production function tells us themaximum output that can be produced with different amounts of the variable inputs,holding fixed inputs constant. In the long-run production function, all inputs arevariable.5. What is the difference between a production function and an isoquant?A production function describes the maximum output that can be achieved with anygiven combination of inputs. An isoquant identifies all of the different combinationsof inputs that can be used to produce one particular level of output.7. Isoquants can be convex, linear, or L-shaped. What does each of these shapes tell youabout the nature of the production function? What does each of these shapes tell you about the MRTS?Convex isoquants indicate that some units of one input can be substituted for a unitof the other input while maintaining output at the same level. In this case, theMRTS is diminishing as we move down along the isoquant. This tells us that it becomes more and more difficult to substitute one input for the other while keeping output unchanged. Linear isoquants imply that the slope, or the MRTS, is constant.This means that the same number of units of one input can always be exchanged fora unit of the other input holding output constant. The inputs are perfect substitutesin this case. L-shaped isoquants imply that the inputs are perfect complements, andthe firm is producing under a fixed proportions type of technology. In this case thefirm cannot give up one input in exchange for the other and still maintain the samelevel of output. For example, the firm may require exactly 4 units of capital for eachunit of labor, in which case one input cannot be substituted for the other.Chapter 7questions for review:3, 7, 143. Please explain whether the following statements are true or false.a. If the owner of a business pays himself no salary, then the accounting cost is zero, but the economic cost is positive.This is True. Since there is no monetary transaction, there is no accounting, or explicit, cost. However, since the owner of the business could be employed elsewhere, there is an economic cost. The economic cost is positive, and reflectsing the opportunity cost of the owner’s time. The economic cost is the value of the owner’stime in his next best alternative, or the amount that the owner would earn if he tookthe next best job.7. Assume that the marginal cost of production is increasing. Can you determine whether the average variable cost is increasing or decreasing? Explain.When marginal cost is increasing, average variable cost can be either increasing or decreasing as shown in the diagram below. Marginal cost begins increasing at output level q1, but AVC is decreasing. This happens because MC is below AVC and is therefore pulling AVC down. AVC is decreasing for all output levels between q1 and q2. At q2, MC cuts through the minimum point of AVC, and AVC begins to rise becauseMC is above it. Thus, for output levels greater than q2, AVC is increasing.17.14. What is the difference between economies of scale and returns to scale? Economies of scale depend on the relationship between what happens to cost andwhen outpuoutput i.e., how does cost change when output is doubled? t is doubled. Returns to scale depend on what happens to output when all inputs are doubled. The difference is that economies of scale reflect input proportions that change optimallyas output is increased, while returns to scale are based on fixed input proportions (such as two units of labor for every unit of capital) as output increases.Chapter 8questions for review:3, 4, 11Chapter 10 questions for review:2, 3, 5, 8Chapter 11questions for review:1, 3, 4Chapter 12 questions for review:2, 6, 8, 10 Chapter 14questions for review:2, 4, 5Chapter 16questions for review:4, 7, 13Chapter 17questions for review:6, 10；exercise: 3, 4 Chapter 18questions for review:1, 2, 3, 104. Caculation（2×10，20 points）Chapter 2exercise:11Chapter 3exercise:14, 16Chapter 4exercise:9, 13Chapter 6exercise:7, 8, 9Chapter 7exercise:3, 9, 11Chapter 8exercise:4, 5, 6, 7, 11 Chapter 10exercise:6, 7Chapter 11exercise:4, 5Chapter 12exercise:3(a/b/c/d), 4, 6(a/b/c) Chapter 14exercise:8, 10(a/b/c) Chapter 18exercise:3。
曼昆《微观经济学》答案(英文版)_Chapter_1~5[1]
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Chapter 1Problems and Applications1. a. A family deciding whether to buy a new car faces a tradeoff between the cost of thecar and other things they might want to buy. For example, buying the car mightmean they must give up going on vacation for the next two years. So the real costof the car is the family's opportunity cost in terms of what they must give up.b. For a member of Congress deciding whether to increase spending on national parks,the tradeoff is between parks and other spending items or tax cuts. If more moneygoes into the park system, that may mean less spending on national defense or on thepolice force. Or, instead of spending more money on the park system, taxes couldbe reduced.c. When a company president decides whether to open a new factory, the decision isbased on whether the new factory will increase the firm's profits compared to otheralternatives. For example, the company could upgrade existing equipment orexpand existing factories. The bottom line is: Which method of expandingproduction will increase profit the most?d. In deciding how much to prepare for class, a professor faces a tradeoff between thevalue of improving the quality of the lecture compared to other things she could dowith her time, such as working on additional research.2. When the benefits of something are psychological, such as going on a vacation, it isn't easy tocompare benefits to costs to determine if it's worth doing. But there are two ways to think about the benefits. One is to compare the vacation with what you would do in its place. If you didn't go on vacation, would you buy something like a new set of golf clubs? Then you can decide if you'd rather have the new clubs or the vacation. A second way is to think about how much work you had to do to earn the money to pay for the vacation; then you can decide if the psychological benefits of the vacation were worth the psychological cost of working.3. If you are thinking of going skiing instead of working at your part-time job, the cost of skiingincludes its monetary and time costs, plus the opportunity cost of the wages you're giving up by not working. If the choice is between skiing and going to the library to study, then the cost of skiing is its monetary and time costs plus the cost to you of getting a lower grade in your course.4. If you spend $100 now instead of investing it for a year and earning 5 percent interest, youare giving up the opportunity to spend $105 a year from now. The idea that money has a time value is the basis for the field of finance, the subfield of economics that has to do with prices of financial instruments like stocks and bonds.5. The fact that you've already sunk $5 million isn't relevant to your decision anymore, sincethat money is gone. What matters now is the chance to earn profits at the margin. If you spend another $1 million and can generate sales of $3 million, you'll earn $2 million in marginal profit, so you should do so. You are right to think that the project has lost a total of $3 million ($6 million in costs and only $3 million in revenue) and you shouldn't have started it. That's true, but if you don't spend the additional $1 million, you won't have any sales and your losses will be $5 million. So what matters is not the total profit, but the profit you can earn at the margin. In fact, you'd pay up to $3 million to complete development; any more than that, and you won't be increasing profit at the margin.6. Harry suggests looking at whether productivity would rise or fall. Productivity is certainlyimportant, since the more productive workers are, the lower the cost per gallon of potion.Harry wants to look at average cost. But both Harry and Ron are missing the other side of the equation−revenue. A firm wants to maximize its profits, so it needs to examine both costs and revenues. Thus, Hermione is right−it’s best to examine whether the extra revenue would exceed the extra costs. In addition, Hermione is the only one who’s thinking at the margin.7. a. Since a person gets fewer after-tax Social Security benefits the greater is his or herincome, there's an incentive not to save for retirement. If you save a lot, yourincome will be higher, and you won't get as much after-tax Social Security income assomeone who didn't save as much. The unintended consequence of the taxation ofSocial Security benefits is to reduce saving; yet the Social Security system arosebecause of worries that people wouldn’t save enough for retirement.b. For the same reason, you'll tend not to work (or not work as much) after age 65.The more you work, the lower your after-tax Social Security benefits will be. Thusthe taxation of Social Security benefits discourages work effort after age 65.8. a. When welfare recipients who are able to work have their benefits cut off after twoyears, they have greater incentive to find jobs than if their benefits were to lastforever.b. The loss of benefits means that someone who can't find a job will get no income atall, so the distribution of income will become less equal. But the economy will bemore efficient, since welfare recipients have a greater incentive to find jobs. Thusthe change in the law is one that increases efficiency but reduces equity.9. By specializing in each task, you and your roommate can finish the chores more quickly. Ifyou divided each task equally, it would take you more time to cook than it would take your roommate, and it would take him more time to clean than it would take you. By specializing, you reduce the total time spent on chores.Similarly, countries can specialize and trade, making both better off. For example, suppose it takes Spanish workers less time to make clothes than French workers, and French workers can make wine more efficiently than Spanish workers. Then Spain and France can both benefit if Spanish workers produce all the clothes and French workers produce all the wine, and they exchange some wine for some clothes.10. a. Being a central planner is tough! To produce the right number of CDs by the rightartists and deliver them to the right people requires an enormous amount ofinformation. You need to know about production techniques and costs in the CDindustry. You need to know each person's musical tastes and which artists theywant to hear. If you make the wrong decisions, you'll be producing too many CDsby artists that people don't want to hear, and not enough by others.b. Your decisions about how many CDs to produce carry over to other decisions. Youhave to make the right number of CD players for people to use. If you make toomany CDs and not enough cassette tapes, people with cassette players will be stuckwith CDs they can't play. The probability of making mistakes is very high. Youwill also be faced with tough choices about the music industry compared to otherparts of the economy. If you produce more sports equipment, you'll have fewerresources for making CDs. So all decisions about the economy influence yourdecisions about CD production.11. a. Efficiency: The market failure comes from the monopoly by the cable TV firm.b. Equityc. Efficiency: An externality arises because secondhand smoke harms nonsmokers.d. Efficiency: The market failure occurs because of Standard Oil's monopoly power.e. Equityf. Efficiency: There's an externality because of accidents caused by drunk drivers.12. a. If everyone were guaranteed the best health care possible, much more of our nation'soutput would be devoted to medical care than is now the case. Would that beefficient? If you think that currently doctors form a monopoly and restrict healthcare to keep their incomes high, you might think efficiency would increase byproviding more health care. But more likely, if the government mandated increasedspending on health care, the economy would be less efficient because it would givepeople more health care than they would choose to pay for. From the point of viewof equity, if poor people are less likely to have adequate health care, providing morehealth care would represent an improvement. Each person would have a more evenslice of the economic pie, though the pie would consist of more health care and lessof other goods.b. When workers are laid off, equity considerations argue for the unemploymentbenefits system to provide them with some income until they can find new jobs.After all, no one plans to be laid off, so unemployment benefits are a form ofinsurance. But there’s an efficiency problem why work if you can get income fordoing nothing? The economy isn’t o perating efficiently if people remainunemployed for a long time, and unemployment benefits encourage unemployment.Thus, there’s a tradeoff between equity and efficiency. The more generous areunemployment benefits, the less income is lost by an unemployed person, but themore that person is encouraged to remain unemployed. So greater equity reducesefficiency.13. Since average income in the United States has roughly doubled every 35 years, we are likelyto have a better standard of living than our parents, and a much better standard of living than our grandparents. This is mainly the result of increased productivity, so that an hour of work produces more goods and services than it used to. Thus incomes have continuously risen over time, as has the standard of living.14. If Americans save more and it leads to more spending on factories, there will be an increasein production and productivity, since the same number of workers will have more equipment to work with. The benefits from higher productivity will go to both the workers, who will get paid more since they're producing more, and the factory owners, who will get a return on their investments. There's no such thing as a free lunch, though, because when people save more, they're giving up spending. They get higher incomes at the cost of buying fewer goods.15. a. If people have more money, they're probably going to spend more on goods andservices.b. If prices are sticky, and people spend more on goods and services, then output mayincrease, as producers increase output to meet the higher demand rather than raisingprices.c. If prices can adjust, then people's higher spending will be matched with increasedprices, and output won't rise.16. To make an intelligent decision about whether to reduce inflation, a policymaker would needto know what causes inflation and unemployment, as well as what determines the tradeoff between them. Because prices are sticky, an attempt to reduce inflation will lead to higher unemployment. A policymaker thus faces a tradeoff between the benefits of lower inflation compared to the cost of higher unemployment.Chapter 2Problems and Applications1. Many answers are possible.2. a. Steel is a fairly uniform commodity, though some firms produce steel of inferiorquality.b. Novels are each unique, so they are quite distinguishable.c. Wheat produced by one farmer is completely indistinguishable from wheat producedby another.d. Fast food is more distinguishable than steel or wheat, but certainly not as much asnovels.3. See Figure 2-5; the four