TAILIEUCHUNG - Lecture Principles of economics (Asia Global Edition) - Chapter 5

Chapter 4 - Demand. After studying this chapter you will be able to understand: Relate the law of demand to the cost-benefit principle, discuss how individual wants are translated into demand, explain the reasoning behind the rational spending rule and apply it to consumer decision making to show how the rule is related to substitution and income effects, discuss the relationship between the individual demand curve and the market demand curve, define and calculate consumer surplus. | Demand Chapter 5 McGraw-Hill/Irwin Copyright © 2015 by McGraw-Hill Education (Asia). All rights reserved. Learning Objectives Relate the law of demand to the Cost-Benefit Principle Discuss how individual wants are translated into demand Explain the reasoning behind the rational spending rule and apply it to consumer decision making to show how the rule is related to substitution and income effects Discuss the relationship between the individual demand curve and the market demand curve Define and calculate consumer surplus Free Ice Cream – Or Is It? The cost of a good extends beyond its monetary cost Waiting in line Purchasing a permit Participating in a lottery "Free" ice cream attracts so many consumers that the time spent waiting in line acts as the price of the good Demand curves relate the quantity demanded to ALL costs, not just monetary costs 3 Law of Demand Law of Demand People do less of what they want to do as the cost of doing it rises 4 Cost-Benefit Principle at work Do something if the marginal benefits are at least as great as the marginal costs An increase in the market price approaches our reservation price If market price exceeds the reservation price, buy no more Costs include ALL costs – money, time, reputation Consider implicit and explicit costs Law of Demand 5 Origins of Demand Reservation price Individual tastes and preferences differ Biological needs ■ Cultural influences Peer behavior ■ Individual differences Perceived quality ■ Expected benefits Tastes may change over time Hamburger and donut Pearl milk tea New goods get incorporated into priorities 6 Needs versus Wants Some goods are required for subsistence These are needs Beyond subsistence, behavior is driven by wants Rice or noodle Hamburger or chicken sandwich Wants depend on price Water in Tokyo Regulations or price mechanism Regulations are cumbersome and expensive Price changes are fast and effective 7 California Water Shortages Problem: California has a large population and .

• Kinh tế học
• Principles of economics
• Lecture Principles of economics
• Market imperfections
• The international economy
• Cost benefit principle
• Calculate consumer surplus
• Ten principles of economics
• People face tradeoffs
• Opportunity cost
• Marginal changes
• Economics of information
• Consumer choice
• Free rider problem
• Market transactions
• Welfare Economics
• Consumer surplus
• Demand curve
• Efficiency of markets
• Nature of an externality
• Market inefficiency
• Negative externalities
• Principles of microeconomics
• Lecture Principles of microeconomics
• Scarce resources
• Scarcity implies choice
• Choice implies cost
• Principles of agricultural economics
• Agricultural economics
• Economics of agricultural production
• Theory of consumer behaviour
• Economics of market demand
• Dynamics in demand analysis
• Analysis of agricultural markets
• Agricultural markets
• Economics of trade
• Costs of taxation
• Deadweight loss
• Laffer curve
• Supply side economics
• Market forces
• Supply and demand
• Market economies
• Competitive Markets
• Thinking like an economist
• Economic models
• Circular flow diagram
• Production possibilities frontier
• The gains from trade
• Production possibilities
• Comparative advantage
• Absolute advantage
• Costs of production
• Total revenue
• Total cost
• Opportunity costs
• Price elasticity of demand
• Price elasticity
• Midpoint method
• Demand curves
• Factors of production
• Demand for labor
• Production function
• Marginal product of labor
• Controls on prices
• Price ceiling
• Price floor
• Market outcomes
• Theory of consumer choice
• Budget constraint
• Indifference curve
• Marginal rate of substitution
• Measuring nation’s income
• Economy’s income
• Gross domestic product
• Components of GDP
• International trade
• Determinants of trade
• Equilibrium without trade
• Production and growth
• Economic growth
• Monetary system
• Functions of money
• Federal reserve
• Central bank
• Open economy macroeconomics
• Economy macroeconomics
• Closed economy
• Open economy
• Public goods
• Common resource
• Types of goods
• Cost benefit analysis
• Aggregate demand
• Aggregate supply
• Short run economic fluctuations
• Economic fluctuations
• Tax system
• Federal Government
• Marginal tax rate
• Budget surplus
• Macroeconomic policy
• Debate over macroeconomic policy
• Stabilize the economy
• Monetary policy