Demand and Supply
The Basic Theory Using Demand and Supply
- The Basic Theory Using Demand and Supply
Chapter 2
The Basic Theory Using Demand and Supply
The Basic Theory Using Demand and Supply This chapter indicates why we study theories of international trade and presents the basic theory using supply and demand curves. Trade is important to individual consumers, to workers and other factor owners, to firms, and therefore to the whole economy. The box “Trade Is Important” provides useful data about the types of products traded and the increasing role of trade in national economies.
Slide24
知识点6
案例4
习题60
Knowledge Points
知识点
Two National Markets and the Opening of Trade
The remainder of the chapter examines the use of supply and demand curves to analyze international trade. If there are two national markets for a product and no trade between them, it is likely that the product’s price will differ between the two markets. Someone should notice the difference and try to profit by arbitrage between the two markets.
- the Opening of Trade
- Arbitrage
- is buying something in one market and reselling the same thing in another market to profit from a price difference.
Four Questions about Trade
It is useful to organize the analysis of international trade by contrasting a world of no trade with a world of free trade, leaving analysis of intermediate cases (e.g., non-prohibitive tariffs) for Chapter 8-14. The analysis seeks to answer four key questions about international trade: Why do countries trade? What determines the pattern of trade?
- Why do countries trade? What is the basis for trade, especially the product (commodity) composition?
- For each country, what are the overall gains (or losses) from trade?
- What are the effects of trade on each country’s economic structure? Production? Consumption?
Demand Curve
This chapter indicates why we study theories of international trade and presents the basic theory using supply and demand curves. Trade is important to individual consumers, to workers and other factor owners, to firms, and therefore to the whole economy. The box “Trade Is Important” provides useful data about the types of products traded and the increasing role of trade in national economies.
- Shows the quantity consumers will buy at each possible market price, other things equal.
- Shows the value consumers place on units of the product, because it indicates the highest price that some consumer is willing to pay for each unit.
- A change in one of the other drivers of quantity demanded for a product (tastes, the prices of other products, or income) causes a shift in the demand curve.
Demand Responsiveness
Basic demand and supply analysis can be used to provide early answers to these four questions, as well as to introduce concepts that can be used in more elaborate theories. Using motorbikes as an example, the chapter first reviews the basic analysis of both demand (the demand curve and the role of the product’s price, other influences on quantity demanded, movements along the demand curve and shifts in the demand curve, and the price elasticity of demand as a measure of responsiveness) and supply (the supply curve, the role of marginal cost, other influences on quantity supplied, movements along the supply curve and shifts in the supply curve, and the price elasticity of supply).
- How responsive is quantity demanded to a change in price?
- A measure of responsiveness that is “unit-free” is
- elasticity,
Consumer Surplus
Basic demand and supply analysis can be used to provide early answers to these four questions, as well as to introduce concepts that can be used in more elaborate theories. Using motorbikes as an example, the chapter first reviews the basic analysis of both demand (the demand curve and the role of the product’s price, other influences on quantity demanded, movements along the demand curve and shifts in the demand curve, and the price elasticity of demand as a measure of responsiveness) and supply (the supply curve, the role of marginal cost, other influences on quantity supplied, movements along the supply curve and shifts in the supply curve, and the price elasticity of supply).
- Consumer surplus
- the increase in the economic well-being of consumers who are able to buy the product at a market price lower than the highest price that they are willing and able to pay for the product.
Cases
案例与情境
Two national market graphs with no trade, one with a high ...
Two national market graphs with no trade, one with a high no-trade price (the United States), and one with a low no-trade price (the rest of the world, or ROW). Question to the class: “If you were the first person to notice this situation, could you make a profit?” This is a good way to motivate international trade driven by arbitrage.
查看原始摘录
Two national market graphs with no trade, one with a high no-trade price (the United States), and one with a low no-trade price (the rest of the world, or ROW). Question to the class: “If you were the first person to notice this situation, could you make a profit?” This is a good way to motivate international trade driven by arbitrage. The U.S. national market graph and the international market graph. Question to the class: “Let’s say that the United States is willing to open up to free trade and integrate into the world market. If it does this, the world price will also be the price within the United States. How much will the United States want to import?” It depends on what the world price is. The instructor can pick one or two hypothetical world price(s) (below the no-trade U.S. price), and measure the gap between domestic quantity demanded and domestic quantity supplied. This is the
The remainder of the chapter examines the use of supply and ...
