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发表于 2007-11-14 16:29:09
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Economists study. . .
􀂋How people make decisions.
􀂋How people interact with each other.
􀂋The forces and trends that affect the economy as a whole.
Efficiency means society gets the most that it can from its scarce resources.
Equity means the benefits of those resources are distributed fairly among the members of society.
NAFTA
􀂋The North American Free Trade Agreement (NAFTA)is an example of a multilateral trade agreement.
􀂋In 1993, NAFTA lowered the trade barriers among the U.S., Mexico, and Canada.
GATT
􀂋The General Agreement on Tariffs and Trade (GATT)refers to a continuing series of negotiations among many of the world’s countries with a goal of promoting free trade.
􀂋GATT has successfully reduced the average tariff among member countries from about 40% after WWII to about 5% today.
Principles of Economics
1. People face tradeoffs.
2. The cost of something is what you give up to get it.
The opportunity cost of an item is what you give up to obtain that item.
3. Rational people think at the margin.
4. People respond to incentives.
marginal benefits exceed its marginal costs!
5. Trade can make everyone better off.
6. Markets are usually a good way to organize economic activity.
firms interacting in markets act as if guided by an “invisible hand.”
7. Governments can sometimes improve market outcomes.
Market failure occurs when the market fails to allocate resources efficiently.
8. The standard of living depends on a country’s production.
Productivity is the amount of goods and services produced from each hour of a worker’s time.
9. Prices rise when the government prints too much money.
Inflation is an increase in the over all level of prices in the economy.
10. Society faces a short-run tradeoff between inflation and unemployment.
Summary 1
􀂋When individuals make decisions, they face tradeoffs.
􀂋Rational people make decisions by comparing marginal costs and marginal benefits.
􀂋 eople can benefit by trading with each other.
􀂋Markets are usually a good way of coordinating trades.
􀂋Government can potentially improve market outcomes.
A country’s productivity determines its living standards.
􀂋Society faces a short-run tradeoff between inflation and unemployment.
Summary 2
􀂋In order to address subjects with objectivity, economics makes use of the scientific method.
􀂋The field of economics is divided into two subfields: microeconomics and macroeconomics.
􀂋Economics relies on both positive and normative analysis. Positive statements assert how the world “is” while normative statements assert how the world “should be.”
􀂋Economists may offer conflicting advice due to differences in scientific judgments or to differences in values.
Summary 3
􀂋Interdependence and trade allow people to enjoy a greater quantity and variety of goods and services.
􀂋The person who can produce a good with a smaller quantity of inputs has an absolute advantage.
􀂋The person with a smaller opportunity cost has a comparative advantage.
􀂋The gains from trade are based on comparative advantage, not absolute advantage.
􀂋Comparative advantage applies to countries as well as to people.
Summary 4
􀂋Economists use the model of supply and demand to analyze competitive markets.
􀂋The demand curve shows how the quantity of a good depends upon the price.
􀂋According to the law of demand, as the price of a good rises, the quantity demanded falls.
􀂋In addition to price, other determinants of quantity demanded include income, tastes, expectations, and the prices of complements and substitutes.
􀂋The supply curve shows how the quantity of a good supplied depends upon the price.
􀂋According to the law of supply, as the price of a good rises, the quantity supplied rises.
􀂋In addition to price, other determinants of quantity supplied include input prices, technology, and expectations.
􀂋Market equilibrium is determined by the intersection of the supply and demand curves.
􀂋Supply and demand together determine the prices of the economy’s goods and services.
􀂋In market economies, prices are the signals that guide the allocation of resources.
Summary 5
􀂋rice elasticity of demand measures how much the quantity demanded responds to changes in the price.
􀂋If a demand curve is elastic, total revenue falls when the price rises.
􀂋If it is inelastic, total revenue rises as the price rises.
􀂋The price elasticity of supply measures how much the quantity supplied responds to changes in the price.
􀂋In most markets, supply is more elastic in the long run than in the short run.
Summary 6
􀂋rice controls include price ceilings and price floors.
􀂋A price ceiling is a legal maximum on the price of a good or service. An example is rent control.
􀂋A price floor is a legal minimum on the price of a good or a service. An example is the minimum wage.
􀂋Taxes are used to raise revenue for public purposes.
􀂋When the government levies a tax on a good, the equilibrium quantity of the good falls.
􀂋A tax on a good places a wedge between the price paid by buyers and the price received by sellers.
􀂋The incidence of a tax refers to who bears the burden of a tax.
