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1.1. The Firms and Market Structures - Coggle Diagram
1.1. The Firms and Market Structures
Demand curve
Function
Demand function:
Qd = f(Px, I, Py)
Qd: Quantity demanded of good X
I: Consumer 's Income
Px: Price/unit of good X
Py: Price/unit of good Y
Inverse-demand function: P(x) = f(Qd)
Slope
Demand curve
d(P) / d(Q) = tan(a) => b1
Demand function
P'(Qd) = d(Q) / d(P)
Slope c
Own-price Elasticity of demand
Factors affect
Quality, availability and closeness of substitute: Many => more elastic
Portion of income spent on a good: Price / Income larger => more elastic
Time allowes to respond to change in price: longer > more elastic
Discretionary (tùy nghi - tiêu sản) >< Non-discretionary (thiết yếu): thiết yếu thì ít elastic hơn
Function
Epx = %d(Qx) / %d(Px) = [ P * Slope of demand function ] / Q
Perfectly inelastic demand => E = 0
Inelastic demand : | E | < 1
Elastic demand : | E | > 1
Perfectly elastic demand: E = infinite
Income elastic of Demand
Function
Ei = % d(Q) / % d(I)
Normal good: I tăng, Q tăng => Ei > 0
Inferior good: I tăng, Q giảm => Ei < 0
Cross-price Elasticity Of Demand
Function
Epy = % d(Qx) / % d(Py)
The good is Substitute: Epy > 0
The good is complement: Epy < 0
Compare Substitute and Income effect
Normal good:
Substitute & Income effect are positive
downward curve, negative slope
Normal inferior good:
Substitute : positive (stronger)
Income: negative
=> downward curve, negative slope
Giffen good (thứ cấp)
tập con của Inferior good
Income: negative (stronger)
Substitute: positive
=> Upward curve, positive sloped
Veblen Good
Positive sloped
Upward curve
But only for some individuals
The Phenomenon of Diminishing Marginal Returns
Definition
Marginal product
Function
:
Marginal product of labor = d(Total product) / d(Q labor)
Status
MP tăng
tăng labor => tăng output product
Reason: specialization
MP = giảm
tăng labor => tăng product nhưng ko còn mạnh nx
đây là điểm
diminishing marginal productivity
MP = negative
tăng labor => output giảm
Economic cost and accounting cost
Accounting cost - explicit cost
Opportunity Cost: Implicit cost
Accounting profit
Economic profit
Total revenue = Economic profit + Economic Cost
Economic cost = opportunity cost + accounting cost
Accounting profit = Economic profit + Opportunity cost
Cosumer surplus
Perfect competition
Short run profit
Economic loss:
P = AR = MR = MC < ATC
Economic profit:
P = AR = MR = MC > ATC
Economic break-even:
P = AR = MR = MC = ATC
Long run profit
P = MR = MC = ATC
No economic profit and earn normal profit
each firm is producing the quantity for which
ATC is a minimum
Economic loss:
some firms exit the market
decrease in market supply and force market price up to firm's ATC
Economic profit:
new firms enter the market
increase in market supply and reduce market price down to firm's ATC
Firm's supply function
Along the MC line (P = MR = MC) and above the AVC
Short - run supply curve for a firm is its MC line above the AVC
Short-run market supply curve is the horizontal sum of the MC curves of all firms in a industry
Perfect competition - Adjustment