transactions are shown.Figure 2-54. a. Figure 2-6 shows a production possibilities frontier between guns and butter. It isbowed out because when most of the economy’s resources are being used to pr oducebutter, the frontier is steep and when most of the economy’s resources are being usedto produce guns, the frontier is very flat. When the economy is producing a lot ofguns, workers and machines best suited to making butter are being used to makeguns, so each unit of guns given up yields a large increase in the production of butter;thus the production possibilities frontier is flat. When the economy is producing alot of butter, workers and machines best suited to making guns are being used tomake butter, so each unit of guns given up yields a small increase in the productionof butter; thus the production possibilities frontier is steep.b. Point A is impossible for the economy to achieve; it is outside the productionpossibilities frontier. Point B is feasible but inefficient because it’s inside theproduction possibilities frontier.Figure 2-6c. The Hawks might choose a point like H, with many guns and not much butter. TheDoves might choose a point like D, with a lot of butter and few guns.d. If both Hawks and Doves reduced their desired quantity of guns by the same amount,the Hawks would get a bigger peace dividend because the production possibilitiesfrontier is much steeper at point H than at point D. As a result, the reduction of agiven number of guns, starting at point H, leads to a much larger increase in thequantity of butter produced than when starting at point D.5. See Figure 2-7. The shape and position of the frontier depend on how costly it is to maintaina clean environment the productivity of the environmental industry. Gains inenvironmental productivity, such as the development of a no-emission auto engine, lead to shifts of the production-possibilities frontier, like the shift from PPF1 to PPF2 shown in the figure.Figure 2-76. a. A family’s decision about how much income to save is microeconomics.b. The effect of government regulations on auto emissions is microeconomics.c. The impact of higher saving on economic growth is macroeconomics.d. A f irm’s decision about how many workers to hire is microeconomics.e. The relationship between the inflation rate and changes in the quantity of money ismacroeconomics.7. a. The statement that society faces a short-run tradeoff between inflation andunemployment is a positive statement. It deals with how the economy is, not how itshould be. Since economists have examined data and found that there’s a short-runnegative relationship between inflation and unemployment, the statement is a fact,thus it’s a positive statement.b. The statement that a reduction in the rate of growth of money will reduce the rate ofinflation is a positive statement. Economists have found that money growth andinflation are very closely related. The statement thus tells how the world is, and soit is a positive statement.c. The statement that the Federal Reserve should reduce the rate of growth of money isa normative statement. It states an opinion about something that should be done,not how the world is.d. The statement that society ought to require welfare recipients to look for jobs is anormative statement. It doesn’t state a fact about how the world is. Instead, it is astatement of how the world should be and is thus a normative statement.e. The statement that lower tax rates encourage more work and more saving is apositive statement. Economists have studied the relationship between tax rates andwork, as well as the relationship between tax rates and saving. They’ve found anegative relationship in both cases. So the statement reflects how the world is, andis thus a positive statement.8. Two of the statements in Table 2-2 are clearly normative. They are: “5. If the federalbudget is to be balanced, it should be done over the business cycle rather th an yearly” and “9.The government should restructure the welfare system along the lines of a ‘negative income tax.’” Both are suggestions of changes that should be made, rather than statements of fact, so they are clearly normative statements.The other statements in the table are positive. All the statements concern how the world is, not how the world should be. Note that in all cases, even though they’re statements of fact, fewer than 100 percent of economists agree with them. You could say that positive statements are statements of fact about how the world is, but not everyone agrees about what the facts are.9. As the president, you’d be interested in both the positive and normative views of economists,but you’d probably be most interested in their positive views. Economists are on your staff to provide their expertise about how the economy works. They know many facts about the economy and the interaction of different sectors. So you’d be most likely to call on them about questions of fact posit ive analysis. Since you’re the president, you’re the one who has the make the normative statements as to what should be done, with an eye to the political consequences. The normative statements made by economists represent their views, not necessarily ei ther your’s or the electorate’s.10. There are many possible answers.11. As of this writing, the chairman of the Federal Reserve is Alan Greenspan, the chair of theCouncil of Economic Advisers is Martin N. Baily, and the secretary of the treasury is Larry Summers.12. There are many possible answers.13. As time goes on, you might expect economists to disagree less about public policy becausethey’ll have opportunities to observe different policies that are put into place. As new policies are tried, their results will become known, and they can be evaluated better. It’s likely that the disagreement about them will be reduced after they’ve been tried in practice.For example, many economists thought that wage and price controls would be a good idea for keeping inflation under control, while others thought it was a bad idea. But when the controls were tried in the early 1970s, the results were disastrous. The controls interfered with the invisible hand of the marketplace and shortages developed in many products. As a result, most economists are now convinced that wage and price controls are a bad idea for controlling inflation.But it’s unlikely that the differences between economists will ever be completely eliminated.Economists differ on too many aspects of how the world works. Plus, even as some policies get tried out and are either accepted or rejected, creative economists keep coming up with new ideas.Chapter 3Problems and Applications1. In the text example of the farmer and the rancher, the farmer’s opportunity cost of producingone pound of meat is two pounds of potatoes because for every 20 hours of work, he can produce one pound of meat or two pounds of potatoes. With limited time at his disposal, producing a pound of meat means he gives up the opportunity to produce two pounds of potatoes. Similarly, the rancher’s opportunity cost of producing one pound of meat is 1/8 pound of potatoes because for every hour of work, she can produce one pound of meat or 1/8 pound of potatoes. With limited time at her disposal, producing a pound of meat means she gives up the opportunity to produce 1/8 pound of potatoes.2. a. See Figure 3-2. If Maria spends all five hours studying economics, she can read100 pages, so that is the vertical intercept of the production possibilities frontier. Ifshe spends all five hours studying sociology, she can read 250 pages, so that is thehorizontal intercept. The time costs are constant, so the production possibilitiesfrontier is a straight line.Figure 3-2b. It takes Maria two hours to read 100 pages of sociology. In that time, she couldread 40 pages of economics. So the opportunity cost of 100 pages of sociology is40 pages of economics.3. a.Workers needed to make:One Car One Ton of GrainU.S. 1/4 1/10Japan 1/4 1/5b. See Figure 3-3. With 100 million workers and four cars per worker, if eithereconomy were devoted completely to cars, it could make 400 million cars. Since aU.S. worker can produce 10 tons of grain, if the U.S. produced only grain it wouldproduce 1,000 million tons. Since a Japanese worker can produce 5 tons of grain, ifJapan produced only grain it would produce 500 million tons. These are theintercepts of the production possibilities frontiers shown in the figure. Note thatsince the tradeoff between cars and grain is constant, the production possibilitiesfrontier is a straight line.Figure 3-3c. Since a U.S. worker produces either 4 cars or 10 tons of grain, the opportunity cost of1 car is 2½ tons of grain, which is 10 divided by 4. Since a Japanese workerproduces either 4 cars or 5 tons of grain, the opportunity cost of 1 car is1 1/4 tons of grain, which is 5 divided by 4. Similarly, the U.S. opportunity cost of1 ton of grain is 2/5 cars (4 divided by 10) and the Japanese opportunity cost of 1 tonof grain is 4/5 cars (4 divided by 5). This gives the following table:Opportunity Cost of:1 Car (in terms of tons ofgrain given up) 1 Ton of Grain (in terms ofcars given up)U.S. 2 1/2 2/5Japan 1 1/4 4/5d. Neither country has an absolute advantage in producing cars, since they’re equallyproductive (the same output per worker); the U.S. has an absolute advantage in producing grain, since it’s more productive (greater output per worker).e. Japan has a comparative advantage in producing cars, since it has a loweropportunity cost in terms of grain given up. The U.S. has a comparative advantage in producing grain, since it has a lower opportunity cost in terms of cars given up. f. With half the workers in each country producing each of the goods, the U.S. wouldproduce 200 million cars (that’s 50 million workers times 4 cars each) and 500 million tons of grain (50 million workers times 10 tons each). Japan would produce 200 million cars (50 million workers times 4 cars each) and 250 million tons of grain(50 million workers times 5 tons each).g. From any situation with no trade, in which each country is producing some cars andsome grain, suppose the U.S. changed 1 worker from producing cars to producinggrain. That worker would produce 4 fewer cars and 10 additional tons of grain.Then suppose the U.S. offers to trade 7 tons of grain to Japan for 4 cars. The U.S.will do this because it values 4 cars at 10 tons of grain, so it will be better off if thetrade goes through. Suppose Japan changes 1 worker from producing grain toproducing cars. That worker would produce 4 more cars and 5 fewer tons of grain.Japan will take the trade because it values 4 cars at 5 tons of grain, so it will be betteroff. With the trade and the change of 1 worker in both the U.S. and Japan, eachcountry gets the same amount of cars as before and both get additional tons of grain(3 for the U.S. and 2 for Japan). Thus by trading and changing their production,both countries are better off.4. a. Pat’s opportunity cost of making a pizza is 1/2 gallon of root beer, since she couldbrew 1/2 gallon in the time (2 hours) it takes her to make a pizza. Pat has anabsolute advantage in making pizza since she can make one in two hours, while ittakes Kris four hours. Kris’s opportunity cost of making a pizza is 2/3 gallons ofroot beer, since she could brew 2/3 of a gallon in the time (4 hours) it takes her tomake a pizza. Since Pa t’s opportunity cost of making pizza is less than Kris’s, Pathas a comparative advantage in making pizza.b. Since Pat has a comparative advantage in making pizza, she will make pizza andexchange it for root beer that Kris makes.c. The highest price of pizza in terms of root beer that will make both roommates betteroff is 2/3 gallons of root beer. If the price were higher than that, then Kris wouldprefer making her own pizza (at an opportunity cost of 2/3 gallons of root beer)rather than trading for pizza that Pat makes. The lowest price of pizza in terms ofroot beer that will make both roommates better off is 1/2 gallon of root beer. If theprice were lower than that, then Pat would prefer making her own root beer (she canmake 1/2 gallon of root beer instead of making a pizza) rather than trading for rootbeer that Kris makes.5. a. Since a Canadian worker can make either two cars a year or 30 bushels of wheat, theopportunity cost of a car is 15 bushels of wheat. Similarly, the opportunity cost of abushel of wheat is 1/15 of a car. The opportunity costs are the reciprocals of eachother.b. See Figure 3-4. If all 10 million workers produce two cars each, they produce atotal of 20 million cars, which is the vertical intercept of the production possibilitiesfrontier. If all 10 million workers produce 30 bushels of wheat each, they produce atotal of 300 million bushels, which is the horizontal intercept of the productionpossibilities frontier. Since the tradeoff between cars and wheat is always the same,the production possibilities frontier is a straight line.If Canada chooses to consume 10 million cars, it will need 5 million workers devotedto car production. That leaves 5 million workers to produce wheat, who willproduce a total of 150 million bushels (5 million workers times 30 bushels perworker). This is shown as point A on Figure 3-4.c. If the United States buys 10 million cars from Canada and Canada continues toconsume 10 million cars, then Canada will need to produce a total of 20 million cars.So Canada will be producing at the vertical intercept of the production possibilitiesfrontier. But if Canada gets 20 bushels of wheat per car, it will be able to consume200 million bushels of wheat, along with the 10 million cars. This is shown as pointB in the figure. Canada should accept the deal because it gets the same number ofcars and 50 million more bushes of wheat.Figure 3-46. Though the professor could do both writing and data collection faster than the student (that is,he has an absolute advantage in both), his time is limited. If the professor’s comparative advantage is in writing, it makes sense for him to pay a student to collect the data, since that’s the student’s comparative advantage.7. a. English workers have an absolute advantage over Scottish workers in producingscones, since English workers produce more scones per hour (50 vs. 40). Scottishworkers have an absolute advantage over English workers in producing sweaters,since Scottish workers produce more sweaters per hour (2 vs. 1). Comparativeadvantage runs the same way. English workers, who have an opportunity cost of1/50 sweaters per scone (1 sweater per hour divided by 50 scones per hour), have acomparative advantage in scone production over Scottish workers, who have anopportunity cost of 1/20 sweater per scone (2 sweaters per hour divided by 40 sconesper hour). Scottish workers, who have an opportunity cost of 20 scones per sweater(40 scones per hour divided by 2 sweaters per hour), have a comparative advantagein sweater production over English workers, who have an opportunity cost of 50scones per sweater (50 scones per hour divided by 1 sweater per hour).b. If England and Scotland decide to trade, Scotland will produce sweaters and tradethem for scones produced in England. A trade with a price between 20 and 50scones per sweater will benefit both countries, as they’ll be getting the traded good ata lower price than their opportunity cost of producing the good in their own country.c. Even if a Scottish worker produced just one sweater per hour, the countries wouldstill gain from trade, because Scotland would still have a comparative advantage inproducing sweaters. Its opportunity cost for sweaters would be higher than before(40 scones per sweater, instead of 20 scones per sweater before). But there are stillgains from trade since England has a higher opportunity cost (50 scones per sweater).。
