Interdependence-and-the-課件

1、Interdependence and the Gains from TradeChapter 3Copyright 2001 by Harcourt, Inc.All rights reserved. Requests for permission to make copies of any part of thework should be mailed to:Permissions Department, Harcourt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777.Interdependen

2、ce and Trade Consider your typical day:You wake up to an alarm clock made in Korea.You pour yourself some orange juice made from oranges grown in Florida.You put on some clothes made of cotton grown in Georgia and sewn in factories in Thailand.You watch the morning news broadcast from New York on yo

3、ur TV made in Japan.You drive to class in a car made of parts manufactured in a half-dozen different countries. and you havent been up for more than two hours yet!Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Interdependence and TradeRemember, economics is the study of how s

4、ocieties produce and distribute goods in an attempt to satisfy the wants and needs of its members.How do we satisfy our wants and needs in a global economy?We can be economically self-sufficient.We can specialize and trade with others, leading to economic interdependence.Interdependence and TradeA g

5、eneral observation . . .Individuals and nations rely on specialized production and exchange as a way to address problems caused by scarcity.Interdependence and TradeBut, this gives rise to two questions:Why is interdependence the norm?What determines production and trade?Why is interdependence the n

6、orm?Interdependence occurs because people are better off when they specialize and trade with others.What determines the pattern of production and trade?Patterns of production and trade are based upon differences in opportunity costs.Imagine . . .only two goods: potatoes and meatonly two people: a po

7、tato farmer and a cattle rancherWhat should each produce?Why should they trade?A Parable for the Modern EconomyThe Production Opportunities of the Farmer and the RancherHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Self-SufficiencyBy ignoring each other:Each consumes what th

8、ey each produce.The production possibilities frontier is also the consumption possibilities frontier.Without trade, economic gains are diminished.Production Possibilities FrontiersPotatoes (pounds)Meat (pounds)4212(a) The Farmers Production Possibilities Frontier0AProduction Possibilities FrontiersP

9、otatoes (pounds)Meat (pounds)540202.5(b) The Ranchers Production Possibilities Frontier0BThe Farmer and the Rancher Specialize and Trade Each would be better off if they specialized in producing the product they are more suited to produce, and then trade with each other.The farmer should produce pot

10、atoes. The rancher should produce meat.The Gains from Trade: A SummaryHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Gains from Trade: A SummaryHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Trade Expands the Set of Consumption PossibilitiesPotatoe

11、s (pounds)Meat (pounds)4221(a) How Trade Increases the Farmers Consumption0A33A*Farmers consumption without tradeFarmers consumption with tradeTrade Expands the Set of Consumption PossibilitiesPotatoes (pounds)Meat (pounds)52.54020(b) How Trade Increases The Ranchers Consumption0B213B*Ranchers consu

12、mption without tradeRanchers consumption with tradeThe Gains from Trade: A SummaryHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Principle of Comparative AdvantageWho should produce what?How much should be traded for each product?Who can produce potatoes at a lower cost-t

13、he farmer or the rancher?Differences in the costs of production determine the following:Differences in Costs of ProductionThe number of hours required to produce a unit of output. (for example, one pound of potatoes)The opportunity cost of sacrificing one good for another.Two ways to measure differe

14、nces in costs of production:Absolute AdvantageDescribes the productivity of one person, firm, or nation compared to that of another.The producer that requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good.Comparative AdvantageCompares pro

15、ducers of a good according to their opportunity cost.The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good.Specialization and TradeWho has the absolute advantage?The farmer or the rancher?Who has the comparative advantage

16、?The farmer or the rancher?Absolute AdvantageThe Rancher needs only 8 hours to produce a pound of potatoes, whereas the Farmer needs 10 hours.The Rancher needs only 1 hour to produce a pound of meat, whereas the Farmer needs 20 hours.The Rancher has an absolute advantage in the production of both me

17、at and potatoes.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Opportunity Cost of Meat and PotatoesHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Comparative AdvantageThe Ranchers opportunity cost of a pound of potatoes is 8 pounds of meat, wherea

18、s the Farmers opportunity cost of a pound of potatoes is 1/2 pound of meat.The Ranchers opportunity cost of a pound of meat is only 1/8 pound of potatoes, while the Farmers opportunity cost of a pound of meat is 2 pounds of potatoes.Harcourt, Inc. items and derived items copyright 2001 by Harcourt,

