Transcript Economics - B-K

Microeconomics
Supply and Demand
● Review
– Factors affecting demand curve
– Factors affecting supply curve
1-1
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Changes in Supply and Demand
● When factors change, analyze in 3 steps
1. Which curve is affected?
2. Which way does the curve move?
3. What happens to P and Q?
● Important – There is a difference between
“demand” and the “demand curve”.
– Can think of “demand” as quantity Q
– The demand curve shows the demand at
every price
1-2
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Changes in Demand Curve
Demand Curve Shifts Left
1-3
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Changes in Supply Curve
Supply Curve Shifts Left
1-4
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Economics - 2
Macroeconomics
1-5
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Macroeconomics
Issues for the Entire Economy
● Capitalism: The Private Enterprise System
● Private enterprise system—economic
system in which business success or failure
depends on how well firms match and
counter the offerings of competitors.
● Adam Smith’s “Invisible hand”
● Our economic system assumes that everyone
will act in their own best interest
– This benefits themselves
– This benefits society – How?
1-6
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Types of Competition
– Pure competition
 Commodities
– Monopolistic competition
 Differentiated products
– Oligopoly
 Small number of suppliers
– Monopoly
 One dominant supplier
– Monopsony
 One dominant customer
1-7
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Planned Economies:
Communism and Socialism
● Communism: planned economic system in
which private property is eliminated, goods
are owned in common, and factors of
production and production decisions are
controlled by the state
● Socialism: planned economic system
characterized by government ownership and
operation of all major industries
1-8
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1-9
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Economic Forms
● What are some government owned
businesses in the U.S.? Other countries?
● Privatization
– Examples of companies going private?
– What about the reverse direction?
1-10
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Planned Economies vs. Capitalism
● The major issue:
Who knows what’s best – the
government or the people?
● With Adam Smith’s “invisible hand,” people
and businesses “vote” with their dollars.
– The ‘best’ survive, the ‘poor’ fail
– Allocation is done by voting with dollars
– Have even used this to predict elections
1-11
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Discussion
● Will increased government regulation of
vaccines, help or hurt flu vaccine shortages?
1-12
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Government Economic Decisions
What is the economic impact of each of
these?
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Government lowering the price for surgeries?
Minimum wage law
Limiting prices on flu vaccines
A tax on medical equipment?
Lowering interest rates
Raising interest rates
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