1、Demand,Supply,&Market EquilibriumChen Hongjun Henan University of TechnologyChapter 2Markets and PricesnWhy does Ming YAO earn more than Chen(an award winning teacher)?Markets and PricesnWhy do diamonds cost more than water?Markets and PricesnWhy do QiBaiShis(齐白石)crabs sell for more than the real on
2、es?Markets and PricesnIs it cost of production that determines prices(as Adam Smith thought)?Markets and PricesnOr is it willingness to pay that determines prices(as Stanley Jevons thought)?nWilliam Stanley Jevons(September 1,1835-August 13,1882),English economist and logician,was born in Liverpool.
3、Markets and PricesnAlfred Marshall(Principles of Economics,1890)was the first to explain clearly how both costs and willingness to pay interact to determine market prices.Markets and PricesWhat is a Market?nA market is any arrangement through which buyers&sellers exchange goods&servicesnMarkets redu
4、ce transaction costsCosts of making a transaction other than the price of the good or serviceMarket StructuresnMarket characteristics that determine the economic environment in which a firm operatesNumber&size of firms in marketDegree of product differentiationLikelihood of new firms entering market
5、Perfect Competition完全竞争完全竞争nLarge number of relatively small firmsnUndifferentiated productnNo barriers to entry Monopoly完全垄断完全垄断nSingle firmnProduces product with no close substitutesnProtected by a barrier to entryn如电力、电话、自来水、天然气以及公共运输等行业。譬如，某人离家百米之内有一小杂货铺，油盐酱醋等日常生活用品一般在此购买。假定方圆10里之内只有这么一家卖油盐酱醋的小杂
6、货铺，而一般推定人们往往不会为生活琐事舍近求远，因此，这家小杂货铺实际上无异于一个处于完全垄断地位的垄断企业。可以说小范围的完全垄断市场结构是经常存在的。Monopolistic Competition垄断竞争垄断竞争nLarge number of relatively small firmsnDifferentiated productsnNo barriers to entry纳爱斯营养维C牙膏牙膏 选一支好牙膏，给自己加选一支好牙膏，给自己加一份健康保障。云南白药一份健康保障。云南白药牙膏，国家保密配方。牙膏，国家保密配方。”冷热酸甜，想吃就吃 Oligopoly 寡头垄断寡头垄断nF
7、ew firms produce all or most of market outputnProfits are interdependentActions by any one firm will affect sales&profits of the other firms如美国汽车业的通用、福特和克莱斯勒，投资银行业的美林、高盛和摩根斯坦利等 DemandnQuantity demanded(Qd)Amount of a good or service consumers are willing&able to purchase during a given period of tim
8、eDemandnSix variables that influence QdPrice of good or service(P)Incomes of consumers(M.normal,inferior)Prices of related goods&services(PR.)(substitutes and complements)Expected future price of product(Pe)Number of consumers in market(N)Some examples of goods and services that might be inferior in
9、clude shoe repairs,generic food products,and used cars.()Taste patterns of consumers()Taste patterns of consumers Generalized Demand Functionnb,c,d,e,f,&g are slope parametersMeasure effect on Qd of changing one of the variables while holding the others constantnSign of parameter shows how variable
10、is related to QdPositive sign indicates direct relationshipNegative sign indicates inverse relationshipdReQabPcMdPefPgN(,)dReQf P M PP N(,)dReQf P M PP NGeneralized Demand FunctionVariableRelation to QdSign of Slope ParameterPPeNMPRInverseDirectDirectDirectDirect for normal goodsInverse for inferior
11、 goodsDirect for substitutesb=Qd/P is negativec=Qd/M is positivec=Qd/M is negatived=Qd/PR is positived=Qd/PR is negativef=Qd/Pe is positiveg=Qd/N is positiveInverse for complementse=Qd/is positiveDemand FunctionnDemand function,or demand,shows relation between P&Qd when all other variables are held
12、constant Qd=f(P)nLaw of DemandQd increases when P falls&Qd decreases when P rises,all else constant Qd/P must be negativeLaw of Demandn需求定律（需求定律（The Law of DemandThe Law of Demand）是说任何物品的价格下降，其需求量必定上升。古往今来，何时何地，不能有例外。这也是说，以竖线为价及竖线之下的横线为量，其中的需求曲线一定是向右下倾斜的。n需求定律是经济学的灵魂，其重要性是不能夸大的。任何经济学论著，有道之士可单看作者对这定律
13、的操纵就知道作者的斤两如何。这定律不需要在文字上提到，但内容上这定律要墨守成规我在自己的博士论文佃农理论上就刻意地完全不提“需求”，向老师表演一下。n -张五常 经济解释之十七 张五常张五常 狂傲之魅狂傲之魅 http:/ 1935年生于香港，被誉为华人世界里最著名的经济学家，新制度经济学和现代产权经济学的创始人之一。1982年起他担任香港大学经济金融学院教授、院长，他的理论主张往往在学术界引起广泛争议。主要著作有佃农理论（英文1969）、社会成本的神话（英文1978）、中国会走向资本主义的道路吗？（英文1982）、卖橘者言（1984）等等。n一方面，张五常教授在理论上下过苦功，“由浅入深、由
