r

o
(EC 210)
2 2552

Sec. 8200

.

r r
(.
)

EC210 2/2552

www.ajarntik.com

 office

Section 8200 13.30-16.30 .

office

9.00-16.00 .
o
o
o
665 ()

email : sansanee@econ.tu.ac.th

msn : tik_econ@hotmail.com
website : www.ajarntik.com
EC210 2/2552


www.ajarntik.com

EC210 2/2552





n
ppt

EC210 2/2552

r




r
o .

Mankiw, N Gregory, Principles of Economics, 3rd ed.2004.

Lipsey, Richard G., Paul N. Courant, Douglas D. Purvis, and Ragen,
Christopher TS, Economics, 13th edition 2007.

EC210 2/2552


Powerpoint Presentation .
( )

(2549)
(2551)

r
n
( ) (2549)

www.nidambe11.net/ekonomiz.htm




EC210 2/2552

www.dekisugi.net ( )

EC210 2/2552

29 2552
n 


22 30 2553

17 24 2552
drop w
4 11 2553

27 2553

17 2552 (9.00-11.00 .)
7 2553 (13.00 -16.00 .)
EC210 2/2552




n
o

-

( 40% )


1-4

n

( 60% )


5-9

EC210 2/2552

??
??

o o o
??

EC210 2/2552

10

nn
r



rnn


n


n
o

()


r no






n



n




n
EC210 2/2552

11

o r

2.

3.

4.

5.

1.

EC210 2/2552

12

 o

()

6.
o
o r 

7.

8.

9.

EC210 2/2552

13

 ( )
. 2 .. 2552


1:

o

r





. 9 .. 2552 
1:

o

r





. 16 .. 2552 
2: (Demand) (Supply)
(Price Determination)
. 23 .. 2552 
3:
r
o
o r 

. 30 .. 2552 
3:
r
o
o r 

. 14 ..2552 
4:
. 17 .. 2552 9.00 11.00 .


5

EC210 2/2552

14

 ( )
. 28 .. 2552


5:

. 4 .. 2553

. 18 .. 2553


6:
o
o r o


6:
o
o r o


7:

. 1 .. 2553


8:

. 8 .. 2553


9:

. 15 .. 2553


9:

. 11 .. 2553

. 22 .. 2553 
7 .. 2553 13.00-16.00.


25

EC210 2/2552

15

EC210 2/2552

16

Outline
1.1
r 
r
1.2


1.3


(Basic Concept)
- o
o
- (Scarcity)
- (Choice)
- (Opportunity Cost)
- (Production Possibility Curve)
EC210 2/2552

17

Outline
1.4
1.5


o

n
1.6
- Inductive Deductive
- Positive Normative Economics
- 10

EC210 2/2552

18


....
.....

nn

o n

r

EC210 2/2552

19



o

r
(Discussion)
1. ...

2.

??? Why??
3. (choice)
( .
n
nn)
EC210 2/2552

20

 (Scarcity)
n
n

..... o




....




..... 

EC210 2/2552

21

 (Scarcity)

(Nation and Society):

(productive resources):
1.

2.

3.
4.

, , ,
EC210 2/2552

22




n

, ,
,

o
n
,
, ,

, ,

EC210 2/2552

23

 (Choice)


o on


o

on




o

n


o


EC210 2/2552

24


.......
.......



o


no 

o

no n
(opportunity cost)
EC210 2/2552

25

 (opportunity cost)
(value) (choice)




o 
(the best
alternative forgone)

o .
...
.....
o
n o oo

EC210 2/2552

26


1
.n
o 
3

12,000
25,000


50,000

o
n

....

EC210 2/2552

27


2 pn

o
(
)

19,000
Wristband 30,000

o

26,000

3 o


4 ()


o

EC210 2/2552

28

(production possibility curve: PPC)



o


o
n


on

o n

1.
o

2
2.



on

3. o


n

o

4.


o

on
onr
EC210 2/2552

29

A
B
C
D
E
F

(X)
0
1
2
3
4
5

(.)
+1
+1
+1
+1
+1

(Y)
15
14
12
9
5
0

(.)
-1
-2
-3
-4
-5

plot
EC210 2/2552

30

Production Possibility Curve (PPC)

15

Z
D

F
3

EC210 2/2552

31



o
PPC
1. PPC ?

o n(Full employment)
(Attainable & Efficiency)
2.


?
o n
Y PPC

(Attainable but Inefficient)

Z PPC

n

(Unattainable
EC210 2/2552

32



o
PPC
3.

PPC Scarcity - Choice Opportunity

Cost ?

4.

F E (

o 
4 5 )

5.


o


EC210 2/2552

33

Production Possibility Curve (PPC)

Y1

Yo

Xo X1
EC210 2/2552

34


(
 
/ )

35 of 40

EC210 2/2552

o


o
o 
(integration)
The more you learn, the more you earn.
EC210 2/2552

36

 n
(Macroeconomics) - n

Example: , , ,

(Microeconomics) -

Example:
,
, ,

EC210 2/2552

37


Examples of microeconomic and macroeconomic concerns

Microeconomics

Macroeconomics

38 of 33

Production

Prices

Income

Employment

Production/Output
in Individual
Industries and
Businesses

Price of Individual
Goods and
Services

Distribution of
Income and Wealth
Wages in the auto
industry
Minimum wages
Executive salaries
Poverty

Employment by
Individual
Businesses &
Industries
Jobs in the steel
industry
Number of
employees in a firm

National Income
Total wages and
salaries

Employment and
Unemployment in
the Economy

Total corporate
profits

Total number of
jobs
Unemployment
rate

How much steel

How many offices
How many cars

Price of medical
care
Price of gasoline
Food prices
Apartment rents

National
Production/Output

Aggregate Price
Level

Total Industrial
Output
Gross Domestic
Product
Growth of Output

Consumer prices
Producer Prices
Rate of Inflation

EC210 2/2552

1) (What?)
2) (How?)
3)
(For Whom?)
EC210 2/2552

39

EC210 2/2552

40


(Types of Economic System)

(Capitalism or
Market
Economy)

(Mixed Economy)

(Socialism or
Command
Economy )

EC210 2/2552

41

1.
r
?

