Microeconomics

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Microeconomics
Kinh tế vi mô (Trường Đại học Ngoại thương)
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MICROECONOMICS
KTEE202(2324-2)1.3
Associate Professor Dr. Nguyễn~ Thị Tường Anh
Email: [email protected]
Class 1 (16/1/2024)
Article I. Some textbook:
1. Principal of Microeconomics – Gregory Mankiw (5 th edition,
2011)
2. Microeconomics – Robert S. Pindyck (9h edition, 2018)
Article II. Lecture:
- 3 credits
- 7.5 weeks (might be longer)
- Time table: Tuesday n Friday
- Break: 10 mins (shouldn’t leave the class tho)
Article III. Assessment:
1. Class participation: 10%
- Random check
- Rarely but be careful=)))
2. Midterm test: 30% - 60 mins
- 3 short-answer qs
- 1 or 2 exercises
3. Final test: 60% - 60 mins
- Multiple choice qs + 2 exes
- Covers all content
Article IV. Regulations:
- No chatting
- No sleeping
- No phone ring
- No late coming☹
*Note: + trong bài kiểm tra có thể sử dụng TV nếu k hiểu
TA=)))
1

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CHAPTER 1. TEN PRINCIPLES OF

ECONOMICS
What economics is all about?
 Scarcity: the limited nature of society’s resources.
Needs/Wants > Supplying/Ability => Scarcity
unlimited limited
Scarcity is everywhere
 Economics:
Class 2:
 Economics: the study of how society manages its scarce
resources, eg..
o How people decide what to buy
How much to work, save, and spend
o How 昀椀rms decide how much to produce, how many
workers to hire
o How society decides how to divide its resources
between national defense, consumer goods, protecting
environment, and other needs
I. How people make decisions

- Principle#1: people face tradeo昀昀s
All decisions involve tradeo昀昀s. Ex:
 Going to a party the night before your midterm leaves less
time for studying
 Society faces an important tradeo昀昀:
EFFICIENCY vs EQUALITY

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o E昀케ciency: when the society gets the most from its

scarce resources
o Equality: when property is distributed uniformly among
society’s member
 Q: Why cant we both have e昀케ciency n equality at the same
time?
A: for eg 2 workers, 1 do good work n the other don’t.
e昀케ciency means the good one get the higher salary for
doing good works n the bad one get none. Equality means
the both of them get the same salary n rewards even though
1 didn’t do any shit. Yeet.
- Equality don’t motivate people
- E昀케ciency do
 If we choose Equality, no one will be motivated. If we choose
E昀케ciency, no one will survive the pressure n will be
overloaded. So, we choose the combination of both of them.
- Principle#2: The cost of something IS What You Give
Up to Get It
 Making decisions requires comparing the costs and bene昀椀ts
of alternative choices
 The OPPORTUNITY COST of any item is whatever must be
given up to obtain it
o Eg: if u have 10B VND n u choose to invest in:
BUSINESS SAVING
- Interest 500M - Pro昀椀t: should be lesser than
invest in Business
- Experience: u will have more
exp or knowledge if u business
- Freetime: u will need to be - Net working:
working n thinking how to
make more money instead of
putting it in bank n wait for it
to grow

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- Principle#3: Rational people think at the Margin

Rational people
 Systematically and purposefully do the best they can to
achieve their objectives
 Make decision by evaluating costs and bene昀椀ts or marginal
changes – incremental adjustments to an existing plan
 Marginal thinking:
o Marginal cost (MC): the change in total cost resulting
from a change from quantity
∆ TC
MC= =T B '(Q)
∆Q
The cost to produce one unit more

o Marginal bene昀椀t (MB): The change in total bene昀椀t
resulting from a change from quantity
∆ TB
MB= =TB' (Q)
∆Q
 MB > MC : Q up
 MB < MC : Q down
 MB = MC : not good for nothing, optimal
- Principle#4: People respond to incentives
 Incentive: something that includes a person to act, i.e. the
prospect of a reward or punishment
 Rational people respond to incentives
Class 5:
I. Supply
- The Quantity supplied of any good is the amount that sellers
are willing and able to sell :
4

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P & Q : positive
P up = Qs up
P down = Qs down
II. Demonstrating supply

- Supply schedule: a table that shows the relationship
between the price of a good n the quantity supplied
Ex: starbucks’s supply lattes
- Demonstrating supply
o Supply schedule
o Supply curve
o Supply function
P = aQs + b
Qs = cP + d => Qs = f(P)
Qs = f(Px,Pi,G,Te,E,N)
 Government’s policies: Tax (bad for the production, make
supply less)
 Subsidy (increase production, make
supply more)
 Technology
 current supply
Ex : In 30min, the price of gasoline gonna be higher compare to
current, as a seller, u would sell less gasoline rn bcause in the
future, u can earn more
III. Movement and shift of the supply curve

- Movement: Px – endogenous variable
- Shift: The rest factors – exogenous variable
SUMMARY: VARIABLES THAT INFLUENCE SELLERS

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VARIABLE A CHANGE IN THIS VARIABLE

Price Cause a movement along the S
curve
Input Prices Shifts the S curve
Technology Shifts the S curve
# of sellers Shifts the S curve
Expectations Shifts the S curve
Govt’s policies Shifts the S curve
IV. Supply and Demand together
- Equilibrium: P has reached the level where quantity supplied
equals quantity demanded
Class 6:
I. Price controlling
1. Controlled by the Government

2. Price Ceiling (Pc)
- The highest price allowed in the market
- For the sake of buyer
- Appear shortage
- Government’s responsibility
3. Price Floor (Pf)
- The lowest price allowed in the market
- For the sake of supplier
- Appear surplus
- Government’s responsibility

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lOMoARcPSD|42138838

Kinh tế vi mô (Trường Đại học Ngoại thương)

Scan to open on Studocu

Studocu is not sponsored or endorsed by any college or university

Downloaded by Ph??ng ?inh Th? Thu ([email protected])

CHAPTER 1. TEN PRINCIPLES OF

I. How people make decisions

Downloaded by Ph??ng ?inh Th? Thu ([email protected])

o E昀케ciency: when the society gets the most from its

Downloaded by Ph??ng ?inh Th? Thu ([email protected])

- Principle#3: Rational people think at the Margin

The cost to produce one unit more

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II. Demonstrating supply

III. Movement and shift of the supply curve

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VARIABLE A CHANGE IN THIS VARIABLE

1. Controlled by the Government

Downloaded by Ph??ng ?inh Th? Thu ([email protected])

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