Ecomomics

Blinder and biases :

renximiged Brofit : ME =
UR

AmEhoring :
Why ?

stvuctureaker For a firm ,

it M层 p Mo
,
the firm should Coutinue to
produce .

Perfeat Competitiom :

lhake + ( Iudustox
从
Mc -

…
S
,
“
Pc
…
… … ! P …
。 MC =
MR
.
…!
n

点 ↑ inmt “

的
. shifeed
0
Q Q
㉑
ATG :
Average total cown ψ

In the short Rum : at rastI is fixed ( Factors of pro duction 了

MG
ATE
…

p
-

!
,
total
Brofit

⼀
。 P MR 3 {AR 3 =□ 的
③
=
=

0 ⑪ 品

If the price t 5 Ta , butthey Caen still omake .

If firun min AtC , stop , ho pointofcees produciny

Ecouomic protic . the OE

of the Broduct

Im the
long run :

(A ll firms
"

earm mormal profits .

If firms make supernormal profit or

MonoBoly ,

I Single seller
.

" no Clos& gubstitutes for the produat ⑬

Siguiticunt harvier to entre

.

Pheveune ws . Brofip lladinmisation .

Economy of Scale

S 层与IC

. The mot 6 produce

LRAIC

③
Miniomum

efficitmt Scale

点
⇌
*
.

In elastic
 Consumer the ory -

otilipy , budget .

Consumers have to allocate their

budget on a varietyof goods andservices based on their own persoral Brefeserce .

Otility :
a set of Humerical values whem the relatire ranking of vario us bundles of goods .
{ umit : otils }

Biominishing marginal otility

HapBimess from Consmmigthefist burgu

tu
Yzud ☆ lo 0

Total utility TU
Λ
“ ( tolal

utility }

⼀
0

masgiua ) otility
=

过
,

…
…

令
ooth burger
dispeasureBositive
∞ ( . x
ir
'
.

↑
Consuuptiou i Consumption

Budget line :
shows al the possible cowmbinations of Ʃ goodsthat a Cousumer
Ean purchase with a girem income and a given pricesofthe

tlmo
good 系 。

Igoods : x &
y

PxX PyY PXY

PyY
B
+ B
-

Magingratoftranfomatin
=
Px : Price 5
o x

( )
Py Price ofY
= 最

④→ M πT

} :

budget

⼋叫
B

PyM

灣
point with in the the
higon ,
consu mers Ean
afford

If budget increage , tHe line looks the sume but mith a

shuft

ix
。 as price of x 9 , we end up with lass x

Imdiffevemce Curvr : ghows al coumsinatious of two goods that give d cousmmer the same level
of satisfauction I utility

Gevel indifference
Ever 4 total rfility Gorrespouds to au
onique Curve .

MY

L
UR δ :
Marginad 1ate
of Substitufion ThG hillingness of t h e amshmern o gubstitute

0
. 9

, 层鹤 ⼆⼀品

!
…
…

ua ☆ U [ E , Y ] =☆
ω ( y ,
Y ) = {
x vy }

ix
 Circularflowofincomelaud-rentlabour-wadq.es
c a p i t a l - i n t e ve s e u t e r p r i s e - p r o f i t c l o s e d e .c o
uomyiauecouomythatdoesu4tradewithauothere.conomy ,

《 ii)
""" "

GDP= goods and services output

P ⼋

PEDPriceelasticityofdemauusleud-sta.tl

linpriceFactorsaffectPEDiAvailabilityofsubstitutes.li
%出 in Qd %1 :
start

i If :PEP 01 = inelastic

i
i p

eqQPESiPicee.la sticityofsupply XEDicrosspricee.la51⼼⼤1

%△ in Qs % in Qd A
XED-on.com plement

% △ inp % in P B

XEDsoisubstitutepiceceilingandpr.ie flow :

Maximumpricesetbelowthemarketequilibriumpr.ie S

consequenceshortgvnder-anocationofres.co urces

priceceiligunaerg.ro undmarket D

定量 配给 了
Nou -

price rationing (

Consumersarepartlybet erof audpaitlyworsegihecirc.ua

ofmoneyGovernmemiPurc.hu
rflow

taxesnfaovernmentofgood8.SN
Se

HouseholdstanstrFinancial.in
ìw

MarketforiexportRestofth 900doesewiceimportiwo.la
⼈

!
𨶹
t­
e­
s­
 Price

elasticityofsupplyimeasurestheresponsivenessofquantitys.vn
pliedtoachangeinpw.PE
S =
% △ in Qs
"

Ifthepriceofbanauasincveasesbyloiaudthesupp.ly

i nwe a s e s by z o i o . t h e P E S i s z o T
% in p

P ^ s

s
10 6 - _ _ _ _ _ _ _ _ 106
!
_ _ _ _ _ _ _ _ _

80
80

iii.
-
-

iii
6064
。 Q
1 00 ⾐
6。

Inelastic

Elastic-achangeinpricecausesasmauerpropor.nu
Achangeinpricecausesabiggerchauge.in
-

