曼昆微观经济学课文.pptx

会计学1曼昆微观经济学课文曼昆微观经济学课文Price Elasticity of DemanduuPrice elasticity of demand is the percentage change in quantity demanded given a percent change in the price.uuIt is a measure of how much the quantity demanded of a good responds to a change in the price of that good.第1页/共63页Determinants of Price Elasticity of DemanduuNecessities versus LuxuriesNecessities versus LuxuriesuuAvailability of Close SubstitutesAvailability of Close SubstitutesuuDefinition of the MarketDefinition of the MarketuuTime HorizonTime Horizon第2页/共63页Determinants of Price Elasticity of DemandDemand tends to be more elastic:Demand tends to be more elastic:uuif the good is a luxury.uuthe longer the time period.uuthe larger the number of close substitutes.uuthe more narrowly defined the market.第3页/共63页Computing the Price Elasticity of DemandThe price elasticity of demand is computed as the percentage change in the quantity demanded divided by the percentage change in price.第4页/共63页Computing the Price Elasticity of DemandExample:If the price of an ice cream cone increases from$2.00 to$2.20 and the amount you buy falls from 10 to 8 cones then your elasticity of demand would be calculated as:第5页/共63页Computing the Price Elasticity of Demand Computing the Price Elasticity of Demand Using the Midpoint FormulaUsing the Midpoint FormulaThe midpoint formula is preferable when calculating the price elasticity of demand because it gives the same answer regardless of the direction of the change.第6页/共63页Computing the Price Elasticity of DemandExample:If the price of an ice cream cone increases from$2.00 to$2.20 and the amount you buy falls from 10 to 8 cones the your elasticity of demand,using the midpoint formula,would be calculated as:第7页/共63页Ranges of ElasticityInelastic DemandInelastic DemanduuQuantity demanded Quantity demanded does not responddoes not respond strongly to price strongly to price changes.changes.uuPrice elasticity of demand is Price elasticity of demand is less thanless than one.one.Elastic DemandElastic DemanduuQuantity demanded Quantity demanded responds stronglyresponds strongly to changes in to changes in price.price.uuPrice elasticity of demand is Price elasticity of demand is greater thangreater than one.one.第8页/共63页Computing the Price Elasticity of DemandDemand is price elastic$54DemandQuantity1000Price50第9页/共63页Ranges of ElasticityuuPerfectly InelasticQuantity demanded does not respond to price Quantity demanded does not respond to price changes.changes.uuPerfectly ElasticQuantity demanded changes infinitely with any change Quantity demanded changes infinitely with any change in price.in price.uuUnit ElasticQuantity demanded changes by the same percentage Quantity demanded changes by the same percentage as the price.as the price.第10页/共63页A Variety of Demand CurvesBecause the price elasticity of demand measures how much quantity demanded responds to the price,it is closely related to the slope of the demand curve.第11页/共63页Perfectly Inelastic Demand-Elasticity equals 0-Elasticity equals 0QuantityPrice4$5Demand1002.leaves the quantity demanded unchanged.1.Anincreasein price.第12页/共63页Inelastic Demand-Elasticity is less than 1-Elasticity is less than 1QuantityPrice4$51.A 22%increasein price.Demand100902.leads to a 11%decrease in quantity.第13页/共63页Unit Elastic Demand-Elasticity equals 1-Elasticity equals 1QuantityPrice4$51.A 22%increasein price.Demand100802.leads to a 22%decrease in quantity.第14页/共63页Elastic Demand-Elasticity is greater than 1-Elasticity is greater than 1QuantityPrice4$51.A 22%increasein price.Demand100502.leads to a 67%decrease in quantity.第15页/共63页Perfectly Elastic Demand-Elasticity equals infinity-Elasticity equals infinityQuantityPriceDemand$41.At any priceabove$4,quantitydemanded is zero.2.At exactly$4,consumers willbuy any quantity.3.At a price below$4,quantity demanded is infinite.第16页/共63页Elasticity and Total RevenueuuTotal revenue is the amount paid by buyers and received by sellers of a good.uuComputed as the price of the good times the quantity sold.TR=P x Q第17页/共63页$4DemandQuantityP0PriceP x Q=$400(total revenue)100QElasticity and Total Revenue第18页/共63页Elasticity and Total RevenueWith an With an inelasticinelastic demand curve,demand curve,an increase in price leads to a an increase in price leads to a decrease in quantity that is decrease in quantity that is proportionately smaller.Thus,proportionately smaller.Thus,total revenue increasestotal revenue increases.