The remainder of the chapter examines the use of supply and demand curves to analyze international trade. If there are two national markets for a product and no trade between them, it is likely that the product’s price will differ between the two markets. Someone should notice the difference and try to profit by arbitrage between the two markets.
查看原始摘录
The remainder of the chapter examines the use of supply and demand curves to analyze international trade. If there are two national markets for a product and no trade between them, it is likely that the product’s price will differ between the two markets. Someone should notice the difference and try to profit by arbitrage between the two markets. If governments permit free trade, then the export supply from the initially low-priced market (the rest of the world in the textbook example) can satisfy the import demand in the initially high-priced market (the United States in the textbook example), and the world shifts to a free-trade equilibrium. We can show this free trade equilibrium by deriving the supply-of-exports curve for the rest of the world and the demand-for-imports curve for the United States. The international market for the product clears at the intersection of the export-supp
Chapter 2 has the first of five boxes about the global ...
Chapter 2 has the first of five boxes about the global financial and economic crisis that began in 2007 and became dramatically worse in 2008. The box “The Trade Mini-Collapse of 2009” documents and discusses the sharp decline in global trade that began in late 2008 (and the bounce back that occurred in 2010). With the series of boxes and the discussion of the global crisis in the final section of Chapter 21, an instructor can weave discussions of the global crisis and its aftermath throughout a course.
查看原始摘录
Chapter 2 has the first of five boxes about the global financial and economic crisis that began in 2007 and became dramatically worse in 2008. The box “The Trade Mini-Collapse of 2009” documents and discusses the sharp decline in global trade that began in late 2008 (and the bounce back that occurred in 2010). With the series of boxes and the discussion of the global crisis in the final section of Chapter 21, an instructor can weave discussions of the global crisis and its aftermath throughout a course. Suggested answer to case study discussion question
The same set of three graphs (the two national markets and ...
The same set of three graphs (the two national markets and the international-trade market) is used to show the effects of the shift from no-trade to free-trade on different groups in each country and to show the net gains from trade for each nation. In the importing country consumers of the product gain consumer surplus and producers of the product lose producer surplus.
查看原始摘录
The same set of three graphs (the two national markets and the international-trade market) is used to show the effects of the shift from no-trade to free-trade on different groups in each country and to show the net gains from trade for each nation. In the importing country consumers of the product gain consumer surplus and producers of the product lose producer surplus. Using the one-dollar, one-vote metric, the country as a whole gains, because the gain in consumer surplus is larger than the loss of producer surplus. In the exporting country producers of the product gain producer surplus and consumers of the product lose consumer surplus. The analysis shows that the country as a whole gains because the gain in producer surplus is larger than the loss of consumer surplus. Furthermore, the country that gains more from the shift to free trade is the country whose price changes more—the co
Exercises
习题与答案
题目 1Demand and Supply
If an individual consumes more of Good X when his/her income doubles, we can infer that
- A) the individual is highly sensitive to changes in the price of Good X.
- B) Good X is a normal good.
- C) Good X is an inferior good.
- D) the demand for Good X is perfectly inelastic.
正确答案：B | Good X is a normal good.
难度：2 Medium Bloom's：Understand
题目 2Demand and Supply
Which of the following factors can lead to an increase in demand for coffee at Starbucks?
- A) An increase in household income
- B) An increase in the price of sugar
- C) An increase in the price of coffee beans
- D) A 10 percent decline in local population
正确答案：A | An increase in household income
难度：1 Easy Bloom's：Remember
题目 3Demand and Supply
If the price of a normal good is measured along the vertical axis and its quantity along the horizontal axis, an increase in the price of the good will lead to
- A) a downward movement along the demand curve.
- B) an upward movement along the demand curve.
- C) a rightward shift of the demand curve.
- D) a leftward shift of the demand curve.
正确答案：B | an upward movement along the demand curve.
难度：1 Easy Bloom's：Remember
题目 4Demand and Supply
Everything else remaining unchanged, when the price of a normal good increases, consumers probably
- A) purchase more of the good.
- B) purchase less of the good.
- C) purchase the same amount of the good.
- D) do not purchase any amount of the good.
正确答案：B | purchase less of the good.
难度：1 Easy Bloom's：Remember
题目 5Demand and Supply
Suppose Good X is a substitute for Good Y. Everything else remaining unchanged, an increase in the price of Good Y will lead to
- A) an increase in demand for Good Y.