QS

proportioualchangeinsupplyReasonsi.FI
,

Reasonsi.sparecapacityiuthefactory.FI
rmsoperatingclose.to funcapacity ,

rmshavelowlevelofstocksyte.fm
Stocksavailablethereawnosurplusgood.to
Inthelougrun.supplywillbemoreiIntheshorttem.ca
⼀

feu ,

elasticcuzcapitalcanbevaried.mu
pitalisfixedintleshot

eEasytoemploymorefact.rs
ojproduciou-Difficulttoempwyfactorsofproduc.tn
Productcanbesoldfromtteinternet.swnisinelastic.in
。

theshortrupfor

ExampksiFidgetspinneragricultu.at
Taxiservices.ExamplesiNuelearreac.to
pwducts ,

rs ImportauceiIfsupplyiselastic.cm inaeaseindemand

willcauseonlyasmanriseinprice.butFlooddefenc.es
Grapes

asignific.cm ↑ in D.

I f i n e l a s t i c E l a s t i c yo l c n t r o l n p r i c p r i c e f l o r i m n i m . a m
pricesetabovethemarketequilibriumprice.Rationale.GOV
ernmenttosupport.producersaudworkers ,

⼈ S

A consumersurplusiAtB.tl PS :D tBtEtc.FI cs -_- Bt

Pricefloor

flìf
B f
1

PS-BtEtctFtG-CEtFJ-ctBtGtDIFD-IGovernmentspending.cn
_
_
_
_
_ -
Producer surplusi EtF _
-

> G :
A △

※
-1Gt F
上 ,

n
.­
.­
P­
e­
 Cousequenceofprice.tl
PED-Elastic.su
00 1 :

revenueitprice.tover-al ocatiouofresounescentralplannomyisaneconomywheredecisionsonwhattoproduce.lt
ede.co
↑
rplus

nomyycommandecouomy-Acentralplannede.co
owtoproauceandforwhomtoproducetoaretakenbythe.gov

ernmentinacentrallymangedbureavcracy.in
theovy.acentrallyplannede.co
nomycanovercomemarketfailureandachieveequalityofdis.tn
bntion.I.pricearekeptvndercontrolinacentrallyplaunede.co
nomytfz.theveisnotthesamelevelge.co
nomiciuequalityinthissystem.3.tn
erearelowerlevelsofvnemploymentfoundincentrallyplannede.co

nemieplanedeconomy.2.gouwillfiudalotcgwaste.in
this_fssystem.
.ther3.emarostantrahypl
ehighlaennedeconomi
vebofin.efes ficie.ua/inacentral y
restrictindividualrights.Freemark.t ?Thefreemarketis aneconomicsystembasedonsupplyanddemandn.im littleornogovernment
control.Itisasummarydescriptionofa.lt
roluntaryexchangesthattakeplaceinagiveneconomic.euvironment.Freemarketsarecharacteriz.eu

byaspontaneousddecentralizedorderofarraug.mentsthrough
whichindiuidualsmakeeconomicdecisions.NO
moderncountryoperateswithcompletelyvninhib.it edfreemarkets.Themostfreemaketstendtocoinciden.ithcountries

thatralue

privateproperty.capitalism.andindividualright.IT
1 2.AfreemarketeconomycanprovidelimitproductchoicesB.fr
I.pro/-itisalwaysthemotiveforsuccessinafveemarketeconomy
hefreemarketprovidesmovefreedomtoinna.ate.
+
2 .

1
thefreemarketeconomynatuallypromot.sequality ,
-

3.Afreemarketecouomyrequiresconsumptiontosurvive.Mixede.co
eemarketeconomiesregulatethemse.lvesnatually
uomyiAmixedeconomyisoneinwhichresourc.es
areallocateathronghpricemechanismandthestate-Publicsec.to
Governmentlstate-ownedorganisationsdse.me
r :

e.g.AVICPrivatesecoriorganisations.co wned byindivials ,

e.gtencent.Mixede.io
-

State

MarketI.hhattoproduce7.i.Governmentprovidesallpub.li
nomy
:

duceanygoodstomeetcouswmersgoodamountofmeritgo.cl
cgoods & a .
Firmsp.ro

demand.2.Howtopwdd7.Improvementinproduction.is
Tomaintaincompetitivenes.fi
rmsaimtoproduceatgovernmentbudgetoepolitic.nl
constrainedby
-

minimnmcostsaudtokeepimprovingquality3.TO
interests

rwhomtoprod.ua?iPublicgoodsareprovidedforallipolicies
Goodsaresoldtothosewhocanafford.ae
,

vsedtohelptleneedytogettheirbasicneedsmet-Inmixedecon.my
mail.etforces?andpartNbytheState.MarketFailure-.InrealIty
, thesequestionsarepartlydeterminedbypricemechanismli.ee 。

, foravarietyofreasons.themarketsometimesfaildu.to ,

I . l a c k o f p u b l i c g o 2 . E x t e r n a l i t e 3. A b u s e o f m o n o p o l y p o w e . r u
d­
s­
MixedeconomyN.korea.n.in
nlhi.GTY.li . Hi 。
planned Iudia France Vk
Singap.ae Marketecouom.es

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