2.

3.

n ?
EC210 2/2552

42

 (Capitalism)


(ownership of resources)
(freedom of enterprise)
(price system)

(profit motive)

EC210 2/2552

43

1) (What?)

o


o o
2) (How?)

o
o
o






Labor intensive VS Capital intensive
3)
(For Whom?)

o 
(purchasing power)

Example () : U.S.A., Canada, Japan
EC210 2/2552

44

(Socialism or Command Economy)

n n


n

EC210 2/2552

45

1) (What?)

2) (How?)
n

n
3)
(For Whom?)

o
n

n
Example (): North Korea, Cuba
EC210 2/2552

46

 (Mixed Economy)






n


o
o 

Questions?

EC210 2/2552

47

1) (What?)


o

o n

2) (How?)

o
3)
(For Whom?)
?
EC210 2/2552

48

(Hypothesis)

rn


n

o

o

(Theory) -

rn


n 

EC210 2/2552

49

Positive VS Normative Economics

Positive Economics ( )


r rn
o r
o

o

.
r 

o

o

o 

o
EC210 2/2552

50

Positive VS Normative Economics

Normative Economics () 

r o
(Value Judgement)

no

EC210 2/2552

51

 Positive or Normative
1.

n
n
o 15 
1
2.
n o
n



o


n o

oo on

EC210 2/2552

52

1: -

(Tradeoffs)
There is no such thing as a free lunch

EC210 2/2552

53

2:
o

o
o


Opportunity Cost

EC210 2/2552

54

3:

(Margin)
Marginal Cost & Marginal Benefit

EC210 2/2552

55


4: n

People make decisions by comparing cost and

benefit.
. When costs or benefits change, decision
will change.
EC210 2/2552

56


5: o o
n

Law of comparative Advantage

r
o

o
o


o

EC210 2/2552

57


6: ""

Invisible hand leads market to

desirable outcomes
EC210 2/2552

58


7:

Lack of competition
Lack of information
Externalities
Public goods

EC210 2/2552

59


8:

n


o

More GDP, More Productivity
lead to a better living standard.
EC210 2/2552

60


9:
o

o 
... ?? ??
???
EC210 2/2552

61


10:

High Inflation <----> Low Unemployment

Low Inflation <----> High Unemployment
EC210 2/2552

62

(scarcity)
... no
n n
?
_______________________________________________________
_______________________________________
________________
__________
o
r








_______ no
r
n
o
n_______
EC210 2/2552

63

EC210 2/2552

64

EC210 2/2552

65

Topics

2.1 (Demand)


(Change in Quantity
Demanded)
o

r(Shift in Demand
Curve)
EC210 2/2552

66

2.2 (Supply)






(Change in Quantity
Supplied)
o

(Shift in Supply Curve)
2.3

EC210 2/2552

67

Introduction

(Market)

o ( ) ( )


o

n
o

, , ,
, e-commerce website
EC210 2/2552

68



1)
o 
o

Demand
2) Supply

o

EC210 2/2552

69

Input Markets and Output Markets:

The Circular Flow

70 of 48

Goods and services flow clockwise.

Firms provide goods and services;
households supply labor services.

Payments (usually money) flow in the

opposite direction (counterclockwise)
as the flow of labor services, goods,
and services.

EC210 2/2552

 EC210 
2/2552

1 .17-..-52 .
2 .1-..-52 .

17.00-19.00 . 206
17.00-19.00 . 206

3
4
5
6
7

17.00-20.00
17.00-20.00
17.00-19.00
17.00-19.00
17.00-20.00

.15-..-52
.12-..-52
.2-..-52
.16-..-52
.23-..-52

.
.
.
.
.

. 206
. 206
. 206
. 206
. 206


1-2

3

4 +

5-6

7-8

9

- 140


( 240 )
- n
o 
n
o
n
o 
-

r
o

-
o 

oon 
o 
(
)
EC210 2/2552

71

EC210 2/2552

72

 (DEMAND)

o


o o

(able and willing to consume) o
o

o n


n

o





o
-


(willingness to pay)
-

(ability to pay)

want VS demand
EC210 2/2552

73

 demand
Example: demand A
( = 4000/)
n 
(P)

n

(Q)

200
160
120
80
40

1
2
3
4
5
EC210 2/2552

74

 A
250
n 
(P)

200
150
100
50
0
1


(Q)
EC210 2/2552

75

Law of demand ()
Law of demand

o o 


P Q ; P Q

onn?

o 
?
EC210 2/2552

76

Question:


?
1. (Income effect):

o
o
nn
n
2. (Substitution effect):


o
o

o
o
n
n

o
oo

Relative Price

...


n
o
o

LPG
EC210 2/2552

77

 (Individual demand)
(Market demand)
Coke
(/ ) . .
q .
q .

1
2
3
4
5
6

10
9
8
7
6
5

12
10
8
6
4
2
EC210 2/2552

q .+ q .=Q

22
19
16
13
10
7
78

From Household
Demand to Market Demand

Assuming there are only two households in the market, market

demand is derived as follows:

EC210 2/2552

79

Exercise
Market demand ....
.... individual demand
/

5
4
3
2
1

o
1

Mkt demand

2
2.5
4
6
9

5
6
8
11
16

10
12
15
20
30

EC210 2/2552

80

 demand
SIMPLE FUNCTION : QDx = f(Px)
... 

o
o
...


on

(Income) : (+) (-)

o
(Py) : (-) (+)

(Taste) : (+) (-)
: (+)

: (+) (-)

EC210 2/2552

81

oo



..........
/

oo

..........
/ /

EC210 2/2552

82

 r

n

black berry


r 

n n

r n

o p o
(pantip.com)
o 
n

EC210 2/2552

83

Change in quantity & change in curve

-


r(change in quantity)
---- called move along



r(change in curve)
---- called shift

EC210 2/2552

84

From C to B is called
From C to A is called
From A to C is called

A
B

D*
D
Q

0
EC210 2/2552

85


To summarize:
Change in price of a good or service
leads to
Change in quantity demanded
(Movement along the curve).