- B) a decrease in demand for Good X.
- C) an increase in demand for Good X.
- D) a decrease in the price of Good X.
正确答案：C | an increase in demand for Good X.
难度：2 Medium Bloom's：Understand
题目 6Demand and Supply
Which of the following events would lead to a decrease in demand for air travel?
- A) A decrease in the number of people who are afraid to fly
- B) A decrease in oil prices
- C) A decrease in rail fares
- D) An increase in income levels
正确答案：C | A decrease in rail fares
难度：1 Easy Bloom's：Remember
题目 7Demand and Supply
Harry used to work in a launderette and earned $30 a day. After work, he normally had a chicken burger worth $5 at McDonalds. After his pay was lowered to $20 he would purchase a vegetable burger worth $3 instead of the $5 chicken burger. In this scenario, the vegetable burger is an example of a(n)
- A) inferior good.
- B) normal good.
- C) complement good.
- D) luxury good.
正确答案：A | inferior good.
难度：3 Hard Bloom's：Analyze
题目 8Demand and Supply
The value of price elasticity of demand is negative because it indicates
- A) the inverse relationship between the price offered and the quantity demanded for the good.
- B) that the value of the consumer surplus is negative for this good.
- C) that the changes in quantity demanded are much less compared to the changes in price for this good.
- D) the direct relationship between the price and consumer surplus from the good.
正确答案：A | the inverse relationship between the price offered and the quantity demanded for the good.
难度：1 Easy Bloom's：Remember
题目 9Demand and Supply
Which of the following will cause a rightward shift of the market supply curve?
- A) An increase in the product price
- B) A decrease in input prices
- C) Change in consumers' tastes
- D) An increase in national income
正确答案：B | A decrease in input prices
难度：2 Medium Bloom's：Understand
题目 10Demand and Supply
Which of the following is a "unit-free" measure?
- A) Consumer surplus when the demand curve is horizontal
- B) Producer surplus when the supply curve is vertical
- C) Market supply
- D) Price elasticity of demand
正确答案：D | Price elasticity of demand
难度：1 Easy Bloom's：Remember
题目 11Demand and Supply
If a 1 percent increase in the price of DVD players leads to a 3 percent reduction in the number of DVD players sold, we can conclude that
- A) the supply of DVD players is perfectly inelastic.
- B) DVD players are inferior goods.
- C) the demand for DVD players is relatively elastic.
- D) the demand for DVD players is relatively inelastic.
正确答案：C | the demand for DVD players is relatively elastic.
难度：2 Medium Bloom's：Understand
题目 12Demand and Supply
Which of the following is true of consumer surplus?
- A) It is graphically represented as the area under the equilibrium price and above the supply curve of a good.
- B) It is the net gain in economic well-being associated with producing and selling the equilibrium quantity of a good.
- C) It is used to measure the impact of a change in price on the economic well-being of the producers.
- D) It is the difference between the value that one places on a good and the price paid for the good.
正确答案：D | It is the difference between the value that one places on a good and the price paid for the good.
难度：1 Easy Bloom's：Remember
Manual Preview
教师手册摘录
The Basic Theory Using Demand and Supply
This chapter indicates why we study theories of international trade and presents the basic theory using supply and demand curves. Trade is important to individual consumers, to workers and other factor owners, to firms, and therefore to the whole economy. The box “Trade Is Important” provides useful data about the types of products traded and the increasing role of trade in national economies.
Trade is also contentious, with perpetual battles over government policies toward trade. To understand the controversy, we need to develop theories of why people trade as they do.
It is useful to organize the analysis of international trade by contrasting a world of no trade with a world of free trade, leaving analysis of intermediate cases (e.g., non-prohibitive tariffs) for Chapter 8-14. The analysis seeks to answer four key questions about international trade: Why do countries trade? What determines the pattern of trade? How does trade affect production and consumption in each country? What are the gains (or losses) for a country as a whole from trading? What are the effects of trade on different groups in a country? Are there groups that gain and other groups that lose? Theories of international trade provide answers to these four questions.
Slide Outline
课件线索
- Four Questions about Trade
- Demand
- Demand Curve
- Demand Responsiveness
- Consumer Surplus
- Supply
- Supply Curve
- Producer Surplus
- Supply Responsiveness
- Demand and Supply for Motorbikes
- The Market for Motorbikes:
- The Market for Motorbikes: Demand and Supply
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