downward slope: (dốc xuống): trade-off

Tại A, B: tối đa hoá nguồn lực

bows outward: the law of increasing opportunity cost

- Marginal: small change from the current decision; đạo hàm của hàm gốc
Marginal cost: chi phí cận biên: the additional cost when we produce more 1 unit

ex: Produce 10 units => total cost 55

Produce 11 unitd => total cost 65

Net benefit = Total benefit - Total cost -> max -> tối ưu lợi ích
<=> (TB)' = (TC)' <=> MB=MC

Q11:

TC1 = 500
TC2 = 400

1. mất 500 bán 300 -> lỗ 200

2. mất 900 bán 800 -> lỗ 100
=> C

Topic 2: The market force: demand and supply

1 Demand (demand curve): all quantity of G&S that customers want and affordable to buy at
any price

- quantity demanded (lượng cầu) khác demand

- factor impacting on D and QD:

+ endogenous (nội sinh): Price
law of demand: P tăng -> QD giảm; P giảm-> QD tăng. => move along the demand curve

+Exogeneous (ngoại sinh):

(1) Income (thu nhập): Normal goods (thông thường). VD: lương thực, thuốc men,...
=> quan hệ cùng chiều: I tăng -> D tăng (+)

Inferior goods (hàng hoá thứ cấp). Vd: mì tôm => quan hệ ngược chiều (-)

(2) Population and number of buyers (+)

(3) Taste (thị hiếu)

(4) Price of related goods:

- Substitute goods (hàng hoá thay thế): Vd: RON 92 và RON 95, coca và pepsi
Giả sử: X, Y
PY tăng -> QDY giảm -> DX tăng (giá Y tăng-> chuyển sang dùng X)
PY và DX thuận chiều
- Complementary goods (hàng hoá bổ sung). VD: pizza và coca, mic và loa, cây và chậu, bia và đồ
nhắm, giày trái và giày phải
PY tăng -> QDY giảm -> DX giảm (giá Y tăng, giảm lượng cầu Y -> cầu X giảm)

(5) Expectation

2 Supply
All the quantity of G&S that sellers want and are able to sell at any price
Supply khác quantity supplied

factors impacting S, QS
Endogenous: price
law of supply: P tăng, QS tăng
-> move along the supply curve

Exogenous:
(1) technology. (+)
(2) price of input (gía của các nguyên liệu đầu vào) (-)
(3) number of sellers (+)
(4) government policies
+ tax (-)
+ subsidy (+): hỗ trơ
(5) Expectation
câu 7 sai đề:
- Nhân tố nội sinh: di chuyển dọc đường cầu
- Nhân tố ngoại sinh: dịch chuyển đường cầu
surplus: price tends to decrease to equilibrium price

shortage; price increases to equilibrium price

* price ceiling (giá trần): Maximum available price
giá trần < giá cân bằng

* Price floor (giá sàn): minimum available price

giá sàn > giá cân bằng. Khi có chính sách giá sàn -> dư thừa vì giá cao quá ít người mua

Calculators
Ex: (1) (D): QD = 20 - P. (S): QS = 2 + 2P
Find the equilibrium price and quantity QD=QS

<=> 20 - P = 2 + 2P => P=6; Q= 14

(2) market price = 8

shortage or surplus?
QD= 20 - 8 = 12
QS= 2 + 2.8 = 18

QD < QS -> surplus 6 units

(3) goverment policies Tax/ subsidy

Government sets tax 2$/unit -> new equilibrium price and quantity
(St): QS = 2 + 2P
=> P= 0.5QS -1
After tax: P= (0.5 QS - 1) + 2 = 0.5 QS +1
=> QS = 2P-2

(D): 20-D

(D)=(S)

D= 22/3
Q= 38/3
Tax burden:
+ consumer: must bear a tax of 1.3$/ unit (because they have to buy at a higher price)
+ Producers: the sellers should have received 22/3 $/ unit. Due to tax, the sellers only receive
22/3 - 2 = 16/3. Thus the seller bear the taxes of 6 - 16/3 = 2/3 dollar

Consumer surplus and producer surplus

Normal market:
S ABQ0O: willingness surplus (WS): value consumers willing to pay to buy Q0 units of product

SP0BQ0O: actual value costumers pay to buy Q0

-> CS: S AP0B : below D, above P0, bounded by Q0 (bị giới hạn bới Q0)

PS: S P0BC: above S, below P0, bounded by Q0

Net social benefit (NSB) = CS + PS -> max

Price floor

Price ceiling (giá trần)

(D) Q= 20-P
(S): Q= 2+P

TAX:
DWL: dead weight loss: phần mất không (ko ai được hưởng)

Ex: (D)

Chapter 5: Elasticity

A Demand elasticity

I) Price elasticity of demand (co giãn của cầu theo giá)

How much the quantity demanded of good responds to a change in the price of that good

+ Point elasticity (co giãn điểm)

+ Interval elasticity:

|Edp| > 1. -> elastic demand

|Edp| = 1 -> unit elasticity-demand

|Edp| < 1 -> inelastic demand

|Edp| = 0 -> perfectly inelastic

|Edp| = dương vô cùng -> perfectly elastic

Applications:

1) Type of good related to Edp

+ |Edp| < 1: necessity goods (hàng hoá thiết yếu)

+ |Edp| > 1. luxury good (hàng hóa xa xỉ)