􀂋The incidence of a tax does not depend on whether the tax is levied on buyers or sellers.
􀂋The incidence of the tax depends on the price elastic ties of supply and demand.
Summary 7
􀂋Consumer surplus measures the benefit buyers get from participating in a market.
􀂋Consumer surplus can be computed by finding the area below the demand curve and above the price.
􀂋roducer surplus measures the benefit sellers get from participating in a market.
􀂋roducer surplus can be computed by finding the area below the price and above the supply curve.
􀂋The equilibrium of demand and supply maximizes the sum of consumer and producer surplus.
􀂋This is as if the invisible hand of the marketplace leads buyers and sellers to allocate resources efficiently.
􀂋Markets do not allocate resources efficiently in the presence of market failures.
􀂋An allocation of resources that maximizes the sum of consumer and producer surplus is said to be efficient.
􀂋olicymakers are often concerned with the efficiency, as well as the equity, of economic outcomes.
Summary 8
􀂋A tax on a good reduces the welfare of buyers and sellers of the good. And the reduction in consumer and producer surplus usually exceeds the revenues raised by the government.
􀂋The fall in total surplus the sum of consumer surplus, producer surplus, and tax revenue is called the deadweight loss of the tax.
􀂋Taxes have a deadweight loss because they cause buyers to consume less and sellers to produce less.
􀂋This change in behavior shrinks the size of the market below the level that maximizes total surplus.
􀂋As a tax grows larger, it distorts incentives more, and its deadweight loss grows larger.
􀂋Tax revenue first rises with the size of a tax.
􀂋Eventually, however, a larger tax reduces tax revenue because it reduces the size of the market.
Summary 9
􀂋The effects of free trade can be determined by comparing the domestic price without trade to the world price.
􀂋A low domestic price indicates that the country has a comparative advantage in producing the good and that the country will become an exporter.
􀂋A high domestic price indicates that the rest of the world has a comparative advantage in producing the good and that the country will become an importer.
􀂋When a country allows trade and becomes an exporter of a good, producers of the good are better off, and consumers of the good are worse off.
􀂋When a country allows trade and becomes an importer of a good, consumers of the good are better off, and producers are worse off.
􀂋A tariff –a tax on imports –moves a market closer to the equilibrium than would exist without trade, and therefore reduces the gains from trade.
􀂋Import quotas will have effects similar to those of tariffs.
􀂋There are various arguments for restricting trade: protecting jobs, defending national security, helping infant industries, preventing unfair competition, and responding to foreign trade restrictions.
􀂋Economists, however, believe that free trade is usually the better policy.
Summary 10
􀂋When a transaction between a buyer and a seller directly affects a third party, the effect is called an externality.
􀂋Negative externalities cause the socially optimal quantity in a market to be less than the equilibrium quantity.
􀂋ositive externalities cause the socially optimal quantity in a market to be greater than the equilibrium quantity.
􀂋Those affected by externalities can sometimes solve the problem privately.
􀂋The Coase theorem states that if people can bargain without a cost, then they can always reach an agreement in which resources are allocated efficiently.
􀂋When private parties cannot adequately deal with externalities, then the government steps in.
􀂋The government can either regulate behavior or internalize the externality by using Pigovian taxes.
Summary 11
􀂋Goods differ in whether they are excludable and whether they are rival.
􀂋A good is excludable if it is possible to prevent someone from using it.
􀂋A good is rival if one person’s enjoyment of the good prevents other people from enjoying the same unit of the good.
􀂋ublic goods are neither rival nor excludable.
􀂋Because people are not charged for their use of public goods, they have an incentive to free ride when the good is provided privately.
􀂋Governments provide public goods, making quantity decisions based upon cost-benefit analysis.
􀂋Common resources are rival but not excludable.
􀂋Because people are not charged for their use of common resources, they tend to use them excessively.
􀂋Governments tend to try to limit the use of common resources.
Summary 13
􀂋The goal of firms is to maximize profit, which equals total revenue minus total cost.
􀂋When analyzing a firm’s behavior, it is important to include all the opportunity costs of production.
􀂋Some opportunity costs are explicit while other opportunity costs are implicit.
􀂋A firm’s costs reflect its production process.
􀂋A typical firm’s production function gets flatter as the quantity of input increases, displaying the property of diminishing marginal product.
􀂋A firm’s total costs are divided between fixed and variable costs. Fixed costs don’t vary with quantities produced; variable costs do.
􀂋Average total cost is total cost divided by the quantity of output.