曼昆微观经济学课后练习英文答案(第七章)
WHAT’S NEW IN THE SIXTH EDITION:There are no major changes to this chapter.LEARNING OBJECTIVES:By the end of this chapter, students should understand:➢ the link between buyers’ willingness to pay for a good and the demand curve.➢ how to define and measure consumer surplus.➢ the link between sellers’ costs of producing a good and the supply curve.➢ how to define and measure producer surplus.➢ that the equilibrium of supply and demand maximizes total surplus in a market.CONTEXT AND PURPOSE:Chapter 7 is the first chapter in a three-chapter sequence on welfare economics and market efficiency. Chapter 7 employs the supply and demand model to develop consumer surplus and producer surplus as a measure of welfare and market efficiency. These concepts are then utilized in Chapters 8 and 9 to determine the winners and losers from taxation and restrictions on international trade.The purpose of Chapter 7 is to develop welfare economics —the study of how the allocation ofresources affects economic well-being. Chapters 4 through 6 employed supply and demand in a positive framework, which focused on the question, “What is the equilibrium price and quantity in a market?” This chapter now addresses the normative question, “Is the equ ilibrium price and quantity in a market the best possible solution to the resource allocation problem, or is it simply the price and quantity thatbalance supply and demand?” Students will discover that under most circumstances the equilibrium price and quantity is also the one that maximizes welfare.7CONSUMERS, PRODUCERS, AND THE EFFICIENCY OF MARKETSKEY POINTS:• Consumer surplus equals buyers’ willingness to pay for a good minus the amount they actually pay for it, and it measures the benefit buyers get from participating in a market. Consumer surplus can be computed by finding the area below the demand curve and above the price.• Producer surplus equals the amount sellers receive for their goods minus their costs of production, and it measures the benefit sellers get from participating in a market. Producer surplus can be computed by finding the area below the price and above the supply curve.•An allocation of resources that maximizes the sum of consumer and producer surplus is said to be efficient. Policymakers are often concerned with the efficiency, as well as the equality, of economic outcomes.• The equilibrium of supply and demand maximizes the sum of consumer and producer surplus. That is,the invisible hand of the marketplace leads buyers and sellers to allocate resources efficiently.• Markets do not allocate resources efficiently in the presence of market failures such as market poweror externalities.CHAPTER OUTLINE:I. Definition of welfare economics: the study of how the allocation of resources affectseconomic well-being.II. Consumer SurplusA. Willingness to Pay1. Definition of willingness to pay: the maximum amount that a buyer will pay for agood.2. Example: You are auctioning a mint-condition recording of Elvis Presley’s first album. Fourbuyers show up. Their willingness to pay is as follows:If the bidding goes to slightly higher than $80, all buyers drop out except forJohn. Because John is willing to pay more than he has to for the album, hederives some benefit from participating in the market.3. Definition of consumer surplus: the amount a buyer is willing to pay for a goodminus the amount the buyer actually pays for it.4. Note that if you had more than one copy of the album, the price in the auction would end upbeing lower (a little over $70 in the case of two albums) and both John and Paul would gain consumer surplus.B. Using the Demand Curve to Measure Consumer Surplus1. We can use the information on willingness to pay to derive a demand curve for the rare ElvisPresley album.PriceBuyersQuantity DemandedMore than $100 None 0 $80 to $100 John1 $70 to $80 John, Paul2 $50 to $70 John, Paul, George3 $50 or lessJohn, Paul, George, Ringo42. At any given quantity, the price given by the demand curve reflects the willingness to pay ofthe marginal buyer . Because the demand curve shows the buyers’ willingness to pay, we can use the demand curve to measure consumer surplus.Figure 1 “This represents the demand curve for the time machine. Consumer surplus is the difference between what consumers are willing to pay and the amount they actually have to pay. The market price will deter mine who uses the time machine and how much surplus they keep.”“If the price of a time machine ride was $500, three rides would be sold—one to Scott, one to Carol, and one to Steve. Jeanne is not willing to pay $500, so she wouldn’t time travel.”“We c an calculate the consumer surplus of three time trips. Scott would pay $3,000 but only pays $500, leaving $2,500 of net benefits.” (Put these numbers on the board.) “Carol has net benefits of $2,000. Steve has $300 in net benefits. Adding up these net savings gives $4,800 in consumer surplus.”Points for DiscussionThe consumer surplus depends on a good’s selling price and the number of consumers who are willing to purchase the good at that price. The lower the price, the greater the consumer surplus.3. Consumer surplus can be measured as the area below the demand curve and above the price. C. How a Lower Price Raises Consumer Surplus1. As price falls, consumer surplus increases for two reasons.a. Those already buying the product will receive additional consumer surplus because theyare paying less for the product than before (area A on the graph).b. Because the price is now lower, some new buyers will enter the market and receiveconsumer surplus on these additional units of output purchased (area B on the graph).D. What Does Consumer Surplus Measure?1. Remember that consumer surplus is the difference between the amount that buyers arewilling to pay for a good and the price that they actually pay.2. Thus, it measures the benefit that consumers receive from the good as the buyersthemselves perceive it.Figure 2Figure 3It is important to stress that consumer surplus is measured in monetary terms. Consumer surplus gives us a way to place a monetary cost on inefficient market outcomes (due to government involvement or market failure).III. Producer SurplusA. Cost and the Willingness to Sell1. Definition of cost: the value of everything a seller must give up to produce a good .2. Example: You want to hire someone to paint your house. You accept bids for the work fromfour sellers. Each painter is willing to work if the price you will pay exceeds her opportunity cost. (Note that this opportunity cost thus represents willingness to sell.) The costs are:3. Bidding will stop when the price gets to be slightly below $600. All sellers will drop out exceptfor Grandma. Because Grandma receives more than she would require to paint the house, she derives some benefit from producing in the market.4. Definition of producer surplus: the amount a seller is paid for a good minus theseller’s cost of providing it.5. Note that if you had more than one house to paint, the price in the auction would end upbeing higher (a little under $800 in the case of two houses) and both Grandma and Georgia would gain producer surplus.ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price ceilings from Chapter 6. Redraw the market for two-bedroom apartments in your town. Draw in a price ceiling below the equilibrium price.Then go through:▪ consumer surplus before the price ceiling is put into place. ▪ consumer surplus after the price ceiling is put into place.B. Using the Supply Curve to Measure Producer Surplus1. We can use the information on cost (willingness to sell) to derive a supply curve for housepainting services.Price Sellers Quantity Supplied$900 or more Mary, Frida, Georgia, Grandma 4$800 to $900 Frida, Georgia, Grandma 3$600 to $800 Georgia, Grandma 2$500 to $600 Grandma 1less than $500 None 02. At any given quantity, the price given by the supply curve represents the cost of the marginalseller. Because the supply curve shows the sellers’ cost (willingness to sell), we can use the supply curve to measure producer surplus.3. Producer surplus can be measured as the area above the supply curve and below the price. Figure 4Figure 5C. How a Higher Price Raises Producer Surplus1. As price rises, producer surplus increases for two reasons.a. Those already selling the product will receive additional producer surplus because theyare receiving more for the product than before (area C on the graph).b. Because the price is now higher, some new sellers will enter the market and receiveproducer surplus on these additional units of output sold (area D on the graph).D. Producer surplus is used to measure the economic well-being of producers, much like consumersurplus is used to measure the economic well-being of consumers.Figure 6ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price floors from Chapter 6. Redraw the market for an agriculturalproduct such as corn. Draw in a price support above the equilibrium price.Then go through:▪ producer surplus before the price support is put in place.▪ producer surplus after the price support is put in place.Make sure that you discuss the cost of the price support to taxpayers.Pretty Woman, Chapter 6. Vivien (Julia Roberts) and Edward (Richard Gere)negotiate a price. Afterward, Vivien reveals she would have accepted a lower price,while Edward admits he would have paid more. If you have done a good job ofintroducing consumer and producer surplus, you will see the light bulbs go off aboveyour students’ heads as they watch this clip.IV. Market EfficiencyA. The Benevolent Social Planner1. The economic well-being of everyone in society can be measured by total surplus, which isthe sum of consumer surplus and producer surplus:Total Surplus = Consumer Surplus + Producer SurplusTotal Surplus = (Value to Buyers – Amount Paid by Buyers) + (Amount Received by Sellers – Cost to Sellers)Because the Amount Paid by Buyers = Amount Received by Sellers:2. Definition ofefficiency: the property of a resource allocation of maximizing thetotal surplus received by all members of society .3. Definition of equality: the property of distributing economic prosperity uniformlythe members of society .B. Evaluating the Market EquilibriumTotal Surplus = Value to Buyers Cost to Sellers Figure 7Now might be a good time to point out that many government policies involve atrade-off between efficiency and equity. When you evaluate government policies, like price ceilings or floors, you can explain them in terms of equity and efficiency.1. At the market equilibrium price:a. Buyers who value the product more than the equilibrium price will purchase the product;those who do not, will not purchase the product. In other words, the free marketallocates the supply of a good to the buyers who value it most highly, as measured bytheir willingness to pay.b. Sellers whose costs are lower than the equilibrium price will produce the product; thosewhose costs are higher, will not produce the product. In other words, the free marketallocates the demand for goods to the sellers who can produce it at the lowest cost.2. Total surplus is maximized at the market equilibrium.Figure 8a. At any quantity of output smaller than the equilibrium quantity, the value of the productto the marginal buyer is greater than the cost to the marginal seller so total surpluswould rise if output increases.b. At any quantity of output greater than the equilibrium quantity, the value of the productto the marginal buyer is less than the cost to the marginal seller so total surplus wouldrise if output decreases.3. Note that this is one of the reasons that economists believe Principle #6: Markets are usuallya good way to organize economic activity.It would be a good idea to remind students that there are circumstances when themarket process does not lead to the most efficient outcome. Examples includesituations such as when a firm (or buyer) has market power over price or when thereare externalities present. These situations will be discussed in later chapters.C. In the News: Ticket Scalping1. Ticket scalping is an example of how markets work to achieve an efficient outcome.2. This article from The Boston Globe descri bes economist Chip Case’s experience with ticketscalping.D. Case Study: Should There Be a Market in Organs?1. As a matter of public policy, people are not allowed to sell their organs.a. In essence, this means that there is a price ceiling on organs of $0.b. This has led to a shortage of organs.2. The creation of a market for organs would lead to a more efficient allocation of resources,but critics worry about the equity of a market system for organs.V. Market Efficiency and Market FailureA. To conclude that markets are efficient, we made several assumptions about how markets worked.1. Perfectly competitive markets.2. No externalities.B. When these assumptions do not hold, the market equilibrium may not be efficient.C. When markets fail, public policy can potentially remedy the situation.SOLUTIONS TO TEXT PROBLEMS:Quick Quizzes1. Figure 1 shows the demand curve for turkey. The price of turkey is P1 and the consumersurplus that results from that price is denoted CS. Consumer surplus is the amount a buyer iswilling to pay for a good minus the amount the buyer actually pays for it. It measures thebenefit to buyers of participating in a market.Figure 1 Figure 22. Figure 2 shows the supply curve for turkey. The price of turkey is P1 and the producersurplus that results from that price is denoted PS. Producer surplus is the amount sellers arepaid for a good minus the sellers’ cost of providing it (measured by the supply curve). Itmeasures the benefit to sellers of participating in a market.Figure 33. Figure 3 shows the supply and demand for turkey. The price of turkey is P1, consumersurplus is CS, and producer surplus is PS. Producing more turkeys than the equilibriumquantity would lower total surplus because the value to the marginal buyer would be lowerthan the cost to the marginal seller on those additional units.Questions for Review1. The price a buyer is willing to pay, consumer surplus, and the demand curve are all closelyrelated. The height of the demand curve represents the willingness to pay of the buyers.Consumer surplus is the area below the demand curve and above the price, which equals theprice that each buyer is willing to pay minus the price actually paid.2. Sellers' costs, producer surplus, and the supply curve are all closely related. The height of thesupply curve represents the costs of the sellers. Producer surplus is the area below the priceand above the supply curve, which equals the price received minus each seller's costs ofproducing the good.Figure 43. Figure 4 shows producer and consumer surplus in a supply-and-demand diagram.4. An allocation of resources is efficient