Change in income, preferences, or

prices of other goods or services
leads to
Change in demand
(Shift of curve).

EC210 2/2552

86

 shift demand
Example: demand A
( = 4000/ = 8000 /)
n 
(P)
200
160
120
80
40

n
n

(Q) 4000
(Q) 8000
1
2
2
4
3
5
4
8
5
9
EC210 2/2552

87

n
o

r
o

Higher income decreases the

demand for an inferior good

Demand Shift

EC210 2/2552

Higher income increases the

demand for a normal good
Demand Shift

88

n
o

r

o

o


Demand for
complement good
(
)
shifts left

Price of hamburger Mac rises

Quantity of hamburger
demanded per month falls

Demand for
substitute good
( KFC)
shifts right

EC210 2/2552

89 of 48





demand 
o?

o
o




o



o
( P

Q


Q
o )



n o

o
demand shift
D D*
EC210 2/2552

90

 n r


r
1.
2.
3.
4.
5.
6.
7.
8.

demand ?
. demand ?
demand p?


r o
r
oo demand 
?
demand ?
demand ?

demand ?
demand ?
EC210 2/2552

91

EC210 2/2552

92

 (SUPPLY)

o


o

.


LAW OF SUPPLY

o



o 
....

....
EC210 2/2552

93



r
n

?...
... ()
P Q
P Q

Supply Curve?
Individual & mkt supply curve?
EC210 2/2552

94

 (Individual supply)
Coke (/ )

(Quantity
supplied - )

1
2
3
4
5
6

0
1
2
3
4
5
EC210 2/2552

95

EC210 2/2552

96

 (Individual supply)
(Market supply)

Coke (/
)

1
2
3
4
5
6

A
qA

0
1
2
3
4
5

qB
qA + qB =Q

2
4
6
8
10
12
EC210 2/2552

2
5
8
11
14
17
97

From Individual
Supply to Market Supply

98 of 48

As with market demand, market supply is the horizontal

summation of individual firms supply curves.

EC210 2/2552

 supply
-

(P)
(Input Price)

o

o

o

(technology)

EC210 2/2552

99

 r

n

r n






o

r
o

......

EC210 2/2552

100


o
supply
-


(change in quantity)
---- called move along



(change in curve)
---- called shift

EC210 2/2552

101

From C to B is called
From C to A is called
From A to C is called

S*

S
B

A
C
Q

0
EC210 2/2552

102


To summarize:
Change in price of a good or service
leads to
Change in quantity supplied
(Movement along the curve).

Change in costs, input prices, technology, or prices of related goods and

services
leads to
Change in supply
(Shift of curve).

EC210 2/2552

103

on o

o

.


.
o
o
o
.
o
.
.

.
EC210 2/2552

104

EC210 2/2552

105

 (Market Equilibrium)



n

(D=S)

(Equilibrium Price)
(Equilibrium Quantity)
Q:

o
?
EC210 2/2552

106

Case I : P > Pe (i.e. P=P1)

Supply > Demand Excess supply

Case II : P < Pe (i.e. P=P2)
Demand > Supply Excess demand
n

Q: o n


excess supply ?
EC210 2/2552

107

Excess supply
Price
S
Excess supply
P1
E

PE

D
QD

QE

QS

EC210 2/2552

Quantity
108

Excess demand
Price
S

E
PE
P2
Excess demand

QS

QE

D
QD

EC210 2/2552

Quantity
109



nn.......
......... ......
.........
. , , 


. n
, , 

. , , 


. n
, , 

.
EC210 2/2552

110


3
1. Demand Shift
2. Supply Shift
Demand & Supply
3. Shift

Comparative Statics
[ n
n&]

.& P&Q
EC210 2/2552

111

Demand Shift
P

S
E2

P2
P1

E1
D*
D

Q1

Q2

EC210 2/2552

Q
112

Supply Shift
S*

S
P2

E2

P1

E1

D
0

Q2

Q1
EC210 2/2552

Q
113

 Demand & Supply (i)

Shift
P

S*
S

P2
P1
D*
D
0

Q1 Q2
EC210 2/2552

Q
114

 Demand & Supply (ii)

Shift
P

S*
S

P2
P1
D*
D
0

Q1
EC210 2/2552

Q
115

 Demand & Supply (iii)

Shift
S*

P2

P1
D*
D
0

Q2 Q1
EC210 2/2552

Q
116

Conclusion
Demand

Demand Shift Demand Shift

P

P
Q

Supply Shift

P
Q

P
Q

P
Q

Supply Shift

P
Q

Supply

EC210 2/2552

117

1.

n
r

Demand/Supply

2.

Shift (/)

3.

D-S

o
o

EC210 2/2552

118



o
o
o

rn

.
. 

. 

.
.
EC210 2/2552

119

on n


o


o
o

r
(shift to the left)

r

o
o

r 
(shift to the right)

n
n 
o

n

(surplus)

EC210 2/2552

120



nn
LPG
r

n
r

Demand/Supply ........

Shift (/) ........

D-S ... ....

o
.. r o

oo
EC210 2/2552

121

n


oo o
(
o
)


demand shift

r
o
n
P
n

E1
S
E2
( = P1 = Q1)
P2
P1

E1
D

D*



o
demand
shift D D* P1 excess demand ()
o 
n

E2 ( = P2 =Q2)

r o


Q1Q2

P1P2
0

Q1

Q2

EC210 2/2552

122

 r rn

r o

o

o 
o
n
o r o

EC210 2/2552

123

 ( n 

)

o n

o
(
) 

n o

o


o
Demand
shift

EC210 2/2552

124

Demand

Supply

(P, I , Py ..)

(P, IP ,tech ..)

