CHAPTER 1INTRODUCTION TO MICROECONOMICS Content Microeconomics Basic questions in economics Economic choice... The economy Household Government Firm Outputmarket Inputmarket I.. The e
Trang 1CHAPTER 1
INTRODUCTION TO MICROECONOMICS
Content
Microeconomics
Basic questions in economics
Economic choice
Trang 2Chapter 1: Introduction
I Microeconomics
1 The economy
Household
Government
Firm
Outputmarket Inputmarket
I Microeconomics
1 The economy
- There are at least 3 members in any economy, which
interacting with each other in a certain regime.
Interacting regimes:
- planning economy (1)
- market economy (2)
- mixed economy (3)
Cuba US, UK,
Japan Hong
Kong
Trang 3I Microeconomics
2 Some definitions
Scarcity: When the needs are greater than the
supplying ability
Commodities: Tools to satisfy people’s needs
Resources : Inputs used to produce commodities to
satisfy people’s needs, including:
+ Labour (L) + Materials (M) + Capital (K)
3 Microeconomics and macroeconomics
Economics: study how society allocates scarce
resources for competitive goals
Microeconomics:study the behavior of each
member in the economy
Macroeconomics: study the economy as a whole
ECONOMICS
Trang 4II Basic economic issues
3 questions
WHAT?
HOW?
FOR WHOM?
III Economic choice
1 Choice’s principles
- Need to choose because of scarce resources If
resource is already spent on A, it can not be spent on B
- Many ways to spend resources →easy to choose
2 Choice’s target
- Household: Optimize benefit
- Firm: Optimize profit
- Government: Optimize social welfare
Trang 5III Economic choice
3 Choosing tool
- Opportunity cost (OC):The value of the best missed
chance when making a choice
- Marginal thinking
+ Marginal cost (MC): The change in total cost resulting
from a change from quantity
+ Marginal benefit (MB): The change in total benefit
resulting from a change from quantity
) (
'Q
TC Q
TC
MC =
∆
∆
=
) (
'Q
TB Q
TB
∆
∆
=