if it maximizes total surplus, the sum of consumersurplus and producer surplus. But efficiency may not be the only goal of economicpolicymakers; they may also be concerned about equity the fairness of the distribution ofwell-being.5. The invisible hand of the marketplace guides the self-interest of buyers and sellers intopromoting general economic well-being. Despite decentralized decision making and self-interested decision makers, free markets often lead to an efficient outcome.6. Two types of market failure are market power and externalities. Market power may causemarket outcomes to be inefficient because firms may cause price and quantity to differ fromthe levels they would be under perfect competition, which keeps total surplus from beingmaximized. Externalities are side effects that are not taken into account by buyers and sellers.As a result, the free market does not maximize total surplus.Problems and Applications1. a. Consumer surplus is equal to willingness to pay minus the price paid. Therefore,Melissa’s willingness to pay must be $200 ($120 + $80).b. Her consumer surplus at a price of $90 would be $200 − $90 = $110.c. If the price of an iPod was $250, Melissa would not have purchased one because theprice is greater than her willingness to pay. Therefore, she would receive no consumersurplus.2. If an early freeze in California sours the lemon crop, the supply curve for lemons shifts to theleft, as shown in Figure 5. The result is a rise in the price of lemons and a decline inconsumer surplus from A + B + C to just A. So consumer surplus declines by the amount B +C.Figure 5 Figure 6In the market for lemonade, the higher cost of lemons reduces the supply of lemonade, asshown in Figure 6. The result is a rise in the price of lemonade and a decline in consumersurplus from D + E + F to just D, a loss of E + F. Note that an event that affects consumersurplus in one market often has effects on consumer surplus in other markets.3. A rise in the demand for French bread leads to an increase in producer surplus in the marketfor French bread, as shown in Figure 7. The shift of the demand curve leads to an increased price, which increases producer surplus from area A to area A + B + C.Figure 7The increased quantity of French bread being sold increases the demand for flour, as shown in Figure 8. As a result, the price of flour rises, increasing producer surplus from area D to D + E + F. Note that an event that affects producer surplus in one market leads to effects on producer surplus in related markets.Figure 84. a. Bert’s demand schedule is:Price Quantity DemandedMore than $7 0$5 to $7 1$3 to $5 2$1 to $3 3$1 or less 4Bert’s demand curve is shown in Figure 9.Figure 9b. When the price of a bottle of water is $4, Bert buys two bottles of water. His consumersurplus is shown as area A in the figure. He values his first bottle of water at $7, butpays only $4 for it, so has consumer surplus of $3. He values his second bottle of water at $5, but pays only $4 for it, so has consumer surplus of $1. Thus Bert’s total consumer surplus is $3 + $1 = $4, which is the area of A in the figure.c. When the price of a bottle of water falls from $4 to $2, Bert buys three bottles of water,an increase of one. His consumer surplus consists of both areas A and B in the figure, an increase in the amount of area B. He gets consumer surplus of $5 from the first bottle($7 value minus $2 price), $3 from the second bottle ($5 value minus $2 price), and $1 from the third bottle ($3 value minus $2 price), for a total consumer surplus of $9. Thus consumer surplus rises by $5 (which is the size of area B) when the price of a bottle ofwater falls from $4 to $2.5. a. Ernie’s supply schedule for water is:Price Quantity SuppliedMore than $7 4$5 to $7 3$3 to $5 2$1 to $3 1Less than $1 0Ernie’s supply curve is shown in Figure 10.Figure 10b. When the price of a bottle of water is $4, Ernie sells two bottles of water. His producersurplus is shown as area A in the figure. He receives $4 for his first bottle of water, but itcosts only $1 to produce, so Ernie has producer surplus of $3. He also receives $4 for his second bottle of water, which costs $3 to produce, so he has producer surplus of $1.Thus Ernie’s total producer surplus is $3 + $1 = $4, which is the area of A in the figure.c. When the price of a bottle of water rises from $4 to $6, Ernie sells three bottles of water,an increase of one. His producer surplus consists of both areas A and B in the figure, anincrease by the amount of area B. He gets producer surplus of $5 from the first bottle($6 price minus $1 cost), $3 from the second bottle ($6 price minus $3 cost), and $1from the third bottle ($6 price minus $5 price), for a total producer surplus of $9. Thusproducer surplus rises by $5 (which is the size of area B) when the price of a bottle ofwater rises from $4 to $6.6. a. From Ernie’s supply schedule and Bert’s demand schedule, the quantity demanded andsupplied are:Price Quantity Supplied Quantity Demanded$2 1 3$4 2 2$6 3 1Only a price of $4 brings supply and demand into equilibrium, with an equilibriumquantity of two.b. At a price of $4, consumer surplus is $4 and producer surplus is $4, as shown inProblems 3 and 4 above. Total surplus is $4 + $4 = $8.c. If Ernie produced one less bottle, his producer surplus would decline to $3, as shown inProblem 4 above. If Bert consumed one less bottle, his consumer surplus would declineto $3, as shown in Problem 3 above. So total surplus would decline to $3 + $3 = $6.d. If Ernie produced one additional bottle of water, his cost would be $5, but the price isonly $4, so his producer surplus would decline by $1. If Bert consumed one additionalbottle of water, his value would be $3, but the price is $4, so his consumer surplus would decline by $1. So total surplus declines by $1 + $1 = $2.7. a. The effect of falling production costs in the market for stereos results in a shift to theright in the supply curve, as shown in Figure 11. As a result, the equilibrium price ofstereos declines and the equilibrium quantity increases.Figure 11b. The decline in the price of stereos increases consumer surplus from area A to A + B + C+ D, an increase in the amount B + C + D. Prior to the shift in supply, producer surpluswas areas B + E (the area above the supply curve and below the price). After the shift in supply, producer surplus is areas E + F + G. So producer surplus changes by the amountF +G – B, which may be positive or negative. The increase in quantity increasesproducer surplus, while the decline in the price reduces producer surplus. Becauseconsumer surplus rises by B + C + D and producer surplus rises by F + G – B, totalsurplus rises by C + D + F + G.c. If the supply of stereos is very elastic, then the shift of the supply curve benefitsconsumers most. To take the most dramatic case, suppose the supply curve werehorizontal, as shown in Figure 12. Then there is no producer surplus at all. Consumerscapture all the benefits of falling production costs, with consumer surplus rising fromarea A to area A + B.Figure 128. Figure 13 shows supply and demand curves for haircuts. Supply equals demand at a quantityof three haircuts and a price between $4 and $5. Firms A, C, and D should cut the hair of Ellen, Jerry, and Phil. Oprah’s willingness to pay is too low and firm B’s costs are too high, so they do not participate. The maximum total surplus is the area between the demand and supply curves, which totals $11 ($8 value minus $2 cost for the first haircut, plus $7 value minus $3 cost for the second, plus $5 value minus $4 cost for the third).Figure 139. a. The effect of falling production costs in the market for computers results in a shift to theright in the supply curve, as shown in Figure 14. As a result, the equilibrium price ofcomputers declines and the equilibrium quantity increases. The decline in the price ofcomputers increases consumer surplus from area A to A + B + C + D, an increase in the amount B + C + D.Figure 14 Figure 15Prior to the shift in supply, producer surplus was areas B + E (the area above the supply curve and below the price). After the shift in supply, producer surplus is areas E + F + G.So producer surplus changes by the amount F + G – B, which may be positive ornegative. The increase in quantity increases producer surplus, while the decline in theprice reduces producer surplus. Because consumer surplus rises by B + C + D andproducer surplus rises by F + G – B, total surplus rises by C + D + F + G.b. Because typewriters are substitutes for computers, the decline in the price of computersmeans that people substitute computers for typewriters, shifting the demand fortypewriters to the left, as shown in Figure 15. The result is a decline in both theequilibrium price and equilibrium quantity of typewriters. Consumer surplus in thetypewriter market changes from area A + B to A + C, a net change of C – B. Producersurplus changes from area C + D + E to area E, a net loss of C + D. Typewriterproducers are sad about technological advances in computers because their producersurplus declines.c. Because software and computers are complements, the decline in the price and increasein the quantity of computers means that the demand for software increases, shifting the demand for software to the right, as shown in Figure 16. The result is an increase in both the price and quantity of software. Consumer surplus in the software market changesfrom B + C to A + B, a net change of A – C. Producer surplus changes from E to C + D + E, an increase of C + D, so software producers should be happy about the technological progress in computers.Figure 16d. Yes, this analysis helps explain why Bill Gates is one the world’s richest people, becausehis company produces a lot of software that is a complement with computers and therehas been tremendous technological advance in computers.10. a. With Provider A, the cost of an extra minute is $0. With Provider B, the cost of an extraminute is $1.b. With Provider A, my friend will purchase 150 minutes [= 150 – (50)(0)]. With Provider B,my friend would purchase 100 minutes [= 150 – (50)(1)].c. With Provider A, he would pay $120. The cost would be $100 with Provider B.Figure 17d. Figure 17 shows the friend’s demand. With Provider A, he buys 150 minu tes and hisconsumer surplus is equal to (1/2)(3)(150) – 120 = 105. With Provider B, his consumersurplus is equal to (1/2)(2)(100) = 100.e. I would recommend Provider A because he receives greater consumer surplus.11. a. Figure 18 illustrates the demand for medical care. If each procedure has a price of $100,quantity demanded will be Q1 procedures.Figure 18b. If consumers pay only $20 per procedure, the quantity demanded will be Q2 procedures.Because the cost to society is $100, the number of procedures performed is too large to maximize total surplus. The quantity that maximizes total surplus is Q1 procedures, which is less than Q2.c. The use of medical care is excessive in the sense that consumers get procedures whosevalue is less than t he cost of producing them. As a result, the economy’s total surplus is reduced.d. To prevent this excessive use, the consumer must bear the marginal cost of theprocedure. But this would require eliminating insurance. Another possibility would be that the insurance company, which pays most of the marginal cost of the procedure ($80, in this case) could decide whether the procedure should be performed. But the insurance company does not get the benefits of the procedure, so its decisions may not reflect the value to the consumer.。
微观经济学试题及答案英文版
微观经济学试题及答案英文版Microeconomics Exam Questions and Answers (English Version)Question 1:Define the law of demand and explain how it relates to the concept of elasticity.Answer 1:The law of demand states that, all else being equal, the quantity demanded of a good or service will decrease as its price increases, and vice versa. Elasticity, specifically price elasticity of demand, measures the responsiveness of the quantity demanded to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. If the absolute value of the elasticity coefficient is greater than one, the demand is elastic; if it is less than one, the demand is inelastic; and if it equals one, the demand is unit elastic.Question 2:Explain the concept of marginal utility and how it relates to consumer behavior.Answer 2:Marginal utility is the additional satisfaction or utility derived from consuming one more unit of a good or service. It is the first derivative of the total utility function with respect to the quantity consumed. As consumers consume moreof a good, the marginal utility typically decreases, a phenomenon known as the law of diminishing marginal utility. This concept is fundamental to understanding consumer behavior and the decision-making process when allocating a limited budget among various goods and services.Question 3:What is the difference between a perfectly competitive market and a monopoly?Answer 3:A perfectly competitive market is characterized by a large number of buyers and sellers, homogeneous products, free entry and exit, and the absence of barriers to entry. Prices are determined by the market and individual firms are price takers. In contrast, a monopoly is a market structure where there is only one seller of a unique product with no close substitutes. The monopolist has market power and can set prices above marginal cost, leading to deadweight loss and inefficiency.Question 4:Explain the concept of opportunity cost and give an example.Answer 4:Opportunity cost is the value of the next best alternative that is forgone when making a choice. It represents the benefits an individual, investor, or business misses out on when choosing one alternative over another. For example, if a farmer has a choice between growing wheat or corn on a piece of land, the opportunity cost of choosing to grow wheat isthe profit that could have been earned from growing corn.Question 5:What are the factors that determine the shape of a firm's supply curve?Answer 5:The shape of a firm's supply curve is determined by the relationship between the cost of production and the quantity supplied. If the marginal cost of production is constant, the supply curve will be perfectly elastic (horizontal). If the marginal cost increases as production increases, the supply curve will be upward sloping. Factors such as technology, input costs, and the availability of resources can influence the shape of the supply curve.End of ExamPlease note that this is a sample exam and the questions and answers provided are for illustrative purposes only.。
《微观经济学microeconomics》英文版
Expenditure Minimization Problem
The problem:
Minx0 px
s.t. u(x) u
The first order condition:
u( x* ) / xl u( x* ) / xk
pl pk
u( x) u
The solution: Hicksian demand function h(p,u)
ECON501 Lecture Note 3
Consumer Theory 2 ( Textbook Chapter 3 )
Structure
Utility Maximization Problem Utility maximization Walrasian demand function Indirect utility function
of demand Preference (Chapter 3) The basic properties of preference Existence of utility function
The Budget set
Commodities The physical constraints and the consumption set
Convexity of Walrasian budget set: proof
Consumer’s Choice
The consumer’s problem: to choose a consumption bundle x from the Walrasian budget set.