EC210 2/2552

125

EC210 2/2552

126

Topics

3.1

n

r n
r
o


o

r nnn

n

r n

EC210 2/2552

127

Topics (continued)

3.2 n
r
on

r n


3.3

o
nnn


EC210 2/2552

128

Topics (continued)

3.4



(Maximum Price)


(Minimum Price)
Sales Tax

EC210 2/2552

129

 (Elasticity)
Question: ?
answer:
n r 
(Magnitude)
n o
o

o

QDx = f(Px, I, Py, ....)

QSx = f(Px, IP... )
EC210 2/2552

130


(
n

10% 10 11 )

o



o 
o n
(



r 
5 n 



n 


r
)r

EC210 2/2552

131

%
%

%y
%x


n
n
Ex

=-1.5

=3

=0

...

%
n
n

10% ( 
3000 ?? )
GDP 4% ( GDP = 4 GDP =??)
EC210 2/2552

132

 r
r 
%Y = Y2 Y1
Y1

n
n

10% ( 
3000 ?? )
10% 3000 300


n 
3300
GDP 4% ( GDP = 4 GDP =??)
4% 400000 16000


GDP 
416000 4.16
EC210 2/2552

133

Question: ?
-


(direction)
..... (+) (-)

(magnitude)
..... (n )
n
x 1% y 
%
EC210 2/2552

134

 
(magnitude)

0

Elastic

Inelastic

Unitary

Elastic

Perfectly

Inelastic

Perfectly
EC210 2/2552

Elastic
135


(price elasticity)
n
r

(income elasticity)

o n
r

(cross price elasticity)

o
r
n
EC210 2/2552

136

Q
EC210 2/2552

137

 (d)



on
o



n o
o o

d =

%Q
%P
on

1%
o
r n
EC210 2/2552

138

 ()

(arc elasticity)
Ed = (Q1-Q2) (P1-P2) = (Q1-Q2) x (P1+P2)
(Q1+Q2)
(P1+P2) (Q1+Q2) (P1-P2)
2
2
(point elasticity)
Ed = Q/Q P/P = Q x P = slope x P
P Q
Q

6
4

D
80

120

EC210 2/2552

139


Ed =

P
6
4

(Q1-Q2) (P1-P2)
(Q1+Q2)
(P1+P2)
2
2
80
= (Q1-Q2) x (P1+P2)
(Q1+Q2) (P1-P2)
= 120-80 x 4+6 = 40 x 10 = -1
120+80
4-6
200 x(-2)

120

n n
o
o o....
EC210 2/2552

140

Exercise: AB CD
o
n
o
AB -3

Price

A
10

CD -0.33
C

4
D

10

20

25

EC210 2/2552

Quantity
141


( )

o
r
o n

o
n
r(Q0)
n

o n
r(P0)
no

WHY !!!
EC210 2/2552

142

** n

r n
r
o
Price
4

EP = -
Elastic

Ep = -1

Inelastic

8
EC210 2/2552

Ep = 0
143



o

r nnn

(point elasticity)
Ed = Q/Q P/P = Q x P = slope x P
P Q
Q

()
(slope) (elasticity)
nn


nn

n
n
n


elasticity o

***

n

EC210 2/2552

144

|Ed|=0 (perfectly inelastic demand):

on



Price

P2

P1

Q1
EC210 2/2552

Quantity
145

|Ed|<1 (inelastic demand):

Price

P2

P1

D
Q2

Q1

EC210 2/2552

Quantity
146

|Ed|=1 (unitary elastic demand):

Price

P2

P1
D

Q2

Q1

Quantity
EC210 2/2552

147

|Ed|>1 (elastic demand):

Price

P2

P1

Q1

Q2

Quantity
EC210 2/2552

148

|Ed|= (perfectly elastic demand):

o
n
(P1)

0

r
o


(
5)

Price

P1

Quantity
EC210 2/2552

149

Comparing Elasticity of Demand

Elasticity at
point A

Price

P1
P2

D* n
n
D


n

n
o n

C
D
D*

Q1 Q2 Q3
EC210 2/2552

Quantity
150

**
1

o 

o n
e.g., , vs.

**
o 


o
o
.... o

10% demand




10%
EC210 2/2552

151

**
2

o
o
o
on

o n

(high elasticity)
e.g., 
nvs.


n
o

o
onn

o
o

EC210 2/2552

152

**
3. r


on
e.g., vs. (
o)

o
on 

20%


demand
( r)r

o
on
o

20%


demand
r)r
(
on
EC210 2/2552

153

** ()
4

n




on

-
e.g., vs. n

o
nn n
o 

o n
e.g., o
r


vs. 

r
n
o

EC210 2/2552

154

n

r n

= x

Total Revenue = Price x Quantity

?
?

Question o or n 

EC210 2/2552

155

Total Revenue

o



n o

Price

Total Revenue = P1 x Q1

(
o o r)
P1

Demand
Q1

Quantity
EC210 2/2552

156

A. |d| >1
B. |d| < 1
Question

o 

Question
o
o r n 
n

EC210 2/2552

157

A.

|d| >1 (% Q > % P)

P

i.e.

6
N

16
EC210 2/2552

Q
158

B.

|d| < 1 (% Q < % P)

P
10

i.e.
o 
N

Demand
8 9
EC210 2/2552

Q
159

(Elastic)

% Q > % P

(Q P )

(Q P )

(Inelastic)

% Q < % P

(Q P )

(Q P )

n
(Unitary Elastic)

% Q = % P

EC210 2/2552

160

 ( n 

)

o n 

o
( ) 

n o

o



o
Demand shift
-3

o
o

o
10 o o 
30

o 

o
o

EC210 2/2552

161

EC210 2/2552

162

** (i)
:



o
o

%Q
%I

Q/Q
I/I

i ....