第19页/共63页Elasticity and Total Revenue:Inelastic Demand$3Quantity0Price80Revenue=$240 Demand$1DemandQuantity0Revenue=$100100 PriceAn increase in price from$1 to$3.leads to an increase in total revenue from$100 to$240第20页/共63页Elasticity and Total RevenueWith an With an elastic demandelastic demand curve,an curve,an increase in the price leads to a increase in the price leads to a decrease in quantity demanded that decrease in quantity demanded that is proportionately larger.Thus,is proportionately larger.Thus,total total revenue decreases.revenue decreases.第21页/共63页Elasticity and Total Revenue:Elastic DemandDemandQuantity0Price$450DemandQuantity0PriceRevenue=$100$520Revenue=$200 An increase in price from$4 to$5.leads to a decrease in total revenue from$200 to$100第22页/共63页Computing the Elasticity of a Linear Computing the Elasticity of a Linear Demand CurveDemand Curve第23页/共63页Income Elasticity of DemanduuIncome elasticity of demand measures how much the quantity demanded of a good responds to a change in consumers income.uuIt is computed as the percentage change in the quantity demanded divided by the percentage change in income.第24页/共63页 Computing Income ElasticityIncome Elasticityof DemandPercentage Change in Quantity DemandedPercentage Change in Income=第25页/共63页Income Elasticity-Types of Goods-Types of Goods-uuNormal GoodsuuInferior GoodsuuHigher income raises the quantity demanded for normal goods but lowers the quantity demanded for inferior goods.第26页/共63页Income Elasticity-Types of Goods-Types of Goods-uuGoods consumers regard as necessities tend to be income inelasticExamples include food,fuel,clothing,utilities,and medical services.Examples include food,fuel,clothing,utilities,and medical services.uuGoods consumers regard as luxuries tend to be income elastic.Examples include sports cars,furs,and expensive foods.Examples include sports cars,furs,and expensive foods.第27页/共63页Price Elasticity of SupplyuuPrice elasticity of supply is the percentage change in quantity supplied resulting from a percent change in price.uuIt is a measure of how much the quantity supplied of a good responds to a change in the price of that good.第28页/共63页Ranges of ElasticityuuPerfectly ElasticE ES S=uuRelatively ElasticE ES S 1 1uuUnit ElasticE ES S=1=1第29页/共63页Ranges of ElasticityuuRelatively InelasticE ES S 1 1uuPerfectly InelasticE ES S=0 =0 第30页/共63页Perfectly Inelastic Supply-Elasticity equals 0-Elasticity equals 0QuantityPrice4$5Supply1002.leaves the quantity supplied unchanged.1.Anincreasein price.第31页/共63页Inelastic Supply-Elasticity is less than 1-Elasticity is less than 1QuantityPrice4$51.A 22%increasein price.110100Supply2.leads to a 10%increase in quantity.第32页/共63页Unit Elastic Supply-Elasticity equals 1-Elasticity equals 1QuantityPrice4$51.A 22%increasein price.125100Supply2.leads to a 22%increase in quantity.第33页/共63页Elastic Supply-Elasticity is greater than 1-Elasticity is greater than 1QuantityPrice4$51.A 22%increasein price.200100Supply2.leads to a 67%increase in quantity.第34页/共63页Perfectly Elastic Supply-Elasticity equals infinity-Elasticity equals infinityQuantityPriceSupply$41.At any priceabove$4,quantitysupplied is infinite.2.At exactly$4,producers willsupply any quantity.3.At a price below$4,quantity supplied is zero.第35页/共63页Determinants of Elasticity of SupplyuAbility of sellers to change the amount of the good they produce.uuBeach-front land is inelastic.Beach-front land is inelastic.uuBooks,cars,or manufactured goods are elastic.Books,cars,or manufactured goods are elastic.uTime period.uuSupply is more elastic in the long run.Supply is more elastic in the long run.第36页/共63页Computing the Price Elasticity of SupplyThe price elasticity of supply is The price elasticity of supply is computed as the percentage change in computed as the percentage change in the quantity supplied divided by the the quantity supplied divided by the percentage change in price.percentage change in price.第37页/共63页Application of ElasticityuuCan good news for farming be bad news for Can good news for farming be bad news for farmers?farmers?uuWhat happens to wheat farmers and the market for What happens to wheat farmers and the market for wheat when university agronomists discover a new wheat when university agronomists discover a new wheat hybridwheat hybridthat is more productive than existing that is more productive than existing varieties?varieties?第38页/共63页Application of ElasticityuuExamine whether the supply or demand curve shifts.uuDetermine the direction of the shift of the curve.uuUse the supply-and-demand diagram to see how the market equilibrium changes.