14、深转复杂，再由复杂转深、再转浅，来来回回好几次”，已把价格理论咀嚼透烂。另一方面，张五常注重案例研究，大量时间用于现实问题的实践调查，多年砺炼，使他的学术素养和对现实问题的把握浑然一体。n他曾当选美国西部经济学会会长，是第一位获此职位的美国本土之外的学者。1969年以名为佃农理论引证于中国的农业及台湾的土地改革的博士论文轰动西方经济学界。1991年作为唯一一位未获诺贝尔奖的经济学者而被邀请参加了当年的诺贝尔颁奖典礼。Graphing Demand CurvesnTraditionally price(P)is plotted on the vertical axis&quantity dema
15、nded(Qd)is plotted on the horizontal axisThe equation plotted is the inverse demand functionP=f(Qd)Graphing Demand CurvesnA point on a demand curve shows either:Maximum amount of a good that will be purchased for a given priceMaximum price consumers will pay for a specific amount of the goodGraphing
16、 Demand CurvesnChange in quantity demandedOccurs when price changesMovement along demand curvenChange in demandOccurs when one of the other variables,or determinants of demand,changesDemand curve shifts rightward or leftwardShifts in Demand (Figure 2.2)Qd01,100700100QuantityPrice(dollars)900P3005001
17、,5001,3001020304050607080D0D1D2$50,300$50,600$40,200$40,500Demand increaseDemand decreaseSupplynQuantity supplied(Qs)Amount of a good or service offered for sale during a given period of timeSupplynSix variables that influence QsPrice of good or service(P)Input prices(PI)Prices of goods related in p
18、roduction(Pr)Technological advances(T)Expected future price of product(Pe)Number of firms producing product(F)nGeneralized supply function(,)sIreQf P P P T P FGeneralized Supply Functionnk,l,m,n,r,&s are slope parametersMeasure effect on Qs of changing one of the variables while holding the others c
19、onstantnSign of parameter shows how variable is related to QsPositive sign indicates direct relationshipNegative sign indicates inverse relationshipsIreQhkPlPmPnTrPsFGeneralized Supply FunctionVariableRelation to QsSign of Slope ParameterPPeFPIPrDirectDirectDirectInverseInverseInverse for substitute
20、sk=Qs/P is positivel=Qs/PI is negativem=Qs/Pr is negativem=Qs/Pr is positiver=Qs/Pe is negatives=Qs/F is positiveDirect for complementsn=Qs/T is positiveTSupply FunctionnSupply function,or supply,shows relation between P&Qs when all other variables are held constant Qs=g(P)Graphing Supply CurvesnA p
21、oint on a supply curve shows either:Maximum amount of a good that will be offered for sale at a given priceMinimum price necessary to induce producers to voluntarily offer a particular quantity for saleGraphing Supply CurvesnChange in quantity suppliedOccurs when price changesMovement along supply c
22、urvenChange in supplyOccurs when one of the other variables,or determinants of supply,changesSupply curve shifts rightward or leftwardS0S2S1 Supply decreaseQs07001009003005001020304050607080Shifts in Supply (Figure 2.4)QuantityPrice(dollars)P$60,700$60,400$40,500$40,650Supply increaseMarket Equilibr
23、iumnEquilibrium price&quantity are determined by the intersection of demand&supply curvesAt the point of intersection,Qd=QsConsumers can purchase all they want&producers can sell all they want at the“market-clearing”priceS0Market Equilibrium (Figure 2.5)Qd,Qs01,100700100QuantityPrice(dollars)900P300
24、5001,5001,3001020304050607080D0The market for lobstersnThe market for lobsters in Zhengzhou,on January 20,2009.Market Equilibrium Quantity and PricenEquilibrium occurs at the price-quantity pair for which both buyers and sellers are satisfied.Price($/lobster)Quantity(1000s of lobsters/day)10864201 2
25、 3 4 5DDSSAt the market equilibrium price of$6 per lobster,buyers and sellers are each able to buy or sell as many lobsters as they wish to.D2D1S0Demand Shifts(Supply Constant)(Figure 2.6)Qd,Qs01,100700100QuantityPrice(dollars)900P3005001,5001,3001020304050607080D0ABCDemand ShiftsS2S1S0Supply Shifts
26、(Demand Constant)(Figure 2.7)Qd,Qs01,100700100QuantityPrice(dollars)900P3005001,3001020304050607080D0RSTSimultaneous ShiftsnWhen demand&supply shift simultaneouslyCan predict either the direction in which price changes or the direction in which quantity changes,but not both The change in equilibrium