(+) (-)

EC210 2/2552

163



Income Elasticity of Demand
(Normal Goods)
o 

o

(Inferior Goods)
o
o

EC210 2/2552

164



o 
i > 0 (i +)
i > 1 (Luxurious Goods)
0 < i < 1 (Necessary Goods)
EC210 2/2552

165

EC210 2/2552

166


()

(essential trips)
( )

(optional trips) np

nn
-0.16

0.70

-0.43

1.53

sansanee limpong (ajarntik) ec382, 1/2552

** (xy)
:




o
o

xy

%Qx
%Py

Qx/Qx
Py/Py


xy ?
(+)
(-)
EC210 2/2552

168



Cross Elasticity of Demand
( )
x y (Substitute)
Py 

o
x y (QDx )
( )
x y (Complementary)
Py 

y x (QDx )
EC210 2/2552

169


Cross Elasticity AIS DTAC ?
Cross Elasticity
n


Exy = 0 ?
EC210 2/2552

170


nn

0 < < 1
> 1

= -2

o 
1% (o ) 2%
EC210 2/2552

171

EC210 2/2552

172

 (s)

on
o



n o
o o

()

s =

%Q
%P
EC210 2/2552


=?
= ?
173

Comparing Elasticity of Supply

S*

Price

B
P2
P1

C
A

Elasticity at
point A

S* n
n
S


n

n
o n

Quantity
EC210 2/2552

174

Perfectly Elastic & Perfectly Inelastic Supply

Price

Price

EP = 0

EP =
P*

Quantity

EC210 2/2552

Q*

Quantity

175


n


o

o

on

e.g., , CD vs. o o

n

o

EC210 2/2552

176

EC210 2/2552

177



(Maximum Price or Price Ceiling)



(Minimum Price or Price Floor)

EC210 2/2552

178

 ?
n..... 

o


-
? A legal maximum on the price at which a good can be sold.


-
? A legal minimum on the price at which a good can be sold.

-

( ,, ...)

/ no
...
EC210 2/2552

179

(Price Ceiling Maximum Price)

EC210 2/2552

180

:
()
o no n

n
o 
n
n
o

:
(Pc) on 
(Pe)
Pc
EC210 2/2552

181

 

(Ceiling Price)
Price
S
Equilibrium
price
Pe
Pc

Price
ceiling

Excess demand

D
0

Q1

Qe

Q2

Quantity
Quantity
EC210 2/2552
supplied
demanded

Quantity
182
Copyright2003 Southwestern/Thomson Learning



n


:


(Excess demand or Shortage)
(Black market)

o

o

o



n

o

80 ??

EC210 2/2552

183

(Price Floor Minimum Price)

EC210 2/2552

184

:
()


onn

,

no
:




(Pf) (Pe)
o n



on Pf
EC210 2/2552

185

 

(Floor Price)
Price
Supply
Excess supply
Pf
Price
floor

Pe
Equilibrium
price

Demand
0

Q1

Q2

Quantity Quantity
demanded
supplied
EC210
2/2552

Quantity
186
Copyright2003 Southwestern/Thomson Learning

 :


Pf Excess Supply

:
1)


n

(Excess supply)
2)

nn



2546-7

??
EC210 2/2552

187

EC210 2/2552

188

n



n ro 
, ,


no

r

10

80 o 
n

n

75 5


n o

o
n


o

oo

3.125 ...

EC210 2/2552

189

 2
1. ( ) (Specific Tax)

.
n
nn
o
2. (Ad Valorem Tax)
.. %

ASSUMPTION nn

o
EC210 2/2552

190

supply


( P&Q)

o 
/

EC210 2/2552

191

 (Specific tax or Unit tax)

S2

Price

S1

PT

Tax

Tax
P1

Q1

Quantity
EC210 2/2552

192


o 
/ /
(
o )
: n
on 
[ P
nn
VS P
n
]
= (
n

-
nn)
( )
:
o 

[ P
on
VS P o
]
=(
on- o
)

:
o
= + = ( )
EC210 2/2552

193


Price
Price
buyers
pay
Price
without
tax

S2

E1
P1
P0
P2

S1
Tax

B
A

A tax on sellers
shifts the supply
curve upward
by the amount of
the tax

E0

Price
sellers
receive
Demand, D1

Q1 Q0
EC210 2/2552

Quantity
194


o r

o 
( ) =

( ) =

( )
=

EC210 2/2552

=
=
=
195


( .....)
I.

d
n

II.

s
n

o nnn

EC210 2/2552

196

Case I Elastic Supply, Inelastic Demand

Price

S*
P1

E*

Tax
P

P2

Demand
0

Q*

Quantity

..... ??
EC210 2/2552

197

Case II Inelastic Supply, Elastic Demand

Price

S*

Price buyers pay

Price without tax

Tax

Demand

Price sellers
receive

Quantity

o

o n
..... ??
EC210 2/2552

198



o 
/
Case I Elastic Supply, Inelastic Demand

o 

odemand nn
n

o 
o


o n



o
n

Case II Inelastic Supply, Elastic Demand

o
demand
o


o n



o

EC210 2/2552

199

Question
?


o 

o
Perfectly inelastic demand // Perfectly elastic supply




o
o
?
Perfectly elastic demand // Perfectly inelastic supply

EC210 2/2552

200


- n

o
D
S2

Price

S1
P

E2

Tax
PS = PE

E1

QE1
EC210 2/2552

Perfectly inelastic demand

Quantity
201


Infinite - n

o
S2

Price

PB =

PE

S1

E2

E1

Tax

Perfectly elastic demand

PS

QE2

QE1
EC210 2/2552

Quantity
202

on n


o

nn

r n 

r
r 
o
r
r

o n
n

r n
o nn

-2,
/Ed/ = 2,
o
o

(total revenue)
..

o
n

..
(cross-price elasticity of demand)

-2.2 n

o

o on

(complement good)

EC210 2/2552

203








VS










n n
n o

EC210 2/2552

204

EC210 2/2552

205

Topics
4.1






n o 
o(Law of Diminishing
Returns)

EC210 2/2552

206

4.2

(Explicit Cost) (Implicit Cost)

o

(Fixed Cost) (Variable Cost)

o

(Total Average Cost)
o
n (Marginal Cost)

(Economies of scale)
(Diseconomies of scale)
4.3 :

EC210 2/2552

207

EC210 2/2552

208

 (Firms) :
Firm ( )

o
o

o 





o
Producer ( ), Seller ( ), Supplier ( )

1.
2.
3.

cover every
company from
smallest to highest
EC210 2/2552

209

www.dbd.go.th .

