Microeconomics

Consumers are willing and able to purchase the quantity of a particular good (or service) at various prices over a certain period of time.

The quantity of goods or services that consumers are willing and able to purchase at various possible prices.

An effective demand where consumers have both the willingness and the ability to purchase, a need with the capacity to pay.

The unity of purchase intention and purchasing power (in a realistic sense), demand ≠ need, demand = willingness to purchase and ability to purchase.

involving two variables simultaneously—the price of the product and the corresponding quantity demanded

Non-actual purchase volume does not necessarily match the actual demand (excess demand over supply).

The market demand — the total quantity of goods or services that all consumers in the market are willing and able to purchase at all possible prices (calculation: aggregate individual quantities demanded)

Individual demand — the quantity of goods or services a single consumer is willing and able to purchase at various possible prices.

Characteristics — Clearly demonstrates the functional relationship between the price and demand of the product.

Definition — A table describing the correspondence between the price of goods or services and the required quantity.

Reflects the economic principle that price and quantity demanded move inversely to each other.

Definition — The two-dimensional curve that displays the corresponding relationship between the price of goods or services and the required quantity.

Characteristics — more intuitively reflects the functional relationship between the price and demand of goods

The demand function — Qd = ƒ (P, I, T, Pi, E, ...) only considers the demand function when the price of the good itself is taken into account.

Giffen Goods: Inferior necessities (during special periods)

Conspicuous consumption goods: luxury items (symbolizing wealth and status)

Speculative commodities: such as stocks

Substitution effect:

Income effect:

A. Substitute

B. Complementary goods: utility complementarity, matching

The impact of time variation, changes in the same direction; expected but did not occur

Definition —— When other factors remain constant, the change in the quantity demanded of a good or service is caused solely by price factors.

The essence — the change in consumer demand for a product solely caused by changes in the product's own price.

The graph — represented by the movement of a point on a given demand curve, without the curve itself shifting.

Definition — Under the condition of constant prices, changes in the quantity demanded for goods or services are caused by other factors (factors other than price).

The essence refers to the change in consumer demand for a product caused by variations in factors other than the product's own price.

Graphically — represented as the movement of the entire demand curve (shifts in demand quantity, translation of the functional relationship)

Change — the alteration of one or several factors can lead to a change in demand, causing the demand curve to shift.

The producer, within a certain period, is willing and able to offer for sale the quantity of a particular commodity (or service) at various prices.

The quantity of goods or services that producers are willing to sell and able to sell at various prices

An effective supply where the producer has both the willingness and the ability to sell

The unity of willingness to sell and production supply capacity, supply ≠ production, supply = willingness to sell and ability to sell.

Involving two variables simultaneously: the price of the commodity and the corresponding supply quantity.

Non-actual sales volume; supply does not necessarily equal actual consumption.

Personal supply — the quantity of goods or services a single producer is willing and able to sell at various prices.

Market supply — the total quantity of goods or services that all producers in the market are willing to sell and able to sell at various prices (the aggregation of individual supplies).

Definition — A table describing the correspondence between the price of goods or services and the quantity supplied.

Features — Clearly demonstrate the corresponding relationship between the price and supply quantity of the product.

Definition — The two-dimensional curve that displays the corresponding relationship between the price of goods or services and the quantity supplied.

Characteristics — More intuitively sense the functional relationship between the price and supply of goods.

The supply function — QS = ƒ(P, a, Pi, E, Pf, …) is the supply function considering only the price of the good itself.

The corresponding relationship between the quantity of supply and various factors affecting the quantity of supply (price is the key factor)

Supply of labor: In certain cases, it conforms to the law of supply (at lower prices), but may be the opposite at a certain price point.

Land: Relatively speaking, the supply is fixed, and while the supply curve for a particular industry may be steep...

Speculative goods: decisions to hold or sell made in response to profit incentives

Definition — The change in the quantity of goods supplied caused by a change in price, with all other factors remaining constant.

The essence — the change in the quantity of goods supplied by producers caused solely by changes in the price of the goods themselves.

Graphically, it is manifested as a movement of a point along a given supply curve, with the quantity supplied moving along the supply curve.

Definition — the change in the quantity of goods supplied caused by factors other than a constant price.

The essence refers to the change in the quantity of goods supplied by manufacturers caused by changes in factors other than the intrinsic price of the goods themselves.

The graph — represented by the movement of the entire supply curve

Change — the alteration of one or several factors will lead to a change in supply, causing the supply curve to shift.

(1) Definition: In economics, relevant variables interact and constrain each other, ultimately reaching a state of relative equilibrium.

(2) Substance: relatively stable stillness - no internal factors that would change the current state

The result of the mutual interaction between the forces of supply and demand in the market

(3) Specifically: The market price is the state where the supply and demand quantities of a commodity are exactly equal, meaning that consumers buy exactly the quantity of goods they are willing to purchase at that price, and producers sell exactly the quantity of goods they are willing to sell at that price (market clearance).

Supply cannot meet demand — goods are in short supply, there is excess demand, a seller's market (where sellers dominate the market).

Consumers consider offering a higher price to purchase the quantity of goods they need due to not getting the amount of satisfaction they desire.

Producers are willing to offer more goods due to rising prices.

The result — price increase, demand reduction, supply increase to equilibrium state

Shortage of supply —— Excess of goods, there is an over-supply, buyer's market (buyer-dominated market)

Producers — attempt to attract consumers by lowering prices, reducing production to ensure all their goods are sold out.

The result - prices decrease, consumer demand increases, and producer supply decreases to reach equilibrium.

The definition: Consumer surplus refers to the benefit represented by the difference between the price a consumer is willing and able to pay for a good and the actual price paid, which is the surplus part of the amount of money a buyer is willing to pay for a good minus the actual amount paid by the buyer.

Reason — Except for the last unit, the marginal utility of the commodity expressed in currency (in US dollars) is greater than its price. The law of diminishing marginal utility states that the price consumers are willing to pay based on their evaluation of the marginal utility of a specific product or service is often higher than the market price determined by the relationship between supply and demand.

The calculation formula — Consumer surplus = Buyer's valuation - Buyer's actual payment

The interest represented by the difference between the actual price provided by the producer when supplying goods and the price that the producer is willing and able to provide.

The calculation formula — Producer surplus = Sellers' revenue - Sellers' actual cost

The essence — the profit that enterprises earn, the revenue that sellers gain during the selling process, economic rent.

The total profit of a manufacturer from producing a product plus the compensation to the factor owners exceeds and falls below the amount they require as minimum returns.

Definition — The benefits obtained by both parties in the transaction process.

The calculation formula — Producer surplus = Total surplus = Buyer's valuation - Buyer's actual payment + Seller's revenue - Seller's actual cost = Buyer's valuation - Seller's actual cost

Left shift: Equilibrium price is not fixed, equilibrium output decreases (both reduced)

Right shift: The equilibrium price is unstable, the equilibrium output increases (increases together)

Price increase: The increase in demand is greater than the increase in supply

The magnitude of the fluctuation is: price decrease, the increase in demand is less than the increase in supply.

The price remains unchanged: the increase in demand and supply is the same.

Demand shifts right, supply shifts left: price increases, output is uncertain (demand exceeds supply). Demand shifts left, supply shifts right: price decreases, output is uncertain (supply exceeds demand).