2) relationship between Edp and Revenue

TR = P.Q

+|Edp|<1: P tăng 1% -> Q giảm nhỏ hơn 1%

-> TR = P.Q tăng

+|Edp|=1: P tăng 1% -> Q giảm 1%

=> TR = P.Q unchanged

+|Edp| >1: P tăng 1% -> Q giảm hơn 1%

=> TR = P.Q giảm

3) Relationship between EDP and price on the demand curve

P tăng -> EDP tăng

4) Relationship between EDP and tax burden

5) Factors impact Edp

+ Availability of substitution goods: (+)

+ The proportion of income spent on the goods (+)

+ How much time has elapsed since the time the price changed (+)

The cost of production

Goal: maximize profit

1. Total revenue, total cost and profit

-revenue= price x quantity

total cost: the market value of the input of firm uses to produce

- profit: revenue - cost = TR-TC

profit max <=> TR'=TC' <=> MR=MC

Implicit and explicit cost

Explicit cost: input costs that require an outlay of money by the firm
Eg: raw material, equipment, real estate, labor, utility (water, electricity),...

Implicit: input costs that don't require an outlay of money

Eg: opportunity cost

economic cost = explicit cost + implicit cost

explicit cost: accounting cost (chi phí kế toán)

a) explicit cost ~ chi phí phát sinh: vay 200.000 phải trả lãi 12%-> phát sinh 12%.200000 = 24000
-> C

b) chi phí cơ hội ~ implicit cost

+ 100.000 lãi 10000 -> nếu mua mất 10.000
nếu không mua: còn nguyên 10.000
-> OC= 10000

+ 200.000 trả 24.000

Nếu mua -> mất 24.000
Nếu ko mua -> không vay / vay nhưng dùng 24000 vào việc khác -> vẫn mất 24.000
-> không tính vào chi phí cơ hội

-> economic cost = 10000 + 24000 = 34000

total revenue = 20.000.000 dollars

TR = 12.000 x 3 = 36.000
có 500.000 trg tk, lãi 4% = 20.000 -> 20.000 là implicit cost
require outlay of 14.000. -> 14.000 là explicit cost

Accounting profit = TR - Accounting cost = 36.000 - 14.000 = 22.000

Economic profit = TR - Econominc cost = 36.000 - (20.000 + 14.000) = 2.000

Quit job as teacher with 40.000 -> Implicit (1) cost is 40.000
20.000 from savings with 3% = 600 interest -> implicit (2) cost is 600
Borrow 30.000 with 3% interest = 900 -> explicit (1) cost is 900
ingredients = 25.000 -> explicit (2) = 25.000
revenue = 60.000

Louis: Accounting profit

Accounting cost = 900 + 25.000 = 25.900
Accounting profit = 60.000 - 25.900 = 34.100

Greg: Economic profit

Economic cost = 40.000 + 600 + 900 + 25.000 = 66.500

Economic profit = 60.000 - 66.500 = 6.500 -> lost 6.500

3. Cost of production
a) the production function

Relationship: Inputs <-> Output

Inputs
+ Capital
+ labors

+ alpha: if K increases by 1%, then Q increases by alpha%

-> whether firms should increase labors/ scale?
 Case 1: increases K,L by 2 times, Q increases more than 2 times -> the production
function exhibits increasing returns to scale (có hiệu suất tăng theo quy mô)
=> economy of scale (tính kinh tế nhờ quy mô)

 Case 2: multiples K,L by 2, Q increases 2 times -> the production function exhibits
constant returns to scale (hiệu suất không đổi theo quy mô)

 Case 3: multiples K,L by 2, Q increases less than 2 times -> the function exhibits decrease
returns to scale

* Marginal product: The increase in output that caused from an additional unit of input (thêm 1
unit đầu vào thì tăng thêm bao nhiêu product)
+ MP of labor: If firm hire 1 more worker, the output increases by ? MP of labor

MPL decreases: Diminishing MP

If the quantity of input increases, MP of an input decreases
EXPLAIN:

+ MP of capital:
In the short term: not mentioned (difficult to change capital)
In the long term:

* Average product:
MPL = APL <=> APL max

Stage 1: APL increases -> MPL above APL

Stage 2: APL decreases -> MPL < APL
4. fixed cost and variable cost
- Fixed cost (FC) cost that independent from output produced.
Ex: renting fee, salary (some case)
- Variable cost (VC) dependent on quantity of output produced
Ex: raw materials. electric, salary (some case)
-> Total cost = fixed cost + variable cost
TC= FC+VC

* Average cost:
ATC = TC/Q

AFC= FC/Q
In long term:

AVC = VC/Q

ATC = AFC + AVC

MCq = TCq - TCq-1

-> C
=> C

-> D

AFC at Q=5
-> AFC = 2 => B
MC at Q=1 -> MC=1
*Relationship between: MC, AVC, AFC, ATC
THE COST OF PRODUCTION

- The goal: maximizing profit

1. Total revenue, total cost and profit

- Revenue: = P.Q
- Total cost: the market value of the inputs that a firm use to produce.
- Profit: Revenue - Cost = TR-TC. -> profit max <=> (TR)' = (TC)' <=> MR = MC (marginal)

2.

-> B
Accounting profit = revenue - accounting cost

TR= 12.000 x 3 = 36.000 ($)

accounting cost = 14.000
-> Accounting profit = 22. 000

Economic profit = revenue - economic cost

or economic profit = accounting profit - economic cost

Economic cost = 14.000 + 4%.500.000 = 34.000

-> economic profit = 36.000 - 34.000 = 2.000 ($)

opportunity cost = 40.000

initial investment isn't included in cost.

accounting cost = 25.000

economic cost = 25.000 + 40.000 + 3%.20.000= 65.600

economic profit < accounting profit : 40.600

-> B