19、Inc.Comparative Advantageso, the Rancher has a comparative advantage in the production of meat but the Farmer has a comparative advantage in the production of potatoes.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Principle of Comparative AdvantageComparative advantage a

20、nd differences in opportunity costs are the basis for specialized production and trade.Whenever potential trading parties have differences in opportunity costs, they can each benefit from trade.Benefits of TradeTrade can benefit everyone in a society because it allows people to specialize in activit

21、ies in which they have a comparative advantage.Adam Smith and TradeIn his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith performed a detailed analysis of trade and economic interdependence, which economists still adhere to today.Harcourt, Inc. items and derived

22、items copyright 2001 by Harcourt, Inc.David Ricardo and TradeIn his 1816 book Principles of Political Economy and Taxation, David Ricardo developed the principle of comparative advantage as we know it today.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Should Tiger Woods Mow

23、 His Own Lawn?Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.SummaryInterdependence and trade allow people to enjoy a greater quantity and variety of goods and services.SummaryThe person who can produce a good with a smaller quantity of inputs has an absolute advantage. The p

24、erson with a smaller opportunity cost has a comparative advantage.SummaryThe gains from trade are based on comparative advantage, not absolute advantage. Comparative advantage applies to countries as well as to people. Graphical ReviewHarcourt, Inc. items and derived items copyright 2001 by Harcourt

25、, Inc.Production Possibilities FrontiersPotatoes (pounds)Meat (pounds)4212(a) The Farmers Production Possibilities Frontier0AProduction Possibilities FrontiersPotatoes (pounds)Meat (pounds)540202.5(b) The Ranchers Production Possibilities Frontier0BTrade Expands the Set of Consumption PossibilitiesP

26、otatoes (pounds)Meat (pounds)4221(a) How Trade Increases the Farmers Consumption0A33A*Farmers consumption without tradeFarmers consumption with tradeTrade Expands the Set of Consumption PossibilitiesPotatoes (pounds)Meat (pounds)52.54020(b) How Trade Increases The Ranchers Consumption0B213B*Ranchers

27、 consumption without tradeRanchers consumption with tradeThe Market Forces of Supply and DemandChapter 4Copyright 2001 by Harcourt, Inc.All rights reserved. Requests for permission to make copies of any part of thework should be mailed to:Permissions Department, Harcourt College Publishers,6277 Sea

28、Harbor Drive, Orlando, Florida 32887-6777.The Market Forces of Supply and DemandSupply and demand are the two words that economists use most often.Supply and demand are the forces that make market economies work.Modern microeconomics is about supply, demand, and market equilibrium.Markets A market i

29、s a group of buyers and sellers of a particular good or service. The terms supply and demand refer to the behavior of people . . . as they interact with one another in markets. Markets Buyers determine demand. Sellers determine supply.Market Type: A Competitive MarketA competitive market is a market

30、. . .with many buyers and sellers.that is not controlled by any one person.in which a narrow range of prices are established that buyers and sellers act upon.Competition: Perfect and OtherwiseProducts are the sameNumerous buyers and sellers so that each has no influence over priceBuyers and Sellers

31、are price takersPerfect CompetitionCompetition: Perfect and OtherwiseMonopolyOne seller, and seller controls priceOligopolyFew sellersNot always aggressive competitionCompetition: Perfect and OtherwiseMonopolistic CompetitionMany sellersSlightly differentiated productsEach seller may set price for i

32、ts own productDemandQuantity demanded is the amount of a good that buyers are willing and able to purchase.Law of DemandThe law of demand states that there is an inverse relationship between price and quantity demanded.Demand ScheduleThe demand schedule is a table that shows the relationship between

33、 the price of the good and the quantity demanded. Demand ScheduleDeterminants of DemandMarket priceConsumer incomePrices of related goodsTastesExpectationsDemand CurveThe demand curve is the downward-sloping line relating price to quantity demanded. Demand Curve$3.002.502.001.501.000.502134567891012

34、11Price of Ice-Cream ConeQuantity of Ice-Cream Cones0Ceteris ParibusCeteris paribus is a Latin phrase that means all variables other than the ones being studied are assumed to be constant. Literally, ceteris paribus means “other things being equal.”The demand curve slopes downward because, ceteris p