EC210 2/2552

210

 (Firms):

Profit Maximization
=
Profit = Total revenue Total costs

Sales Maximization
Staff Maximization
Growth Maximization etc.
EC210 2/2552

211

EC210 2/2552

212

( Explicit cost)
n
noo



(Implicit cost)
n
n

n
noo

n

o


= Opportunity cost= ??
EC210 2/2552

213


= -

= -
o

(Explicit Cost)
= -
= -Explicit Cost-Implicit Cost

r

n

?
EC210 2/2552

214

Economic versus Accountants

How an Economist
Views a Firm

How an Accountant
Views a Firm

Economic
profit
Accounting
profit

Revenue

Implicit
costs

Revenue
Total
opportunity
costs

Explicit
costs

Explicit
costs

215

EC210 2/2552
Copyright 2004 South-Western

...
( 10 )
()

500,000

(n

n
n 
rnno)

no

n 
o
5,000
Internet (high speed internet)
4,000

2,000
???
EC210 2/2552

216

implicit cost, explicit cost

15000 n
o n?

o

o o n? ....


n
o 
1
o o o

8000
no
12000
EC210 2/2552

217

...
( 10 )



5,000

8,000

12,000
n 
o
5,000
Internet (high speed internet)
4,000

2,000

36,000
(... r

oo
on n
n)
EC210 2/2552

218


If

economic profits > 0 called excess profit

If economic profits = 0 called normal profit
Normal profit()


o

o
o
o
n

What happen when economic profit < 0

But Accounting profit > 0 ???
EC210 2/2552

219

 (Social Cost)


on nn
(Private Cost)

o
n
o

(, )

(Social Cost)
= +

o

o
n


n n

EC210 2/2552

220

-


vs
-Law of Diminishing Returns
- Return to scale
EC210 2/2552

221

INPUTS OUTPUT

(Production Function)


r n

o



o
technology

Total Product = f(a1,a2,)

Q =f(labor ,capital ,raw material ,energy)
EC210 2/2552

222


(variable factors):

o


o

(fixed factors) :

ASSUMPTION
Capital: (K) Labor: (L)
EC210 2/2552

223

 






Q =f(L,K)

n


n
o
(called fixed factor)

Q =f(L,K)

n



o

( variable factor)

EC210 2/2552

224

r










r
o
TOTAL PRODUCT(TP) = Q =f(L,K)
AVERAGE PRODUCT(AP) = TP
nn
L TP
MARGINAL PRODUCT(MP) =

n
L



TP.How to find AP , MP
EC210 2/2552

225

 o
n
??





nn

n
o
o


( )

2000 
n
order 500 

o


n

n

o
o
n o 
() o 
onn o

10 

no
11 o n
EC210 2/2552

226

 n


K

TP

12

14

14

12

AP

MP

Find AP and MP ?

EC210 2/2552

227



r


L

TP

AP

0
1
2
3
4
5
6

5
5
5
5
5
5
5

0
3
8
12
14
14
12

3
4
4
3.5
2.8
2

EC210 2/2552

MP
3
5
4
2
0
-2
228


(TP)

TP

nn











o 



o

TP
WHY ??


(AP)

AP


nn

AP

n 
(MP)

MP



nn

MP
EC210 2/2552

229

C
D

TP

AP
L0

L1
EC210 2/2552

L2

L
230


(Law of Diminishing Returns)






o


n
r




n o
n 
(Law of diminishing marginal product)
EC210 2/2552

231





r






(n
)



o:


r 

(Return To scale)

EC210 2/2552

232

 (Return to Scale)
1)
on 
(Increasing Return to Scale)




() 1 n 

1
2)
on
(Constant Return to Scale)




() 1 n 


1
3)
on 
(Decreasing Return to Scale)




() 1 n 

1
EC210 2/2552

233

2 10 




5 

o
o50



20 

10 

o
o120

n 




??

EC210 2/2552

234

.

o


o







o


o
n

EC210 2/2552

235



































o


o




etc.
EC210 2/2552

236

 ( 100 )




(100 / o n)

o
n

o


SET UP COST >>> n

o
on

n

200 / 20
,
OPERATING COST
(, ,
...)
( )

nn
EC210 2/2552

237


r
.o.. Total Average Marginal

Total Cost (T C)
Total Variable Cost (TVC)
Total Fixed Cost (TFC)
o

Average Total Cost (ATC)

o

Average Variable Cost (AVC)
o


Average Fixed Cost (AFC)
o

Marginal Cost (MC)

o
n
EC210 2/2552

238


ATC

ATC

TC
AFC
q

TC
TFC

q
q

AVC

TVC

TC
MC
q
EC210 2/2552

239

A Firms Short Run Costs

EC210 2/2552

240

 oo 
( )
(
)


o
o
(
n o

)
Break even point ( )

o
o

(

o
n )

EC210 2/2552

241

: N*

o

() C

N* ( )

(Breakeven Analysis) o
nn








r
EC210 2/2552

242


on n


o


o

r n
o

o

(Fixed cost)

o

(Average Fixed cost)

EC210 2/2552

243


- n o 

on
15
o

2 
o 
3
- n
o
o
o o




oonno

n
80 n

nnn


20 n
o
17 on o

. TP = 17 , AP = 5
. TC = 60 , MP = 2
. TVC = 100 , MP = 4.25
. AP = 4.25 , MP = 2
EC210 2/2552

.
244

EC210 2/2552

245

 (Long-Run Cost)




n
o

: Capital (K) & Labor (L)