Walrasian Demand Function x( p, w)
Intuition: Figure 2.F.1
《微观经济学》教学大纲(英文版)
Syllabus for MicroeconomicsThe Nature of the Course：Specialized required courseSuitable Specialty: International economy and trade Marketing AccountingInformation Management and Systems Business AdministrationFinancial AdministrationCredit： 4Class Hours：64Authors：yijun liu ling langT he Purpose and Tasks of the CourseThis course is a basic professional course for undergraduate in the School of Business and Management. Through this course, students have a more comprehensive understanding of basic issues and basic viewpoints on the microeconomics. They can grasp the basic concepts of microeconomics, the basic idea, the basic analytical methods and basic theory as well. More important, lay ing a theoretical foundation for the further study of other professional courses.The Basic Requirements of the Course1．Require students to grasp the basic concept, the basic thought, the basic analysis method and the elementary theory of microeconomics.2．Require students to conduct self-study, and students are encouraged to widely read reference books to make it more understanding of basic economic theory and its application in all respects.3．Require teachers to pay close attention to using graphic tools and using mathematical tools properly.4．The advance curriculum is the higher mathematics.Outline the Content and Hours Allocation Recommendations Chapter 1Introduction 6 Class Hours §1 Ten Principles of Economics1.How People Make Decisions2. How People Interact3.How the Economy as a Whole Works§2 Thinking Like an Economist1.The Economist as a Scientist2. The Economist as a Policy Adviser3.Why Economist Disagree§3 the Using of Graphs in Economics （#）1.Graphic Drawing and Graphics Type in Economic Analysis2.Slope and Elasticity3. Note for Graphics Use in Economic Analysis§4 Interdependence and the Gains from Trade1.The Production Possibilities Frontier、Specialization and Tradeparative Advantage3.Applications of Comparative AdvantageChapter 2Supply and Demand（Ⅰ）：How Markets Work 8 Class Hours §1Markets and Competitionpetitive Market2.Other Markets§2 law of demand1.Demand and the Demand Curve2.Shifts in the Demand Curve and Shift of the Demand Curve3.Market Demand and Individual Demand§3 law of supply （#）1. Supply and the Supply Curve2. Shifts in the Supply Curve and Shift of the Supply Curve3.Market Supply and Individual Supply§4 Supply and Demand Model1.The Conditions of Supply and Demand Model2.Supply and Demand Model3.What happens to equilibrium when supply and demand shifts?4.Cobweb Theory （☆）§5Elasticity and The Applications of Elasticity Theory1.the Elasticity of Demand and Its Application2.the Elasticity of Supply and Its Application（#）§6Supply、Demand and Government Policies1.Controls on prices （#）2.How Taxes Affect Market Outcomes3.Can Good News for Farming Be Bad News for Farmers?Exercise classes 2Class Hours Chapter 3 Supply and Demand（Ⅱ）：Market and Welfare 16 Class Hours §1 The Theory of Consumer Choice 4 Class Hours1.Cardinal Utility Theory2. Preference Theory3.Application of The Theory of Consumer Choice§2 The Theory of Producer Choice 6 Class Hours1.The Organization of Production （#）2. Production Function and Factor Inputs3. The Cost Theory§3 Consumer Surplus 2Class Hours1.Willingness to Paying the Demand Curve to Measure Consumer Surplus3.How a Lower Price Raises Consumer Surplus§4 Producer Surplus（#）1.Cost and the Willingness to Sell2. Using the Supply Curve to Measure Producer Surplus3. How a Higher Price Raises Producer Surplus§5 Market Efficiency 2 Class Hours1.The Concept of Efficiency2.The Equilibrium Efficiency of the Competitive Firm(1)3.The conditions of the Efficient Competitive Firm§6 Application：The Cost of Taxation 2 Class Hours1.The Deadweight Loss of Taxation2.The Determinants of the Deadweight Loss3. Deadweight Loss and Tax Revenue as Taxes Vary§7 Application：International Trade （#）1.The Determinants of Trade2.The Winners and Losers from Trade3.The Arguments for Restricting TradeExercise classes 3 Class Hours Discussion class 1 Class Hour Chapter 4The Economics of the Public Sector 4 Class Hours §1 Externalities1.Externalities and Market Inefficiency2.Private Solutions to Externalities3.Public Policies toward Externalities§2 Public Goods and Common Resources1.The Different Kinds of Goods2.Public Goodsmon Resources§3 The Design of the Tax System（#）1.Taxes and Efficiency2.Taxes and EquityChapter 5 Supply and Demand（Ⅲ）：Enterprise behavior and industrial organization8 Class Hours§1Types of Market （#）§2 Firms in Competitive Markets 4 Class Hours1. The Demand Curve and Revenue Curve of the Competitive Firm2. The Short-run Decision and the Supply Curve of the Competitive Firm3. The Short-run Supply Curve of the Competitive Market4.The Competitive Firm's Long-run Decision5.The Long-run Supply Curve of the Competitive Firm6.The Equilibrium Efficiency of the Competitive Firm(2)§3 Monopoly 4 Class Hours1.Why Monopolies Arise2.The Demand Curve and Revenue Curve of the Monopolistic Firm3.The Monopolistic Firm's Short-run and Long-run Decision4.The Welfare Cost of Monopoly5.Public Policy toward Monopolies6.Price Discrimination§4 Oligopoly （#）1.Markets with Only a few Sellers2.Game Theory and the Economics of Cooperation3.Public Policy toward Oligopolies§5 Monopolistic Competition（#）1.The Demand Curve and Revenue Curve of The MonopolisticCompetitive Firm2. The Monopolistic Competitive Firm in the Short-run and Long-run3. Monopolistic Competition and the Welfare of Society4.AdvertisingExercise classes 1 Class Hour Discussion class 1 Class Hour Chapter 6 Supply and Demand（Ⅳ）：The Markets for the factors of production6 Class Hours§1 How Markets Determine Incomes1. Income and Wealth （#）2. Marginal Productivity Determines the Prices of Inputs§2 The Economics of Labor Market1.The Demand and Supply for Labor （#）2.Equilibrium in the Labor Market （#）3. Some Determinants of Equilibrium Wages4.The Economics of Discrimination§3 The Land Market and The Capital Marketnd and Rent2.Capital and Interest§4 Income Distribution （#）1.The Measurement of Inequality2.The Political Philosophy of Redistributing Income3.Policies to Reduce PovertyDiscussion class 2 Class Hours Chapter 7 Supply and Demand（Ⅴ）：(General equilibrium) Market and Welfare （☆）§1 General equilibrium1.Meaning of the Equilibrium2. The Equilibrium Model of Léon Walras3. The Two-sector Model of General Equilibrium§2 Welfare Economics1.The Social Welfare Function2.Equity and EfficiencyChapter 8Uncertainty and Information （☆）§1 Uncertainty in the Economy1. Uncertainties and Risks2. The Effectiveness of Property3. Measurement of Risk Cost§2 Information, Risk and Markets1. Insurance and Risk-sharing2. Private Information and Market3. Risk Management in the Financial MarketsReview class 2 Class Hours Flexible time 4 Class Hours note：（#）Expressed that students learn these contents on its own, and they are included in the scope of examination.（☆）Expressed that students can choose according to their interest in reading, but not included in the scope of examination.Recommended Teaching Materials and Major Reference Books1．[美]曼昆著，梁小民译，《经济学原理（第5版）》，机械工业出版社，2009年2．[美]保罗·萨缪尔森、威廉·诺德豪斯著，萧琛主译，《经济学（第18版）》，人民邮电出版社，2008年3．刘毅军主编，《经济学基础》，石油工业出版社，2006年。
经济学英语知识点归纳
经济学英语知识点归纳经济学是研究如何合理利用资源以满足人们需求的一门社会科学。
在学习经济学时，掌握经济学英语知识点是很重要的。
下面将详细介绍一些常见的经济学英语知识点。
1. Microeconomics（微观经济学）: Microeconomics studies the behavior of individual consumers and firms in making decisions on the allocation oflimited resources.2. Macroeconomics （宏观经济学）: Macroeconomics is the branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole.3. Supply and Demand（供求关系）: Supply refers to the quantity of a good or service that producers are willing to offer at a given price, while demand refers to the quantity of a good or service that consumers are willing to buy at a given price. The interaction between supply and demand determines the equilibrium price and quantity in a market.4. Elasticity（弹性）: Elasticity measures the responsiveness of quantity demanded or supplied to changes in price or income. Price elasticity of demand measures the percentage change in quantity demanded due to a 1% change in price, while price elasticity of supply measures the percentage change in quantity supplied due to a 1% change in price.5. Market Structure（市场结构）: Market structure refers to thecharacteristics of a market, such as the number of firms, barriers to entry, and degree of product differentiation. Common market structures includeperfect competition, monopoly, monopolistic competition, and oligopoly.6. GDP (Gross Domestic Product)（国内生产总值）: GDP is the total value of all final goods and services produced within a country's borders in a given period of time. It is commonly used as an indicator of economic performance.7. Inflation（通货膨胀）: Inflation refers to a sustained increase in the general price level of goods and services over a period of time. It reduces the purchasing power of money and can have negative effects on an economy.8. Unemployment（失业）: Unemployment refers to the state of being without a job. It is an important economic indicator and can have significant social andeconomic consequences.9. Fiscal Policy（财政政策）: Fiscal policy refers to the use of government spending and taxation to influence the economy. It is often used to stabilize the economy and promote economic growth.10. Monetary Policy（货币政策）: Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates in order to influence the economy. It is often used to control inflation and promote economic stability.11. Comparative Advantage（比较优势）: Comparative advantage refers to the ability of a country, individual, or firm to produce a good or service at a lower opportunity cost than others. It is the basis for international trade.12. Exchange Rate（汇率）: The exchange rate is the rate at which one currency can be exchanged for another. It is determined by supply and demand in the foreign exchange market and can have a significant impact on international trade and investment.13. Trade Balance（贸易平衡）: Trade balance refers to the difference betweena country's exports and imports. A positive trade balance, or trade surplus, occurs when exports exceed imports, while a negative trade balance, or trade deficit, occurs when imports exceed exports.14. Market Failure（市场失灵）: Market failure occurs when the allocation of resources by a free market is inefficient and leads to a suboptimal outcome. Common causes of market failure include externalities, public goods, and imperfect competition.15. Game Theory（博弈论）: Game theory is a branch of economics that studies the strategic interactions between individuals or firms in situations where the outcome of one's decision depends on the decisions of others. It is used to analyze behavior in situations such as oligopoly and bargaining.以上是一些常见的经济学英语知识点。
微观经济学英语大一知识点
微观经济学英语大一知识点微观经济学是经济学的分支之一，研究个体经济单位（如家庭、企业等）的决策行为以及市场机制如何影响价格和资源分配。
在大一的学习中，了解和掌握微观经济学的基本概念和原理是非常重要的。
以下是关于微观经济学的一些英语知识点：1. Demand and Supply（需求与供给）需求与供给是微观经济学的基础概念之一。
需求是指消费者愿意购买某种商品或服务的数量。
供给是指生产者愿意提供给市场的某种商品或服务的数量。
需求和供给的交互决定了市场的价格和数量。
从经济学角度看，需求和供给是互相影响、相互制约的。
2. Elasticity（弹性）弹性是指价格变动对需求和供给的敏感程度。
需求弹性衡量消费者对价格变动的反应程度，而供给弹性衡量生产者对价格变动的反应程度。
需求弹性的计算方法是需求量的百分比变化除以价格的百分比变化。
供给弹性的计算方法是供给量的百分比变化除以价格的百分比变化。
弹性的数值越大，表示对价格变动的反应越敏感。
3. Consumer Behavior（消费者行为）消费者行为研究消费者在购买商品或服务时的决策过程和行为。
消费者行为受到多种因素的影响，包括个人偏好、收入水平、价格水平、市场环境等。
了解消费者行为对于企业制定市场营销策略至关重要，能够更好地满足消费者需求和提高市场份额。
4. Producer Behavior（生产者行为）生产者行为研究企业在生产和经营过程中的决策行为和策略选择。
生产者行为受到成本、技术水平、市场需求等因素的影响。
了解生产者行为能够帮助企业优化生产过程、制定合理的定价策略和扩大市场份额。
5. Market Structure（市场结构）市场结构研究市场中企业的数量、产品差异程度以及市场进入和退出的障碍程度。
常见的市场结构包括完全竞争市场、垄断市场、寡头垄断市场和垄断竞争市场。
不同的市场结构对于价格、利润和资源配置都有不同的影响。
了解不同市场结构的特点和影响有助于分析市场行为和预测市场走势。
微观经济学第七章
微观经济学第七章CHAPTER 7: Production and GrowthI. Economic Growth around the WorldA. Table 1 shows data on real GDP per capita in 1960 and 2007 among different countries.1. What does the data tell us about the living standards between these countries?2. Which country has the largest growth rates on average? What is the effect ofcompounding on the process of economic growth? Apply the rule of 70.3. Because of different growth rates, the ranking of countries by income per personchanges substantially over time. Are poor countries doomed to poverty forever? II. Productivity: Its Role and DeterminantsA. Why Productivity Is So Important?1. Definition of productivity: the amount of goods and services producedfor each hour of a worker’s time.2. Review of Principle #8: A Country’s Standard of Living Depends on Its Ability toProduce Goods and Services.B. How Productivity Is Determined1. Physical Capital per WorkerDefinition of physical capital: the stock of equipment and structures thatare used to produce goods and services.2. Human Capital per WorkerDefinition of human capital: the knowledge and skills that workersacquire through education, training, and experience.3. Natural Resources per Workera.Definition of natural resources: the inputs into the production ofgoods and services that are provided by nature, such as land, rivers,and mineral deposits.b.Are Natural Resources a Limit to Growth?4. Technological KnowledgeDefinition of technological knowledge: society’s understanding of thebest ways to produce goods and services.C. The Production Function1. A production function describes the relationship between the quantity of inputs used in production and the quantity of output from production.2. The production function generally is written like this:Y = A F(L, K, H, N)where Y = output, L = quantity of labour, K = quantity of physical capital, H = quantity of human capital, N = quantity of natural resources, A reflects the available production technology, and F( ) is a function that shows how inputs are combined to produce output.3. Constant returns to scalea.This property implies that as all inputs are doubled, output will exactly double.b.This implies that the following must be true:x Y = A F(xL, xK, xH, xN)Where x =2 if inputs are doubled. What about only if labour is doubled?Would output double as well?c. This also means that if we want to examine output per worker, we couldset x = 1/L and we would get the following:Y/L = A F(1, K/L, H/L, N/L)This shows that output per worker depends on the amount of physicalcapital per worker (K/L), the amount of human capital per worker (H/L),and the amount of natural resources per worker (N/L).d. This chapter discusses how employment has declined relative to outputin the farm sector. Can you think of another sector of the economywhere the same phenomenon has occurred more recently? Would you consider the change in employment a success or failure from thestandpoint of society as a whole?III. Economic Growth and Public PolicyA. The Importance of Saving and Investment1.Investment is funded by saving. How do we increase saving today?2. What is an opportunity cost of producing more capital goods?3. Figure 7.1 shows how the amount of capital per worker influences the amount of output per worker. The curve becomes flatter as the