􀂋Marginal cost is the amount by which total cost would rise if output were increased by one unit.
􀂋The marginal cost always rises with the quantity of output.
􀂋The average-total-cost curve is U-shaped.
􀂋The marginal-cost curve always crosses the average-total-cost curve at the minimum of ATC.
􀂋A firm’s costs often depend on the time horizon being considered.
Summary 14
􀂋Because a competitive firm is a price taker, its revenue is proportional to the amount of output it produces.
􀂋The price of the good equals both the firm’s average revenue and its marginal revenue.
􀂋To maximize profit a firm chooses the quantity of output such that marginal revenue equals marginal cost.
􀂋This is also the quantity at which price equals marginal cost.
􀂋Therefore, the firm’s marginal cost curve is its supply curve.
􀂋In the short run when a firm cannot recover its fixed costs, the firm will choose to shut down temporarily if the price of the good is less than average variable cost.
􀂋In the long run when the firm can recover both fixed and variable costs, it will choose to exit if the price is less than average total cost.
􀂋In a market with free entry and exit, profits are driven to zero in the long run and all firms produce at the efficient scale.
􀂋Changes in demand have different effects over different time horizons.
Summary 15
􀂋A monopoly is a firm that is the sole seller in its market.
􀂋It faces a downward-sloping demand curve for its product.
􀂋A monopoly’s marginal revenue is always below the price of its good.
􀂋Like a competitive firm, a monopoly maximizes profit by producing the quantity at which marginal cost and marginal revenue are equal.
􀂋Unlike a competitive firm, its price exceeds its marginal revenue, so its price exceeds marginal cost.
􀂋A monopolist’s profit-maximizing level of output is below the level that maximizes the sum of consumer and producer surplus.
􀂋A monopoly causes deadweight losses similar to the deadweight losses caused by taxes.
􀂋olicymakers can respond to the inefficiencies of monopoly behavior with antitrust laws, regulation of prices, or by turning the monopoly into a government-run enterprise.
􀂋If the market failure is deemed small, policymakers may decide to do nothing at all.
􀂋Monopolists can raise their profits by charging different prices to different buyers based on their willingness to pay.
􀂋rice discrimination can raise economic welfare and lessen deadweight losses.
Summary 16
􀂋Oligopolists maximize their total profits by forming a cartel and acting like a monopolist.
􀂋If oligopolists make decisions about production levels individually, the result is a greater quantity and a lower price than under the monopoly outcome.
􀂋The prisoners’dilemma shows that self-interest can prevent people from maintaining cooperation, even when cooperation is in their mutual self-interest.
􀂋The logic of the prisoners’dilemma applies in many situations, including oligopolies.
􀂋olicymakers use the antitrust laws to prevent oligopolies from engaging in behavior that reduces competition.
Summary 17
􀂋A monopolistically competitive market is characterized by three attributes: many firms, differentiated products, and free entry.
􀂋The equilibrium in a monopolistically competitive market differs from perfect competition in that each firm has excess capacity and each firm charges a price above marginal cost.
􀂋Monopolistic competition does not have all of the desirable properties of perfect competition.
􀂋There is a standard deadweight loss of monopoly caused by the markup of price over marginal cost.
􀂋The number of firms can be too large or too small.
􀂋The product differentiation inherent in monopolistic competition leads to the use of advertising and brand names.
􀂋Critics of advertising and brand names argue that firms use them to take advantage of consumer irrationality and to reduce competition.
􀂋Defenders argue that firms use advertising and brand names to inform consumers and to compete more vigorously on price and product quality.
Summary 18
􀂋The three most important factors of production are labor, land, and capital.
􀂋The demand for factors, such as labor, is a derived demand that comes from firms that use the factors to produce goods and services.
􀂋Competitive, profit-maximizing firms hire each factor up to the point at which the value of the marginal product of the factor equals its price.
􀂋The supply of labor arises from individuals’ tradeoff between work and leisure.
􀂋An upward-sloping labor supply curve means that people respond to an increase in the wage by enjoying less leisure and working more hours.
􀂋The price paid to each factor adjusts to balance the supply and demand for that factor.
􀂋Because factor demand reflects the value of the marginal product of that factor, in equilibrium each factor is compensated according to its marginal contribution to the production of goods and services.
􀂋Because factors of production are used together, the marginal product of any one factor depends on the quantities of all factors that are available.
􀂋As a result, a change in the supply of one factor alters the equilibrium earnings of all the factors. |
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发表于 2007-11-6 23:39:25