EC210 2/2552

246

o


n
o



(Total Variable Cost - TVC) n

:

TC = TFC + TVC
TFC = 0 and TC = TVC
TFC
AFC=
Q

TVC
AVC=
Q

AFC = 0 and AVC = ATC

EC210 2/2552

247

(Economic Efficiency):

o o
o

EC210 2/2552

248

Example:
ATC1 (Plant size 1)

o 
()

ATC1 (Plant size 2)

Q1

Q2

Q3
EC210 2/2552

Q4

249

 (Return to Scale)

o

1)
on 
(Increasing Return to Scale)
ATC

(economies of scale)

2)
on
(Constant Return to Scale)

ATC n

3)
on 
(Decreasing Return to Scale)
ATC

(Diseconomies of scale)

EC210 2/2552

250



()

LRATC
Economies
of scale

Constant
return to
scale

Diseconomies
of scale

EC210 2/2552

251

Question: Why might bigger be better?

Specialization and division of labor

n
nn
o o

Adopt mass production techniques

o
r


o
Quantity discounts

on

EC210 2/2552

252

Question: Why might bigger not be better?

Organizational complexity:

o

no

EC210 2/2552

253

DISCUSSION

n



Economy of Scale

n n

no
r
.....
EC210 2/2552

254

 n o nn
n 

r

EC210 2/2552

255

 o


o

.
o
o r
on
.
n

rn


.
o
.
n 


n

.
o



oon

EC210 2/2552

256

 

(Floor Price)
Price
Supply
Excess supply
Pf
Price
floor

Pe
Equilibrium
price

Demand
0

Q1

Q2

Quantity Quantity
demanded
supplied
EC210
2/2552

Quantity
257
Copyright2003 Southwestern/Thomson Learning

 o

on
no
o o

(PPC) o
.
.
o n
n
.
.

o rn
.
n

EC210 2/2552

258

o n n o
n
(Shift in Supply)
.

o o
. r
.

n o
n n
. rnn

n n

EC210 2/2552

259



n

.
o
o
.
o


. n
.
r
.

r

EC210 2/2552

260

o n rn onn

-1
.
o 
1 
o 
1
.
o 
100 
o 
1
.
o 
1 % o 
1%
. 5% o 
5%
o
.

. .

EC210 2/2552

261

EC210 2/2552

262

Outline
5.1
5.2





oo 


n


EC210 2/2552

263

Outline
5.3 (Market Failure)








EC210 2/2552

264

 (Market)



o



n
o

v w



n n
oo

n 
r
o



n

:
n
:

:


n 
no

EC210 2/2552

265

 
r

o n





o

n n
? ?



r
n ?



n
?

EC210 2/2552

266

r
on 

n
n

n


4
(Perfect Competition)


n


(Monopolistic Competition)
(Oligopoly)
(Monopoly)

on
n

.
EC210 2/2552

267

EC210 2/2552

268


o o

(Market Structure)

o
o

:
vs.
EC210 2/2552

269

Market
structure

Perfect
competition

Monopolistic
competition

Oligopoly
Monopoly

Free entry

Homogeneous

Same but not

Easy to entry
homogeneous

Have barrier Homogeneous

/ differentiated
(mkt share ) to entry

EC210 2/2552

Can not entry differentiated

270

.. r o n

oo
r

Etc.

EC210 2/2552

271

 o n

o n


nn
n

o n


o n


nn n

o n


nn n

n

o
o
nn




.... noo 
n

EC210 2/2552

272

 (Market Structure)

(Perfect
Competition)

(Monopolistic)

EC210 2/2552

o

(Oligopoly)

(Monopoly)

273

 (Perfect Competition)

n
r:

o
o

o


(Homogeneous)
(No barriers to entry or exit)

o
o
o
on

(Complete and perfect
information)

EC210 2/2552

274

 Example

():

o
???
???

EC210 2/2552

275

 :

(No market power)

(Price Taker)

on 

o

( = )

EC210 2/2552

276


o

r n
>>
o

r n
o

o
on

n

o o

on

n

o r

r n

?



o

r n



o

EC210 2/2552

277

P = AR =MR

EC210 2/2552

278

 3 $

(P)
3
3
3
3
3
3
3

(Q)
0
1
2
3
4

13

(TR)
0
3
6
9
12

39
EC210 2/2552

(AR)
3
3
3
3

n 
(MR)
3
3
3
3

3
279

 o r
o


AR
MR


...



EC210 2/2552

280

STC
TR

, ()

oo
Q

()

Q1

Q2

Q*

EC210 2/2552

Q3

Q
281


..


o (Positive economic
profit)

(Zero economic
profit or Normal rate of return)

o
o

oo


o n
oo

EC210 2/2552

282

 :

o

r

o

o
n

o

o

o
o r


n

on

EC210 2/2552

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 (Monopoly)

:
:

(Monopolist)

o
n
o
o o



o
n
o

(Barriers to entry)


EC210 2/2552

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 Example

():

DeBeers

o
p
r
o r???

EC210 2/2552

285

 
(Sources of Market Power):
1) (Natural Monopoly)

o

o


(High
start up cost!!!)
,

2)
(Exclusive control of a resource)

3) (Legal Monopoly)


(Patents), , Copyrights

EC210 2/2552

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o

o

(Market Power)

(Price Maker)

EC210 2/2552

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Price

o 


= r
o

D
Quantity (Q)

o r
o

n n
r n
EC210 2/2552

??
288



(P)
6
5
4
3
2
1

(Q)
0
1
2
3
4
5

(TR)
0
5
8
9
8
5

EC210 2/2552

(AR)
5
4
3
2
1

n 
(MR)
5
3
1
-1
-3

289

 o

:
o
o

o

o

( = )

o

r


...
:



o

n (MR) =
o
n 
(MC)

n

?? ( o

o
n 
n

3
)

EC210 2/2552

290


o

r 

o
MC = MR

(P)
6
5
4
3
2
1

(Q)
0
1
2
3
4
5

(TR) 
(MR)
0
5
5
8
3
9
1
8
-1
5
-3


(MC)
1
1
1
1
1

EC210 2/2552

(TC)
1
2
3
4
5

4
6
6
4
0

291

 :

o

r

o

o


r

o

n on
o



o r

n

onn

EC210 2/2552

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:
1)

o 
( o
o on )
2)

oo
(Rent seeking behavior)

n

o oo o

:
1)
o

o o

n
2) (Economies of Scale)
(Natural Monopoly)
EC210 2/2552

293


oo 
(Oligopoly)

oo :

o n

o 
n
o n
n n

o


o
o




o



o
n
o

(Barriers to entry)


EC210 2/2552

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Example :

(AIS, DTAC, True,

Hutch)
Search engine i.e. google , yahoo

EC210 2/2552

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r
o
o

1)

Act as a joint monopoly

Monopoly Outcome!!!