amount of capital increases and why?B. Diminishing Returns and the Catch-Up Effect1. Definition of diminishing returns: the property whereby the benefit froman extra unit of an input declines as the quantity of the input increases.2. An important implication of diminishing returns is the Catch-Up Effect.a. Definition of catch-up effect: the property whereby countries thatstart off poor tend to grow more rapidly than countries thatstart off rich.b. A puzzle: The share of GDP devoted to investment was similar forCanada and South Korea (about 23%) over the past 40 years. However, South Korea had a 6 percent growth rate of average annual income,while Canada had only a 2 percent growth rate over that past 40 years.How can this be explained?C. Investment from Abroad1. Saving by domestic residents is not the only way for a country to invest in new capital.2. Investment in the country by foreigners can also occur.a. Foreign direct investment occurs when a capital investment is ownedand operated by a foreign entity.b. Foreign portfolio investment occurs when a capital investment isfinanced with foreign money but operated by domestic residents.3. Some of the benefits of foreign investment flow back to foreign owners in the form of profits. How does foreign investment benefit our economy?D. Education1. What is the opportunity cost of investing in human capital?2. What is a “brain drain”? Many poor countries and rich countries as well face a brain drain and why?E. Property Rights and Political Stability1.There is little incentive to produce products if there is no guarantee that they cannot be taken.2. Countries with questionable enforcement of property rights or an unstable political climate will also have difficulty in attracting foreign (or even domestic) investment.F. Free Trade1. Trade allows a country to specialize in what it does best and thus consume beyond its production possibilities.2. Most countries including Canada import substantial amount of goods and services from other countries. Yet this chapter says that a nation can enjoy a higher standard of living only if it can produce a large quantity of goods and services. Can you reconcile these two facts?G. Research and Development1. The primary reason why living standards have improved over time has been due to large increases in technological knowledge.2. The Canadian government promotes the creation of new technological information by providing research grants and providing tax incentives for firms engaged in research.3. The patent system also encourages research by granting an inventor the exclusive right to produce the product for a specified number of years.H. Population Growth1. Stretching Natural Resourcesa.2oo years ago, Thomas Malthus (an English minister and early economic thinker) argued that an ever-increasing population meant that the worldwas doomed to live in poverty forever. Was he right?b.Many critics argue that population growth is depleting the Earth’s nonrenewable resources and, therefore, places a limit on the growth inliving standards. But technological progress often yields ways to avoidthese limits. For example, the invention of hybrid cars reduces the use ofgas, or better insulating homes reduces the energy required to heat orcool them. The scarcer a resource is, the higher the market price whichprovides incentive to conserve it and develop alternatives.2. Diluting the Capital Stocka. High population growth reduces GDP per worker because rapid growth in the number of workers forces the capital stock to be spread more thinly.b. Countries with a high population growth have large numbers of school-age children, placing a burden on the education system.c. Some countries have already instituted measures to reduce population growth rates, for example, regulating the number of children (e.g., China)and fostering equal treatment for women which raises economic opportunities for women leading to lower rates of population (e.g., India).3. Promoting Technological Progressa. Some economists have suggested that population growth has driven technological progress and economic prosperity.b. More people implies more scientists, more inventors, and more engineers.G. QuestionThe catch-up effect says that countries with low income can grow faster than countries with higher income. However, in statistical studies that include many diverse countries we do not observe the catch-up-effect unless we control for other variables that affect productivity. Considering the determinants of productivity, list and explain some things that would tend to prohibit or limit a poor country's ability to catch up with the rich ones.。
经济学原理(上)大纲(英语)
微观经济学课程教学大纲一、课程概况英文名：Microeconomics开课单位：管理学院课程编码：107203学分学时：56学时，3.5学分授课对象：管理学院各专业本科生先修课程：高等数学课程目的和主要内容：通过微观经济学的学习，使学生掌握微观经济学的基本原理和分析方法，了解价格形成的机理、决定价格的主要因素、价格机制的作用和市场运行的原理，理解资源配置有效性的含义及其条件，以及价格机制作用的局限性。
主要内容包含市场供求和均衡及弹性的基本概念和原理；从消费者行为出发的需求影响因素及分析；从生产者行为出发的生产与成本分析；不同市场的结构特征和相应的企业产量决策；市场失灵以及政府的微观经济政策等。
二、课程教学内容及要求第一章：Ten Principles of Economics1．1：How People Make Decisions1．2：How People Interact1．3：How the Economy as a Whole WorksKEY POINTS:1. People face tradeoffs .The cost of any action is measured in termsof forgone opportunities. Rational people think at the marginal. People respond to incentives.2. Trade can be mutually beneficial. Markets are usually a good wayof coordinating trades among people. The government can potentially improve market outcomes.3. Productivity is the ultimate source of living standards. Moneygrowth is the ultimate source of inflation. Society faces a short-run tradeoff between inflation and unemployment.第二章：Thinking Like an Economist2．1：The Economist as Scientist2．2：The Economist as Policy Adviser2．3：Why Economists DisagreeKEY POINTS:1. Like all scientists, Economists make appropriate assumptions and build simplified models in order to understand the world around them.2. The field of economics is divided into two subfields: microeconomics and macroeconomics.3. A positive statement is an assertion about how the world is. A normative statement is an assertion about how the world ought to be.4. Economists who advise policymakers offer conflicting advice either because of differences in scientific judgments or because of differences in values.第三章：Interdependence and the Gains from Trade3．1：A Parable for the Modern Economy3．2：The Principle of Comparative Advantage3．3：Applications of Comparative AdvantageKEY POINTS:1. Interdependence and trade are desirable because they allow everyone to enjoya greater quantity and variety of goods and services.2. There are two ways to compare the ability of two people in producing a good: absolute advantage and comparative advantage. The gains from trade are based on comparative advantage, not absolute advantage.3. Trade makes everyone better off because it allows people to specialize in those activities in which they have a comparative advantage.第四章：The Market Forces of Supply and Demand4．1：Demand4．2：Supply4. 3: Supply and Demand TogetherKEY POINTS:1. The demand curve shows how the quantity of a good demanded depends on the price. In addition to price, other determinants of how much consumers want to buy include income, the prices of substitutes and complements, tastes, expectations, and the number of buyers.2. The supply curve shows how the quantity of a good supplied depends on the price. In addition to price, other determinants of how much producers want to sellinclude input prices, technology, expectations, and the number of sellers.3. The intersection of the supply and demand curves determines the market equilibrium. At the equilibrium price, the quantity demanded equals the quantity supplied. The behavior of buyers and sellers naturally drives markets toward their equilibrium.第五章：Elasticity and Its Application5．1：The Elasticity of Demand5．2：The Elasticity of Supply5．3：Applications of Supply, Demand, and ElasticityKEY POINTS:1. The price elasticity of demand measures how much the quantity demanded responds to changes in the price. The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price.2. For inelastic demand curves, total revenue rises as price rises. For elastic demand curves, total revenue falls as price rises.3. The income elasticity of demand measures how much the quantity demanded responds to changes in consumers’ income. The cross-price elasticity of demand measures how much the quantity demanded of one good responds to the price of another good.4. The price elasticity of supply measures how much the quantity supplied responds to changes in the price. The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price.第六章：Supply, Demand, and Government Policies6．1：Controls on Prices6．2：TaxesKEY POINTS:1. A price ceiling is a legal maximum on the price of a good or service. A price floor is a legal minimum on the price of a good or service.2. When the government levies a tax on a good, the equilibrium quantity of the good falls. A tax on a good places a wedge between the price paid by buyers and the price received by sellers.3. The incidence of a tax depends on the price elasticities of supply and demand. The burden tends to fall on the side of the market that is less elastic because that side of the market can respond less easily to the tax by changing the quantity bought or sold.第七章：Consumers, Producers, and the Efficiency of Markets7．1：Consumer Surplus7．2：Producer Surplus7．3：Markets EfficiencyKEY POINTS:1. Consumer surplus equals buyers’ willingness to pay for a good minus the amount they actually pay for it, and it measures the benefit buyers get from participating in a market.2. Producer surplus equals the amount sellers receive for their goods minus their costs of production, and it measures the benefit sellers get from participating in a market.3. An allocation of resources that maximizes the sum of consumer and producer surplus is said to be efficient. The equilibrium of supply and demand maximizes the sum of consumer and producer surplus. Markets do not allocate resources efficiently in the presence of market failures such as market power or externalities.第八章：Applications: The Costs of Taxation8．1：The Deadweight Loss of Taxation8．2：The Determinants of the Deadweight Loss8．3：Deadweight Loss and Tax Revenue as Taxes VaryKEY POINTS:1. A tax on a good reduces the welfare of buyers and sellers of the good, and the reduction in consumer and producer surplus usually exceeds the revenue raised by the government.2. Taxes have deadweight losses because they cause buyers to consume less and sellers to produce less. Larger elasticities imply larger deadweight losses.3. As a tax grows larger, it distorts incentives more, and its deadweight loss grows larger.第九章：Application: International Trade9．1：The Determinants of Trade9．2：The Winners and Losers from Trade9．3：The Arguments for Restricting TradeKEY POINTS:1. The effects of free trade can be determined by comparing the domestic price without trade to the world price.2. When a country allows trade and becomes an exporter of a good, producers of the good are better off, and consumers of the good are worse off. When a country allows trade and becomes an importer of a good, consumers are better off, and producers are worse off. In both cases, the gains from trade exceed the losses.3. A tariff moves a market closer to the equilibrium that would exist without trade and, therefore, reduces the gains from trade.4. There are various arguments for restricting trade, although some of these arguments have some merit in some cases, economists believe that free trade is usually the better policy.第十章：Externalities10．1：Externalities and Market Inefficiency10．2：Private Solutions to Externalities10．3：Public Policies toward ExternalitiesKEY POINTS:1. Negative externalities cause the socially optimal quantity in a market to be less than the equilibrium quantity. Positive externalities cause the socially optimal quantity to be greater than the equilibrium quantity.2. Those affected by externalities can sometimes solve the problem privately. According to the Coase theorem, if people can bargain without cost, then they can always reach an agreement in which resources are allocated efficiently.3. Sometimes the government prevents socially inefficient activity by regulating behavior. Other times it internalizes an externality using Pigouvian taxes. Another way to protect the environment is for the government to issue a limited number of pollution permits.第十一章：Public Goods and Common Resources11．1：The Different Kinds of Goods11．2：Public Goods11．3：Common ResourcesKEY POINTS:1. Goods differ in whether they are excludable and whether they are rival.2. Public goods are neither rival nor excludable. Because people are not charged for their use of the public good, they have an incentive to free ride when the good is provided privately. Therefore, governments provide public goods, making their decision about the quantity based on cost–benefit analysis.3. Common resources are rival but not excludable. Because people are not charged for their use of common resources, they tend to use them excessively. Therefore, governments try to limit the use of common resources.第十二章：The Costs of Production12．1：Production and Costs12．2：The Various Measures of Cost12．3：Costs in the Short Run and in the Long RunKEY POINTS:1. A firm’s costs reflect its production process. A typical firm’s production function gets flatter as the quantity of an input increases, displaying the property of diminishing marginal product.2. A firm’s total costs can be divided between fixed costs and variable costs. From a firm’s total cost, two related measures of cost are derived. Average total co st is total cost divided by the quantity of output. Marginal cost is the amount by which total cost rises if output increases by one unit.3. For a typical firm, marginal cost rises with the quantity of output. Average total cost first falls as output increases and then rises as output increases further. The marginal-cost curve always crosses the average-total-cost curve at the minimum of average total cost.4. A firm’s costs often depend on the time horizon being considered. In particular, many costs are fixed in the short run but variable in the long run. As a result, when the firm changes its level of production, average total cost may rise more in the short run than in the long run.第十三章：Firms in Competitive Markets13．1：What Is a Competitive Market13．2：Profit Maximization and the Competitive Firm's Supply Curve13．