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PE Chapter 4

The document discusses the key concepts of market structures including perfect competition, monopolistic competition, oligopoly, and monopoly. It explains the determinants of demand and supply, how demand and supply curves are derived, and how equilibrium price and quantity are determined by the intersection of the demand and supply curves. Variables that can shift the demand and supply curves, such as income, price of related goods, tastes, expectations, input prices, technology, and number of buyers and sellers are also covered.

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23 views3 pages

PE Chapter 4

The document discusses the key concepts of market structures including perfect competition, monopolistic competition, oligopoly, and monopoly. It explains the determinants of demand and supply, how demand and supply curves are derived, and how equilibrium price and quantity are determined by the intersection of the demand and supply curves. Variables that can shift the demand and supply curves, such as income, price of related goods, tastes, expectations, input prices, technology, and number of buyers and sellers are also covered.

Uploaded by

kirisugutokisada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Chapter 4.

*Market: +groups of buyers – DEMAND

+ groups of sellers – SUPPLY

_markets take many forms ( highly and less organized)

_4 types of markets:

Competitive Less competitive

Perfect competition Monopolistic Competition Oligopoly (Độc quyền nhóm) Monopoly

Cạnh tranh độc quyền

Many sellers Many Sellers A few 1 seller

Identical products Differentiated products

Price takers ( giá cả cố định) Set the price

*Demand: Downard sloping

Quantity

_Quantity demand

_Law of demand :

+Assuming other things equal

+Price increase -> Quantity demand decrease (Demand Curve show Downard sloping -> Negative
relationship Price and Quantity)

_Market demand: sum of all individual demands

_ Shifts in demand curve (# move along the line): go above the line

+Increase in demand ( shift the demand curve to the right)

+Decrease in demand ( shift the demand curve to the left)

_Variables that shift the demand curve:


_Income:

Normal good: Income increase -> demand increase

Inferior good: goods that people don’t want to buy when income increase : Income increase -> demand
decrease

_Price of related goods:

Subtitutes goods( có thể trả cho 1 trong 2) Thay thế : Price increase -> Demand for other good increase

Ex: Price of tea increase -> demand for coffee increase

Complements : (trả cho cả 2) – Cộng sinh

EX: Price of tickets increase -> Demand for popcorn decrease

_Tastes

_Expectations : Price in the future increase -> Increase demand today

_Number of buyers: more buyers -> demand increase

*Supply: upward slopping ( positive relationship)

_Market supply = sum of all individual supplies

_Supply shift left -> supply decrease >< Shift right -> increase

_Variables:

+ Input price: when Input increase -> supply decrease -> Supply curve shifts left

+ Technology: increase (reduce the cost for production) -> supply increase

+ Expectations: Price of the future increase -> supply today decrease

+ Number of seller: increase -> supply increase

*Equilibrium: điểm cân bằng ( giao điểm của 2 curve): luôn thay đổi

Price Surplus

Equalibirum price ( market-clearing price) Quantity supply = Quantity demand

Shortage

Quantity

_Surplus: Q. Demand < Q. supplies >< Shoratage

*3 Steps to analyzing equilibrium:


_Decide an event affects supply or demand curve

_decide curve to the left or right

_ Depend on which increase or decrease more

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