35、aribus, lower prices imply a greater quantity demanded!Market DemandMarket demand refers to the sum of all individual demands for a particular good or service.Graphically, individual demand curves are summed horizontally to obtain the market demand curve.Harcourt, Inc. items and derived items copyri

36、ght 2001 by Harcourt, Inc.Determinants of DemandMarket priceConsumer incomePrices of related goodsTastesExpectationsChange in Quantity Demanded versus Change in DemandChange in Quantity DemandedMovement along the demand curve.Caused by a change in the price of the product.Changes in Quantity Demande

37、d0D1Price of Cigarettes per PackNumber of Cigarettes Smoked per DayA tax that raises the price of cigarettes results in a movement along the demand curve.AC202.00$4.0012Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Change in Quantity Demanded versus Change in DemandChange in

38、 DemandA shift in the demand curve, either to the left or right.Caused by a change in a determinant other than the price.Changes in Demand0D1Price of Ice-Cream ConeQuantity of Ice-Cream ConesD3D2Increase in demandDecrease in demandHarcourt, Inc. items and derived items copyright 2001 by Harcourt, In

39、c.Consumer IncomeAs income increases the demand for a normal good will increase.As income increases the demand for an inferior good will decrease.Consumer IncomeNormal Good$3.002.502.001.501.000.50213456789101211Price of Ice-Cream ConeQuantity of Ice-Cream Cones0Increasein demandAn increase in incom

40、e.D1D2Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Consumer IncomeInferior Good$3.002.502.001.501.000.50213456789101211Price of Ice-Cream ConeQuantity of Ice-Cream Cones0Decreasein demandAn increase in income.D1D2Harcourt, Inc. items and derived items copyright 2001 by Harc

41、ourt, Inc.Prices of Related GoodsSubstitutes & ComplementsWhen a fall in the price of one good reduces the demand for another good, the two goods are called substitutes.When a fall in the price of one good increases the demand for another good, the two goods are called complements.Change in Quantity

42、 Demanded versus Change in DemandVariables that Affect Quantity DemandedA Change in This Variable . . .PriceRepresents a movementalong the demand curveIncomeShifts the demand curvePrices of relatedgoodsShifts the demand curveTastesShifts the demand curveExpectationsShifts the demand curveNumber ofbu

43、yersShifts the demand curveSupplyQuantity supplied is the amount of a good that sellers are willing and able to sell. Law of SupplyThe law of supply states that there is a direct (positive) relationship between price and quantity supplied.Determinants of SupplyMarket priceInput pricesTechnologyExpec

44、tations Number of producersSupply ScheduleThe supply schedule is a table that shows the relationship between the price of the good and the quantity supplied. Supply ScheduleSupply CurveThe supply curve is the upward-sloping line relating price to quantity supplied. Supply Curve$3.002.502.001.501.000

45、.50213456789101211Price of Ice-Cream ConeQuantity of Ice-Cream Cones0Market SupplyMarket supply refers to the sum of all individual supplies for all sellers of a particular good or service.Graphically, individual supply curves are summed horizontally to obtain the market supply curve.Harcourt, Inc.

46、items and derived items copyright 2001 by Harcourt, Inc.Determinants of SupplyMarket priceInput pricesTechnologyExpectations Number of producersChange in Quantity Supplied versus Change in SupplyChange in Quantity SuppliedMovement along the supply curve.Caused by a change in the market price of the

47、product.Change in Quantity Supplied1 5Price of Ice-Cream ConeQuantity of Ice-Cream Cones0S 1.00AC$3.00A rise in the price of ice cream cones results in a movement along the supply curve.Change in Quantity Supplied versus Change in SupplyChange in SupplyA shift in the supply curve, either to the left

48、 or right. Caused by a change in a determinant other than price.Change in SupplyPrice of Ice-Cream ConeQuantity of Ice-Cream Cones0S1S2S3Increase in SupplyDecrease in SupplyChange in Quantity Supplied versus Change in SupplySupply and Demand TogetherEquilibrium PriceThe price that balances supply and demand. On a graph, it is the price at which the supply and demand curves intersect.Equilibrium QuantityThe quantity that balances supply and demand. On a graph it is the quantity at which the supply and demand curves intersect. Supply and Demand TogetherDemand ScheduleSupply ScheduleAt $2.00, t