3：The Supply Curve in a Competitive MarketKEY POINTS:1. Because a competitive firm is a price taker, its revenue is proportional to the amount of output it produces. The price of the good equals both the firm’s average revenue and its marginal revenue.2. To maximize profit, a firm chooses a quantity of output such that marginal revenue equals marginal cost. Because marginal revenue for a competitive firm equals the market price, the firm chooses quantity so that price equals marginal cost. Thus,the firm’s marginal cost curve is its supply curve.3. In the short run when a firm cannot recover its fixed costs, the firm will choose to shut down temporarily if the price of the good is less than average variable cost. In the long run when the firm can recover both fixed and variable costs, it will choose to exit if the price is less than average total cost.4. In a market with free entry and exit, profits are driven to zero in the long run. In this long-run equilibrium, all firms produce at the efficient scale, price equals minimum average total cost, and the number of firms adjusts to satisfy the quantity demanded at this price.5. Changes in demand have different effects over different time horizons. In the short run, an increase in demand raises prices and leads to profits, and a decrease in demand lowers prices and leads to losses. But if firms can freely enter and exit the market, then in the long run the number of firms adjusts to drive the market back to the zero-profit equilibrium.第十四章：Monopoly14．1：Why Monopolies Arise14．2：How Monopolies Make Production and Pricing Decisions14．3：The Welfare Cost of Monopoly and Public Policies toward MonopoliesKEY POINTS:1. A monopoly arises when a single firm owns a key resource, when the government gives a firm the exclusive right to produce a good, or when a single firm can supply the entire market at a smaller cost than many firms could.2. A monopoly firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost. The monopoly then chooses the price at which that quantity is demanded.3. A monopolist’s profit-maximizing level of output is below the level that maximizes the sum of consumer and producer surplus. As a result, monopoly causes deadweight losses similar to the deadweight losses caused by taxes. Policymakers can respond to the inefficiency of monopoly behavior in different ways.第十五章：Oligopoly and Monopolistic Competition15．1：Oligopoly15．2：Monopolistic CompetitionKEY POINTS:1. Oligopolists maximize their total profits by forming a cartel and acting like amonopolist. If oligopolists make decisions about production levels individually, theresult is a greater quantity and a lower price than under the monopoly outcome.2. A monopolistically competitive market is characterized by three attributes:many firms, differentiated products, and free entry.The equilibrium in a monopolisticallycompetitive market differs from perfect competition in that each firm has excesscapacity and each firm charges a price above marginal cost.三、实践环节无五、附录参考教材：Essentials of Economics, 3e, N. Gregory Mankiw（经济学原理，第三版，曼昆），高等教育出版社，2005.4参考和阅读书目：1. 萨缪尔森《经济学》(Economics)2. 斯蒂格利茨《经济学》(Economics)3. 高鸿业《西方经济学》（微观部分）4. 卢锋《经济学原理—中国版》制定者：张健威审校者：批准者：微观经济学课程简介英文名：Microeconomics开课单位：管理学院课程编码：学时学分：56学时，3.5学分授课对象：管理学院各专业本科生先修课程：高等数学课程目的和主要内容：通过微观经济学的学习，使学生掌握微观经济学的基本原理和分析方法，了解价格形成的机理、决定价格的主要因素、价格机制的作用和市场运行的原理，理解资源配置有效性的含义及其条件，以及价格机制作用的局限性。
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7Technology, Production, and Costs Chapter SummaryThe basic activity of a firm is to use inputs to produce goods and services. Firms separate the relationship between production and costs into the short run and long run. In the short run, the firm’s technology and physical plant are fixed, but other inputs (such as labour and raw materials) are variable. In the long run, the firm can vary the quantities of all inputs, adopt new technology and change the size of its physical plant.Total cost is the cost of all of the inputs used in production. In the short run, the costs of fixed inputs are fixed costs and the costs of variable inputs are variable costs.Total Cost (TC) =Fixed Cost (FC) +Variable Cost (VC)When a firm spends money it incurs an explicit cost or accounting cost. Implicit costs are non-monetary opportunity costs. Economic costs include both accounting and implicit costs.The firm’s production function is the relationship between the inputs employed by the firm and the maximum output it can produce with those inputs. The production function is short run if the time period is too short to change the quantity of one of the inputs. The firm’s average total cost (ATC) equals the total cost divided by the quantity of output produced (TC/Q). As production increases from low levels, ATC falls. ATC will rise as output increases further at higher levels of production (once the firm is producing more output than its plant was designed to produce).In the short run, adding more and more of a variable input, such as labour, to the same amount of a fixed input, such as capital, will eventually cause the marginal product of labour to decline. This principle is called the law of diminishing returns. At low levels of variable input usage, the marginal product of the variable input increases. This is caused by specialisation and the division of labour. The marginal product of labour is the change in output that results from changing the number of workers hired. The average product of labour equals total output divided by the total number of workers hired. When the marginal product of labour is greater than the average product of labour, the average product increases, and when the marginal product of labour is less than the average product of labour, the average product of labour decreases.Marginal cost (MC) is the change in total cost from producing one more unit of output. When the marginal product of the variable factor increases, marginal cost decreases, and when the marginal product of the variable factor decreases, marginal cost increases. Average total cost (ATC) equals total cost divided by total output (TC/Q). Average fixed cost (AFC) equals total fixed cost divided by total output (FC/Q). Average variable cost (AVC) equals total variable cost divided by total output (VC/Q). ATC = AFC + AVC. When MC is less than ATC (or AVC), ATC (AVC) decreases. When MC is greater than ATC (or AVC), ATC (AVC) increases. When MC equals ATC or AVC they are at their minimum values. In other words, the MC curve intersects both the ATC and AVC curves at their lowest points.In the long run, all costs are variable. Many firms experience economies of scale, which means long run ATC falls as output increases. Constant returns to scale occur when long run ATC is unchanged as output increases. Diseconomies of scale exist when long run ATC rises as output increases.103 Chapter7Learning ObjectivesWhen you finish this chapter you should be able to:1.Define technology and give examples of technological change. Positive technological change results inthe production of more output using the same quantities of inputs or production of the same amount of output with lower quantities of inputs. Positive technological change can result from the installation of faster machinery or equipment. Negative technological change can result from damage to machinery or equipment from a hurricane. Negative technological change results in less output produced from the same quantity of inputs.2.Distinguish between the economic short run and the economic long run. The short run is a timeperiod during which at least one of the firm’s inputs is fixed so that changes in the rate of output result from varying the use of other variable inputs. In the long run, the firm changes the rate of output by varying all inputs. In the long run, there are no fixed inputs.3.Understand the relationship between the marginal product of labour and the average product oflabour. The marginal product of labour is the additional output produced by a firm by hiring one more worker. The average product of labour equals total output produced by a firm divided by the number of its workers. When the marginal product of labour is greater than the average product of labour, the average product increases. When the marginal product of labour is less than the average product of labour, the average product decreases.4.Explain and illustrate the relationship between marginal cost and average total cost. Marginal cost isthe change in total cost caused by producing one more unit of output. Average total cost equals total cost divided by total output. When marginal cost is greater than average total cost, average total cost increases.When marginal cost is less than average total cost, average total cost decreases.5.Graph average total cost, average variable cost, average fixed cost, and marginal cost. The averagefixed cost curve declines continuously as output increases. The average total cost curve and the average variable cost curve are U-shaped. The marginal cost curve crosses both of these curves from below at their lowest points. The distance between the average total cost curve and the average variable cost curve equals average fixed cost.6.Understand how firms use the long run average cost curve to plan. The long run average total costcurve shows the lowest cost at which a firm can produce a given amount of output in the long run. This curve shows the impact on cost of expanding output by, for example, building a larger factory or store.Chapter ReviewChapter Opener: Computers, diminishing returns and virtualisationThe introduction to the chapter looks at the ‘Virtualisation Engine’ being developed by IBM for its servers. This highlights the shape of the average cost curve, as traditional servers exhibit declining average costs of information processing per unit until the server reaches around 30% of capacity, after which it slows down and the average cost starts rising (it is this issue the Virtualisation Engine is attempting to address). This ‘U-shaped’ average cost curve is common for many businesses.Technology, production and costs 104 Technology: An Economic DefinitionTechnology includes all the processes a firm uses to turn inputs into outputs of goods and services. Technological change is a change in the ability of a firm to produce a given level of output with a given quantity of inputs. Positive technological change results from rearranging the layout of a store, faster or more reliable machinery, etc. Positive technological change causes more output to be produced from the same inputs or the same output from fewer inputs. Negative technological change may result from hiring less-skilled workers, damage to buildings due to inclement weather, etc. The result is a decline in the quantity of output that can be produced from a given quantity of inputs.Helpful Study HintDo not confuse technological change with invention. An invention is the development of a newproduct or process for making a product. An invention or discovery of new information, such asa mathematical formula, is not technological change. Technological change results from theapplication of new or old knowledge to a production process.The Short Run and the Long RunThe short run is a period of time during which at least one of the firm’s inputs is fixed. The long run is a period of time long enough to allow a firm to vary all of its inputs, to adopt new technology, and to increase or decrease the size of its physical plant. Total cost is the cost of all the inputs a firm uses in production. Variable costs are costs that change as output changes. Fixed costs are costs that remain constant as output changes.Total Cost (TC) =Fixed Cost (FC) +Variable Cost (VC)In the long run, all costs are variable because all input quantities are variable. The opportunity cost of any activity is the highest-valued alternative that must be given up to engage in an activity. Costs may be explicit or implicit. An explicit cost is a cost that involves spending money. An implicit cost is a nonmonetary opportunity cost. The production function is the relationship between the inputs employed by the firm and the maximum output it can produce with those inputs. Average total cost (ATC) is total cost divided by the quantity of output produced.Helpful Study HintAn example may help you to understand the difference between a short-run and a long-runproduction function. Your home town probably has a theatre, stadium or auditorium. Variousevents are held at these venues during the year, some of which may sell out while others do not.In the short run, the size of the facility is a fixed factor since variations in crowd size can beaccommodated by changes in the use of variable factors (ticket takers, ushers, parkingattendants, food at refreshment stands, etc.). It is unlikely that the owners would decide toincrease or decrease the capacity of the facility unless they expected a permanent change inaverage expected attendance. This could be the result of an increase or decrease in populationserved by the facility or the acquisition or loss of a permanent tenant; for example, aprofessional sports franchise or a philharmonic orchestra. Expanding or contracting the size ofthe facility (usually by tearing down the existing structure and building a new one) is anexample of a long-run production decision.105 Chapter7The Marginal Product of Labour and the Average Product of LabourThe marginal product of labour is the additional output a firm produces as a result of hiring one more worker. The law of diminishing returns is the principle that, at some point, adding more of a variable input, such as labour, to the same amount of a fixed input, such as capital, will cause the marginal product of the variable input to decline. The increases in marginal product of labour that occur at low rates of output result from specialisation and the division of labour. Adding a second or third worker, for example, reduces the time the workers spend moving from one activity to the next and allows them to be more specialised at their tasks.The average product of labour is the total output produced by a firm divided by the quantity of workers. When the marginal product of labour is greater than the average product of labour, the average product of labour must be increasing. When the marginal product of labour is less than the average product of labour, the average product of labour must be decreasing. The marginal product of labour equals the average product of labour for the quantity of workers where the average product of labour is at a maximum.The Relationship between Short-Run Production and Short-Run CostIn the short run, the behaviour of the marginal product of the variable factor is reflected in the behaviour of marginal cost. Marginal cost is the change in a firm’s total cost from producing one more unit of a good or service. The U-shape of the average total cost curve is determined by the shape of the marginal cost curve. Marginal cost (MC) can be expressed mathematically asΔTCMC=ΔQwhere ∆ represents “change in,” TC is total cost and Q is output.The law of diminishing returns explains the behaviour of the marginal product of the variable factor in the short run. This is demonstrated in Figure 7.4 (page 217). The table in this figure shows how the marginal product of labour (i.e. ΔQ derived from Column 3) rises and marginal cost falls as the first three workers are hired. The marginal product of labour falls, due to diminishing returns, and marginal cost rises as the last three workers are hired. The