Unit 2 The price system and the microeconomy

本思维导图对第二单元知识点进行了总结，包括Demand and supply curves、Price elasticity, income elasticity and cross elasticity of demand、Price elasticity of supply等内容。

Unit 2 The price system and the microeconomy

• Chapter 7 Demand and supply curves
  • The price mechanism and markets
    • the means of allocating resources in a market economy
      • from consumers to producers
  • Demand
    • demand refers to the quantity of a product that buyers are willing and able to buy at different prices per period of time, coteries paribus or other things equal.
      • quantity
      • product
      • buyers
      • willing to buy
      • able to buy
      • different prices
      • per period of time
      • coteries paribus
  • The demand curve
  • The factors that affect demand
    • price
    • non-price factor
      • changes in income
      • changes in the price of related products
      • changes in fashion, taste and attitudes
      • advertising campaigns
      • changes in population
      • other factors
        • eg. weather conditions, expectation
  • Supply
    • supply refers to the quantity of a product that suppliers are willing and able to sell at different prices over a period of time, coteries paribus or other things equal.
      • quantity
      • product
      • suppliers
      • willing and able to sell at different prices
      • per period of time
      • coteries paribus
  • The supply curve
  • The factors affecting supply
    • price
    • non-price factor
      • changes in the costs of production
      • government policy
      • nature of the industry / size of the industry
      • price os related goods
  • Causes of a shift in the demand curve
    • a shift to the right in the demand curve
      • an increase in income
      • an increase in the price of substitutes
      • a decrease in the price of complements
      • a favourable change in fashion,, taste and attitudes
    • a shift to the left in the demand curve
      • a decrease in income
      • a decrease in the price of substitutes
      • an increase in the price of complements
      • an unfavourable change in fashion, taste and attitudes
  • Causes of a shift in the supply curve
    • a shift to the right in the supply curve
      • a decrease in the costs of production
      • growth in the size of the industry
      • a decrease in the price if competitor’s goods
      • decrease in an indirect tax to increase in subsidy
    • a shift to the left in the supply curve
      • an increase in costs of production
      • decline in the size of the industry
      • an increase in the price of competitor’s goods
      • increase in an indirect tax or fall in subsidy
  • How to distinguish between a shift in the demand or supply curve and a movement along the curves
    • extension of demand or supply
      • an increase in the quantity demanded to quantity supplied.
    • contraction of demand or supply
      • a decrease in the quantity demanded to quantity supplied.
• Chapter 8 Price elasticity, income elasticity and cross elasticity of demand
  • What do economists mean by elasticity?
    • elasticity
    • elastic
    • inelastic
  • Price elastic of demand PED
    • PED = %change in quantity demanded / %change in price
      • PED>1 elastic PED>1 inelastic
      • PED = ∞ perfectly elastic PED = 0 perfectly inelastic
      • PED = 1 unit elasticity
    • factors affecting price elasticity of demand
      • the availability and attractiveness of substitutes
      • the relative expense of the product
      • the time period
    • PED and a downward-sloping linear demand curve
  • Income elasticity of demand YED
    • YED = %change in quantity demanded / %change in income
      • YED>0 normal good
        • 0<YED<1 necessity
        • YED>1 luxury
      • YED<0 inferior good
    • how firms use YED
      • forecasting the future demand
      • resources allocation
        • if the firms anticipate and economic growth (national income increase)
          • allocating resources to produce normal goods
  • Cross elasticity of demand XED
    • XED = %change in quantity demanded of product A / %change in the price of product B
      • XED>0 substitutes
      • XED<0 complements
  • How price, income and cross elasticities of demand can affect decision-making
    • PED
      • price variations in a market
      • the impact of changing prices on consumer expenditure and sales revenue
      • the effects of change in indirect taxes on government income
• Chapter 9 Price elasticity of supply
  • PES = %change in quantity supplied / %change in price
    • • 同PED
  • Factors influencing price elasticity of supply
    • availability of stocks
    • time period
    • productive capacity
• Chapter 10 The interaction of demand and supply
  • Market equilibrium and disequilibrium
    • equilibrium
      • a situation where there is no tendency to change in a markey
    • disequilibrium
      • a situation where demand and supply are not equal in a market
  • The effects of shifts in demand and supply curves on equilibrium price and quantity
    • shifts in market demand curve
    • causes of shifts in the demand curve
      • income / the ability to pay
      • the price and availability of related products
      • fashion, taste and attitudes
    • shifts in the market supply curve
    • causes of shifts in the supply curve
      • costs associated with supply
      • changes in the prices of other products
      • the size and nature of the industry
      • government policy
    • a change in supply and demand
  • Relationships between markets
    • alternative demand
    • joint demand
    • derived demand
    • joint supply
  • The functions of price in resources allocation
    • rationing
    • signalling and the transmission of preferences
    • the provision
• Chapter 11 Consumer and producer surplus
  • The significance of consumer surplus
    • consumer surplus
      • the difference between the price a consumer is willing to pay for a product and its market price
  • The significance of producer surplus
    • producer surplus
      • the difference between the price a producer is willing to accept and what is actually paid