27、 price or quantity is said to be indeterminate when the direction of change depends on the relative magnitudes by which demand&supply shiftA Change in SupplySDSSDSimultaneous Shifts:(D,S)QPrice may rise or fall;Quantity risesPAQPBPQQCPDSimultaneous Shifts:(D,S)SDSSQPrice falls;Quantity may rise or f
28、allPAQPBPQQCPSSimultaneous Shifts:(D,S)DSDSQPrice rises;Quantity may rise or fallPAQPBPQQCPSimultaneous Shifts:(D,S)SDSDSQPrice may rise or fall;Quantity fallsPAQPBPQQCPCeiling&Floor PricesQx QuantityPrice(dollars)QxPxPxQuantityPrice(dollars)SxDx2501622233284Panel A Ceiling priceSxDx250Panel B Floor
29、 priceExcess supply(Floor Prices)nA situation in which price exceeds its equilibrium value is called one of excess supply,or surplus.Price($/lobster)Quantity(1000s of lobsters/day)10864201 2 3 4 5DDSSexcess supplyAt$8,there is an excess supply of 2000 lobsters in this market.Excess DemandnA situatio
30、n in which price lies below its equilibrium value is referred to as one of excess demand.At a price of$4 in this lobster market,there is an excess demand of 2000 lobsters.Price($/lobster)Quantity(1000s of lobsters/day)10864201 2 3 4 5DDSSexcess demandZero excess supply and demandnEquilibrium occurs
31、at the price-quantity pair for which both buyers and sellers are satisfied.Price($/lobster)Quantity(1000s of lobsters/day)10864201 2 3 4 5DDSSAt the market equilibrium price of$6,both excess demand and excess supply are exactly zero.Example 3.1.nAt a price of$2 in this hypothetical lobster market,ho
32、w much excess demand for lobsters will there be?How much excess supply will there be at a price of$10?DDSS123450246810Price($/lobster)Quantity(1000 lobsters/day)The Trading LocusnWhen price differs from the equilibrium price,trading in the marketplace will be constrained-by the behavior of buyers if
33、 the price lies above equilibrium,by the behavior of sellers if below.Price($/lobster)Quantity(1000s of lobsters/day)10864201 2 3 4 5DDSSTrading locusFrom disequilibrium to equilibriumPrice($/lobster)Quantity(1000s of lobsters/day)10864201 2 3 4 5DDSSAt prices above equilibrium,sellers are not selli
34、ng as much as they want to.The impulse of a dissatisfied seller is to reduce his price.From disequilibrium to equilibriumPrice($/lobster)Quantity(1000s of lobsters/day)10864201 2 3 4 5DDSSAt prices below the equilibrium value,buyers cannot obtain the quantities they wish to purchase.Some buyers adju
35、st by offering slightly higher prices.From disequilibrium to equilibriumnAn extraordinary feature of this equilibrating process is that no one consciously plans or directs it.nThe actual steps that consumers and producers must take to move toward equilibrium are often indescribably complex.Suppliers
36、 looking to expand their operations,for example,must choose from a bewilderingly large menu of equipment options.Buyers,for their part,face literally millions of choices about how to spend their money.From disequilibrium to equilibriumnAnd yet the adjustment toward equilibrium results more or less a
37、utomatically from the natural reactions of self-interested individuals facing either surpluses or shortages.Ceiling&Floor PricesnCeiling priceMaximum price government permits sellers to charge for a goodWhen ceiling price is below equilibrium,a shortage occursnFloor priceMinimum price government per
38、mits sellers to charge for a goodWhen floor price is above equilibrium,a surplus occursn昆明市民呼吁米线限价 律师支持政府干预_县域经济_农博网 n给牛肉面限价一些给牛肉面限价一些“心理心理”支持支持这几天关于兰州牛肉面限价的新闻已是铺天盖地，争议声四起，广州日报7月1日的报道说：兰州市物价局副局长魏立中在通报会上表示：牛肉面价格就是兰州人心中的民生价格。发表日期：2007年7月18日 n潘石屹:限价房无法律支持 造成市场混乱 孙红丽 2008年12月12日11:33 来源：人民网-房产频道n化肥“限价令”
39、遭遇执行尴尬 国家发改委近日发布的当前化肥生产形势应予关注报告称，为了维护农民利益，国家对化肥产品实行限价，但由于政府给予的化肥生产企业一些优惠政策如化肥用煤炭限价落实不到位等问题，导致企业经营生产困难，甚至亏损停产。n该报告指出：“一旦化肥供给数量低于农业需求，影响到农业生产特别是粮食生产，将对粮食安全产生较大的负面影响。”并建议有关部门适时调整政策取向和调控力度，为化肥行业与农业的和谐发展创造条件。n在市场行为与限价政策杠杆的较量中，政策变得越来越“力不从心”，目前化肥市场正处于价格限又限不住、放又不敢放的尴尬局面。既然补贴农资生产环节难以监管，政府不妨借鉴给农民发放粮食直补的做法，将过去对流通环节的间接补贴改为对农民的直接补贴。Questions/CommentsThank you!