marginal cost of production falls and then rises – a U-shape – because the marginal product of labour rises and then falls.Graphing Cost CurvesSeveral related average cost measures can be described mathematically.TCAverage Total Cost = ATC =QFCAverage Fixed Cost = AFC =QVCAverage Variable Cost = AVC =QBecause costs can only be either fixed or variable, by definition then:ATC = AFC + AVCTechnology, production and costs 106The MC, ATC and AVC curves are all U-shaped. The MC curve intersects the AVC and ATC curves at their minimum points. When MC is above AVC or ATC, it causes them to increase. When MC equals AVC or ATC, they must be at their minimum points. AFC gets smaller and smaller as output increases. As output increases, the difference between ATC and AVC (this is equal to AFC) gets smaller.Helpful Study HintPractice drawing these cost curves. To draw the curves accurately it is best to draw the MCcurve first. Then draw ATC but start by putting your pencil or pen on the MC curve anddrawing the left half of ATC. Go back to the MC curve and then draw the right half of ATC.Follow the same procedure to draw AVC. When you draw the left half of AVC make sure thatthe difference between ATC and AVC becomes greater as output decreases. When you drawthe right half of AVC, make the difference between ATC and AVC smaller as output decreases.Remember that the difference between ATC and AVC is AFC (average fixed cost).Costs in the Long RunThere are no fixed costs in the long run. Total cost equals variable cost. Managers of firms decide how they will operate their current store, office or factory in the short run. In the long run they decide whether the firm would be more profitable if the store, office or factory were made larger or smaller.A long-run average cost curve shows the lowest cost at which the firm is able to produce a given quantity of output in the long run, when no inputs are fixed. Economies of scale exist when a firm’s long-run average total costs fall as it increases output. Constant returns to scale exist when a firm’s long-run average costs remain unchanged as it increases output. Minimum efficient scale is the level of output at which all economies of scale have been exhausted. Diseconomies of scale exist when a firm’s long-run average costs rise as it increases output. Economies of scale may result from several factors. The firm’s technology may make it possible to increase production with a smaller than proportional increase in at least one input. Both workers and managers become more specialised, enabling them to be more productive, as output expands. Large firms may be able to purchase inputs at lower costs than smaller competitors. Diseconomies of scale may result when managers have difficulty coordinating a firm as it grows in scale.Helpful Study HintLong-run average cost (LRATC) curves, such as those shown in Solved Problem 7.2, are drawnas smooth U-shaped curves. Do not confuse these curves with short-run average total costcurves. The reasons for the U-shape of the short-run and long-run curves are different. Thesmooth long run ATC is similar to the optical illusion of a motion picture. A motion picture isessentially a series of still photographs that when projected sequentially (and rapidly) give theviewer the illusion of live, continuous motion. Similarly, the long run ATC is made up of aseries of short-run ATC curves, each of which contributes a small portion (one point) of thelong run ATC.107 Chapter7Appendix : Using Isoquants and Isocosts to Understand Production and CostsIsoquantsFirms search for the cost-minimising combination of inputs that will allow them to produce a given level of output. The cost-minimising combination of inputs depends on technology and input prices. An isoquant is a curve showing all the combinations of two inputs, such as capital and labour, that will produce the same level of output. The farther an isoquant is from the origin – the farther to the right on the graph – the more output the firm is producing. There are many isoquants, one for every possible level of output.The marginal rate of technical substitution (MRTS) is the slope of an isoquant. The MRTS represents the rate at which a firm is able to substitute one input for another while keeping the level of output constant. The slope of an isoquant becomes less steep as one moves downward. This is a consequence of diminishing returns to inputs.Helpful Study HintFigure 7A.1 (page 232) illustrates three isoquants, each of which represents variouscombinations of capital (measured on the vertical axis) and labour (measured on the horizontalaxis) that enable Jill to produce a given number of photocopies per day. Isoquants are similar toindifference curves in several respects. If you understand the analysis of indifference curves inthe appendix to Chapter 6, you should understand isoquants.Isocost LinesThe relationship between the quantity of inputs used and the firm’s total cost can be shown with an isocost line. An isocost line shows all the combinations of two inputs, such as capital and labour, that have the same total cost. An isocost line intersects the vertical axis at the maximum amount of an input (for example, capital) that can be purchased with a given budget. The same isocost line intersects the horizontal axis at the maximum amount of another input (for example, labour) that can be purchased with the same budget. One input is substituted for another as one moves along an isocost line, but the total expenditure on inputs is the same. The slope of an isocost line is constant and equals the change in the quantity of one input (capital) divided by the change in the quantity of the other input (labour).The slope of an isocost line is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis, multiplied by negative 1. Higher levels of total cost shift the isocost line outward, and lower levels of cost shift the isocost line inward.Helpful Study HintFigure 7A.2 (page 233) illustrates an example of isocost lines. The analysis of isocost lines issimilar to the analysis of budget lines in the appendix to Chapter 6.Technology, production and costs 108 Choosing the Cost-Minimising Combination of Capital and LabourThere is only one combination of inputs that will produce a given amount of output at the lowest total cost. The lowest cost combination of inputs that will produce a given level of output is found at the tangency of an isocost line with the isoquant that represents the given output level. The cost-minimising choice of inputs is determined jointly by available production technology and input prices. A change in technology affects the position of isoquants and may affect the choice of inputs. If input prices change the position of isocost lines will change and the choice of inputs may also change.At the point of cost minimisation, the MRTS is equal to the price of the input measured on the horizontal axis (for example, the wage rate or price of labour) divided by the price of the input measured on the vertical axis (for example, the rental price of capital). The slope of an isoquant is the rate at which a firm can substitute labour for capital given the existing technology. The slope of an isocost line is the rate at which a firm is able to substitute labour for capital at given current input prices.Moving along an isoquant changes the amount of inputs used but output stays the same. The marginal product of capital (MP K ) equals the change in output from using an additional unit of capital. The marginal product of labour (MP L ) equals the change in output from using an additional unit of labour. The change in output from moving down an isoquant is equal to:K = L Δ quantity of capital × MP -Δ quantity of labour MP ×Rewriting this equation: LK -Δ quantity of capitalMP = MRTS = quantity of labour MP ΔThe slope of the isocost line equals the wage rate (w) divided by the rental price of capital (r). At the point of cost minimisation, the slope of the isoquant equals the slope of the isocost line. Therefore:LKMP w = MP r , or LKMP MP = w rThe last equation implies that to minimise cost, a firm should hire inputs up to the point where the last dollar spent on each input results in the same increase in output.The Expansion PathAn expansion path is a curve showing a firm’s cost-minimising combination of inputs for every level of output. The expansion path represents the least-cost combination of inputs to produce a given level of output in the long run when the firm is able to vary the levels of all of its inputs. In the short run, one of the firm’s inputs is fixed. Expansion of output is possible only by varying the firm’s variable input(s). The firm’s minimum total costs of production are lower in the long run than in the short run.109 Chapter7Solved ProblemChapter 7 in the textbook includes two Solved Problems to support learning objectives 4 (Explain and illustrate the relationship between marginal cost and average total cost) and 6 (Understand how firms use the long-run average cost curve to plan). The following Solved Problem supports another of this chapter’s learning objectives.Solved Problem 7.3 Supports learning objective 1: Define technology and give examples of technological change.Technological Change: Wright and WrongDecades can pass before a new idea is developed to the point where it can be widely used. For instance, the Wright Brothers first achieved self-propelled flight at Kitty Hawk, North Carolina in 1903. But the Wright Brothers’ plane was very crude and it wasn’t until the introduction of the DC-3 by Douglas Aircraft in 1936 that regularly scheduled inter-city flights became common in the United States. Similarly, the development of the first digital electronic computer – the ENIAC – occurred in 1945. But the first IBM personal computer was not introduced until 1981. It wasn’t until the 1990s that widespread use of computers began to have a significant effect on the productivity of American business.In 1999, Hershey Foods, manufacturer of Hershey’s bars and Reese’s Peanut Butter Cups, installed a new software program designed by the German company SAP to coordinate almost all of the company’s operations. Unfortunately, it took Hershey many months to get the software to work properly. During the period when the software was not working well, Hershey failed to send out some shipments and other shipments contained less candy than they were supposed to. Software problems made it difficult for Hershey to keep track of what was shipped out and to whom it had been shipped. The company lost $150 million worth of sales before the problem was corrected and the software began to work as it was intended.Sources: For DC-3 and ENIAC, David Mowery and Nathan Rosenberg, “Twentieth Century Technological Change,” in Stanley L. Engerman and Robert Gallman, eds., The Cambridge Economic History of the United States, Vol. III: The Twentieth Century, Cambridge: Cambridge University Press, 2000. For Hershey: Emily Nelson and Evan Ramstad, “Trick or Treat: Hershey’s Biggest Dud Has Turned out to be its New Technology,” Wall Street Journal, October 29, 1999 and “Hershey Foods Warns 1999 Earnings Will Be Worse Than Initially Feared,” Dow Jones Business News, December 28, 1999.(a)Define technology and technological change.(b)Was the Wright Brothers’ 1903 flight at Kitty Hawk an example of technological change? Was thedevelopment of the ENIAC computer an example of technological change?(c)Explain why the widespread use of computers in the 1990s resulted in positive technological change.(d)Did Hershey’s use of a new software program in 1999 result in positive or negative technologicalchange?Solving the Problem:Step 1: Review the chapter material. This problem requires understanding of technology and technological change so you may want to review the section Technology: An Economic Definition that begins on page 206 in the textbook.Step 2: (a) Define technology and technological change. A firm’s technology is the processes it uses to turn inputs into outputs of goods and services. Technological change is the change in the ability to produce a given level of output with given quantities of inputs.Technology, production and costs 110Step 3: (b) Answer both of these questions. Neither of these represents technological change because there was no impact on the ability of firms to produce output with a different quantity of inputs.Step 4: Answer (c). This led to a widespread improvement in productivity. Many firms were able to produce the same output of goods and services with fewer inputs or more output with the same quantity of inputs.Step 5: Answer (d). The initial use of the software produced negative technological change since Hershey’s output was less with the same quantity of inputs. After the major “bugs” were eliminated, the use of this software produced a positive technological change.Self-Test(Answers are provided at the end of the Self-Test.)Multiple-Choice Questions1The term used to describe the ability of a firm to produce more output using the same inputs, or the same output using fewer inputs is _____________.a Technology.b Technological change.c The long run.d The production function.2Which costs are affected by the level of output produced?a Fixed costs.b Variable costs.c All costs.d Sunk costs.3Which of the following is known as the highest-valued alternative that must be given up in order to engage in that activity?a Opportunity cost.b Explicit cost.c Total cost.d Variable cost.4Which of the following are sometimes called accounting costs?a Economic costs.b Implicit costs.c Explicit costs.d Total variable costs.5Fill in the blanks. When graphing a conventional short-run production function, we place __________________ in the horizontal axis and ________________ in the vertical axis.a output; the variable inputb the variable input; the fixed inputc the fixed input; the variable inputd the variable input; output7111 Chapter6What is the additional output that a firm produces as a result of hiring one more worker called?a The production function.b Average total cost.c Marginal product of labour.d Average product of labour.7Refer to the graph below. During the trajectory of the curve from point A to point B, which of the following is more likely to occur?a Specialisation.b Diminishing returns.c Division of labour.d None of the above.8Which of the following statements about the relationship between marginal and average product is correct?a Whenever the marginal product of labour is less than the average product of labour, the average product oflabour must be increasing.b Whenever the marginal product of labour is greater than the average product of labour, the averageproduct of labour must be increasing.c Whenever the marginal product of labour is greater than the average product of labour, the marginalproduct of labour must be decreasing.d Whenever the marginal product of labour is less than the average product of labour, the average product oflabour must be increasing.。