2)

Compete by lowering price (Price war)

Competitive Outcome!!!

EC210 2/2552

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 Conclusion:

o r

o n

o
r o

o nn
o


n


(on


o
r
)

n

on

EC210 2/2552

297


n


(Monopolistic Competition)

n

:

(Numerous rival firms)

o

n
on

(No barriers to entry or exit)

EC210 2/2552

298

():


o

o
otop
???


???

Example

EC210 2/2552

299

 :
(Firms have some
market power) on

o

, ,
, ,

EC210 2/2552

300

n

:

o (Positive economic
profit)
(Zero economic profit or
Normal rate of return) n


o

o
o r
o

(Product
variety) n

o
on n

n

on
EC210 2/2552

301

Market Structure

(Oligopoly)

(Monopoly)

(Perfect Competition)

(Monopolistic)

(Market Power)

nn


o

: +

: +

: +

: +

: 0

: 0

: +

: +

EC210 2/2552

302

(Market Failure)
EC210 2/2552

303

on
n
o

(Imperfect Competition)
(Externalities)
(Public Goods)
()

EC210 2/2552

304



o

oo
o

:


o 
(


)

o

o

EC210 2/2552

305

 (Imperfect Competition)

o on
??

o n


o

(

)
: (Artificial Scarcity)

n

EC210 2/2552

306

o o

(Antitrust Policy)
Example: Microsoft, IBC+UTV, MAJOR + EGV
Natural
Monopoly
Example: ,
EC210 2/2552

307

 (Externalities)
(Externalities) 

nn


o n


n

:

n
o

r o

o o



n n
o



o

EC210 2/2552

308

n


o

on nn
(Private Cost)

o
n
o

(, )

(Social Cost)
= +

o

o
n

EC210 2/2552

309

 (Negative Externality)

o
o

no n o

no

(Allocative inefficiency - market over allocates)
:
,

EC210 2/2552

310



negative externalities
Social cost
= private cost + external cost
private cost

P2

E2

P1

E1

D
0

Q2

Q1
EC210 2/2552

311

 
(Positive Externality)

no n

o ooo

o
: o

EC210 2/2552

312

 (Public Good)

(Public Good)

o
n n
o

1) Non-Rivalry ( )
2) Non-Excludability ()
Example: 3-5-7-9-11-itv,
EC210 2/2552

313


o


o n
??
(Private Good)

o
n n
o o



1) Rivalry (
)
2) Excludability ()
Example: , Gucci

EC210 2/2552

314


Free Rider Problem!!!

()
:

o
o

o


EC210 2/2552

315

Asymmetric Information
()

o n
2 (o-) o n n
2

Adverse Selection (
n )
- n 

Moral Hazard ( )
-

- - - 
o
n

n 
--EC210 2/2552

316

 Adverse Selection

...
...
...
...
...


o
oo no 
no
n
o n
EC210 2/2552

317

 Moral Hazard

...
...
...

(n )...
( )...


o
oo no 
no


o

EC210 2/2552

318

Appendix:
How to Read and Understand Graphs

A graph is a twodimensional
representation of a set of
numbers or data.

EC210 2/2552

319

Appendix:
How to Read and Understand Graphs

Total disposable personal income

Total Disposable Personal Income in

the United States: 1975-2002 (in
billions of dollars)
8000
7500
7000
6500
6000
5500
5000
4500
4000
3500
3000
2500
2000
1500
1000

1975

1980

1985

1990

1995

A time series graph

shows how a single
variable changes over
time.

2000

Year

EC210 2/2552

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Appendix:
How to Read and Understand Graphs

The Cartesian coordinate system is the most common

method of showing the relationship between two variables.
The horizontal line is the X-axis
and the vertical line the Y-axis.
The point at which the horizontal
and vertical axes intersect is
called the origin.

EC210 2/2552

321

Appendix:
How to Read and Understand Graphs

The point at which the line

intersects the Y-axis (point a) is
called the Y-intercept.

The Y-intercept, is the value of Y

when X = 0.

EC210 2/2552

322

Appendix:
How to Read and Understand Graphs

The slope of the line indicates

whether the relationship
between the variables is
positive or negative.

The slope of the line is

computed as follows:

Y
Y1 Y0
b=

X X1 X 0
EC210 2/2552

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Appendix:
How to Read and Understand Graphs

This line slopes upward,

indicating that there seems to
be a positive relationship
between income and
spending.
Points A and B, above the 45
line, show that consumption
can be greater than income.

EC210 2/2552

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Appendix:
How to Read and Understand Graphs
An upward-sloping line
describes a positive
relationship between X and
Y.

A downward-sloping line
describes a negative
relationship between X and Y.

EC210 2/2552

325

Appendix:
How to Read and Understand Graphs
7
b
0.7
10

5
b
0.5
10

0
b
0
10

10
b

EC210 2/2552

326

Appendix:
How to Read and Understand Graphs

EC210 2/2552

327

Appendix:
How to Read and Understand Graphs
Cartesian coordinate system

slope

graph

time series graph

negative relationship

X-axis

origin

Y-axis

positive relationship

Y-intercept

EC210 2/2552

328