第39页/共63页An Increase in Supply in the Market for Wheat$3Quantity of Wheat1000Price ofWheatDemandS1Harcourt,Inc.items and derived items copyright 2001 by Harcourt,Inc.第40页/共63页3.and a proportionately smallerincrease in quantity sold.As a result,revenue falls from$300 to$220.An Increase in Supply in the Market for Wheat$3Quantity of Wheat1000Price ofWheat1.When demand is inelastic,an increase in supply.DemandS1S221102.leadsto a large fall in price.Harcourt,Inc.items and derived items copyright 2001 by Harcourt,Inc.第41页/共63页Compute Elasticity第42页/共63页Compute ElasticityDemand is inelastic第43页/共63页SummaryuuPrice elasticity of demand measures how Price elasticity of demand measures how much the quantity demanded responds to much the quantity demanded responds to changes in the price.changes in the price.uuIf a demand curve is elastic,total revenue If a demand curve is elastic,total revenue falls when the price rises.falls when the price rises.uuIf it is inelastic,total revenue rises as the If it is inelastic,total revenue rises as the price rises.price rises.第44页/共63页SummaryuuThe price elasticity of supply measures how The price elasticity of supply measures how much the quantity supplied responds to much the quantity supplied responds to changes in the price.changes in the price.uuIn most markets,supply is more elastic in In most markets,supply is more elastic in the long run than in the short run.the long run than in the short run.第45页/共63页Graphical Review第46页/共63页Computing the Price Elasticity of DemandDemand is price elastic$54DemandQuantity1000Price50第47页/共63页Perfectly Inelastic Demand-Elasticity equals 0-Elasticity equals 0QuantityPrice4$5Demand1002.leaves the quantity demanded unchanged.1.Anincreasein price.第48页/共63页Inelastic Demand-Elasticity is less than 1-Elasticity is less than 1QuantityPrice4$51.A 22%increasein price.Demand100902.leads to a 11%decrease in quantity.第49页/共63页Unit Elastic Demand-Elasticity equals 1-Elasticity equals 1QuantityPrice4$51.A 22%increasein price.Demand100802.leads to a 22%decrease in quantity.第50页/共63页Elastic Demand-Elasticity is greater than 1-Elasticity is greater than 1QuantityPrice4$51.A 22%increasein price.Demand100502.leads to a 67%decrease in quantity.第51页/共63页Perfectly Elastic Demand-Elasticity equals infinity-Elasticity equals infinityQuantityPriceDemand$41.At any priceabove$4,quantitydemanded is zero.2.At exactly$4,consumers willbuy any quantity.3.At a price below$4,quantity demanded is infinite.第52页/共63页$4DemandQuantityP0PriceP P x x Q Q=$400$400(total revenue)(total revenue)100QElasticity and Total Revenue第53页/共63页Elasticity and Total Revenue:Inelastic Demand$3Quantity0Price80Revenue=$240 Demand$1DemandQuantity0Revenue=$100100 PriceAn increase in price from$1 to$3.leads to an increase in total revenue from$100 to$240第54页/共63页Elasticity and Total Revenue:Elastic DemandDemandQuantity0Price$450DemandQuantity0PriceRevenue=$100$520Revenue=$200 An increase in price from$4 to$5.leads to a decrease in total revenue from$200 to$100第55页/共63页Perfectly Inelastic Supply-Elasticity equals 0-Elasticity equals 0QuantityPrice4$5Supply1002.leaves the quantity supplied unchanged.1.Anincreasein price.第56页/共63页Inelastic Supply-Elasticity is less than 1-Elasticity is less than 1QuantityPrice4$51.A 22%increasein price.110100Supply2.leads to a 10%increase in quantity.第57页/共63页Unit Elastic Supply-Elasticity equals 1-Elasticity equals 1QuantityPrice4$51.A 22%increasein price.125100Supply2.leads to a 22%increase in quantity.第58页/共63页Elastic Supply-Elasticity is greater than 1-Elasticity is greater than 1QuantityPrice4$51.A 22%increasein price.200100Supply2.leads to a 67%increase in quantity.第59页/共63页Perfectly Elastic Supply-Elasticity equals infinity-Elasticity equals infinityQuantityPriceSupply$41.At any priceabove$4,quantitysupplied is infinite.2.At exactly$4,producers willsupply any quantity.3.At a price below$4,quantity supplied is zero.第60页/共63页An Increase in Supply in the Market for Wheat$3Quantity of Wheat1000Price ofWheatDemandS1Harcourt,Inc.items and derived items copyright 2001 by Harcourt,Inc.第61页/共63页An Increase in Supply in the Market for Wheat3.and a proportionately smallerincrease in quantity sold.As a result,revenue falls from$300 to$220.$3Quantity of Wheat1000Price ofWheat1.When demand is inelastic,an increase in supply.DemandS1S221102.leadsto a large fall in price.Harcourt,Inc.items and derived items copyright 2001 by Harcourt,Inc.第62页/共63页