Mindmap for Micro Economics - Neo Classical point of view

1. LECTURE 2:
NEOCLASSICAL
MICROECONOMICS -
PRODUCT MARKET
APPROACH
Market demand
and supply
Explaining PRICES and
QUANTITIES of individual
products
DEMAND
Market
demand
Sum of all
individual demand
Demand
by
individuals Determinants
PRICE
Link of price and quantity
demanded gives DEMAND
CURVE
Diminishing MARGINAL UTILITY
explains downward sloping curve
OTHER
Income
Tastes
Expected price
Price of other products
SUPPLY
Market
supply
Sum of
individual supply
Individual firm
supply Determinants
Price
Link of price and quantity
supplied gives the supply curve
explained by rising unit costs
costs include a normal profit
....but not above-normal profits
Prices are set on basis of
MARGINAL costs
supply curve = marginal cost curve
Short-run supply curve
Period when most factor inputs are fixed
Diminishing MARGINAL
PRODUCTIVITY explains
upward sloping curve
Explains rising
unit costs over
the short run
Key is rising average
VARIABLE unit costs
Costs INCLUDE Profit
Long-run
Diminishing ECONOMIES of SCALE
Explains rising costs
All factor inputs variable
Other
Technology
Work effort
Management
Taxes and subsidies
Input prices
CONTD.
DEMAND AND SUPPLY
EQUILIBRIUM or market
clearing output and price
Shift in demand and supply
curves will result in a shift in
equilibrium price and output
Explains shift in supply curve
Explains shift in demand curve
LECTURE 2 Part 1.mmap - 12/09/2014 - Howard Nicholas