IGCSE经济学课件(英文版).ppt

IGCSE/O Level Economics1.1 The basic economic problemS1 Factors of productionNaturalresources=landMan-maderesources=capitalHumanskillsandeffort=labourBusinessknow-how=enterprise ProductionUsinginputs(resources)tomakeoutputs(goodsandservices)tosatisfytheneedsandwantsofconsumers ConsumptionUsingupgoodsandservices(products)tosatisfyconsumersneedsandwants The basic economic problemHumanwantsareunlimitedbutresourcesarescarce So,we all have to make choicesThereisalimitedamountofresourcessuchasrawmaterials,machines,factoriesandskilledworkers.Butthereareanumberofdifferentwaysinwhichtheycanbeused.Resource allocationthereforeinvolvesdecidinghowbesttousescarceresourcestosatisfyasmanyneedsandwantsaspossibleCHOICECHOICE Choice Similarly,peopleandgovernmentsonlyhavealimitedamountofmoneybuthavemanyneedsandwantstosatisfy$100Food?Entertainment?Clothing?Defence?Healthcare?Roads?$100bn Opportunity cost OpportunitycostisthecostofchoiceWhatwouldyoubuywithUS$10?HowshouldthegovernmentspendUS$250million?(Or,shouldthegovernmentcuttaxesbyUS$250million?)Whatoccupationwillyouchoosewhenyoufinishyourstudies?HowshouldanewbusinessinvestUS$20million?Shouldweconservemorenaturalresources?and what are the next best alternatives foregone?BrianTitley2012:thismaybereproducedforclassusesolelyforthepurchasersinstitute Production possibility curves AfirmproducingcarsandtrucksWhatistheopportunitycostofproducing20moretrucks?BrianTitley2012:thismaybereproducedforclassusesolelyforthepurchasersinstituteAneconomyproducingconsumergoodsandcapitalgoodsWhatistheopportunitycostofproducing15moretonnesofconsumergoods?Production possibility curves Production possibility curves Productionpossibilitycurves(PPCs)showthemaximumcombinedoutputoftwoormoreproductsafirmoranentireeconomycanproducewithitsavailableresourcesResourcesarebeingusedefficientlyiftheyareproducingtheirmaximumoutputBut,becauseresourcesarelimited,producingmoreofoneproductmeansproducinglessofanotherPPCsarethereforeausefulwayofshowingtheopportunitycostofproducingmoreofoneproductintermsofhowmuchofanothermustbegivenupIGCSE/O Level Economics2.1 Economic systemsS2 Resource allocationBecauseproductiveresourcesarescarcerelativetohumanwantswemustdecide:What to produce?How to produce?Who to produce for?Shouldweuseresourcestoproduceasmanyconsumergoodsaspossibleorallocatesomeresources,forexample,tobuildnewroadsortoprovidebetterhealthcare?Whattoolsandmachinerywillbeneeded?Howmanyworkerswillberequiredandwhatskillswilltheyneed?Isitcheapertoemploymorelabourormoremachinery?Shouldpeopleinthegreatestneedgetthegoodsandservicestheyrequire?Orshouldtheybeproducedforpeoplewhocanpaythemostforthem?Whatpriceshouldtheypay?Economic systemsWhoinaneconomydecideswhatgoodsandservicestoproduce,howtoproducethemandwhotoproducethemfor,andhowarethesedecisionsaremade?Market economyMixed economyPlanned economyWho?PrivatesectorfirmsandconsumersHow?ThepricemechanismWho?Privatesectorfirmsandconsumers,andagovernmentHow?ThepricemechanismandgovernmentplanningWho?GovernmentHow?Governmentplanning Economic systemsChinaCubaNorth KoreaDenmarkFranceItalySwedenUKManydevelopedeconomiesArgentinaMauritiusNepalParaguayBahamasSingapore The market economic systemPrivate sector producersConsumersGoodsandservicesMoneyProductionExchangeConsumptionInafree market economic system alldecisionsaretakenbyprivate sector organizationsandindividuals.Thereislittleornoroleforgovernmentorapublic sectorandthereforelittleornotaxationorpublicspending.The price mechanismAmarket isanysetofarrangementsthatbringstogetheralltheproducersandconsumersofagoodorservicesothattheycanengageinexchange.Private firms produce goods and services to maximize their profitsConsumers consume goods and services to maximize their utility(satisfaction)AsconsumerdemandforaproductrisesProductionbecomesmoreprofitable,soproducersincreaseoutputProductionbecomeslessprofitable,soproducersreduceoutputMarket price and quantity tradedMARKET PRICE RISESMARKET PRICE FALLSAsconsumerdemandforaproductfalls Whats good about the market system?AwidevarietyofgoodsandserviceswillbeproducedtosatisfyconsumerwantsFirmsrespondquicklytochangesinconsumerwantsandspendingpatternsTheprofitmotiveoffirmsencouragesthemtodevelopnewproductsandusethemostefficientmethodsofproductionTherearenotaxesProfitscanbeincreasedbyincreasingsalesand/orreducingcostsofproductionIfconsumerdemandisrising,priceswillriseandproductionbecomesmoreprofitable.EntrepreneurswillallocateresourcestotheirmostprofitableusesThereisnopublicsectorinatotallyfreemarketeconomicsystem How the market system can failMarket failure:whenfreemarketsfailtoproducegoodsandservicesthatareworthwhileorwhenthedecisionsofproducersorconsumersresultinwastefulorharmfulactivitiesFirms will only produce goods and services if they are profitableFirms will only supply products to consumers who are able to pay for themResources will only be employed if it is profitable to do soNATIONAL PARK How the market system can failMarket failure:whenfreemarketsfailtoproducegoodsandservicesthatareworthwhileorwhenthedecisionsofproducersorconsumersresultinwastefulorharmfulactivitiesHarmful goods may be produced if it is profitable to do soSome producers and consumers may ignore the harmful effects of their activities on others and the environmentSome firms may restrict competition,mislead consumers and charge them very high prices The mixed economic systemInamixed economyagovernmentcaninterveneindifferentmarketsinanattempttocorrecttheworstmarketfailures:ItcanprovideusefulandessentialgoodsandservicesItcanprovidegoodsandservicesforpeopleinthegreatestneedItcanemploypeopleinpublic sector organizationsandprovidefinancialsupporttoprivatesectorfirmstoboostoutputandemploymentItcanoutlawtheproductionofharmfulgoodsanddangerousactivitiesItcanoutlawbusinesspracticesthatrestrictcompetitionormisleadconsumers The mixed economic systemAmixedeconomythereforecombinestheadvantagesofamarketeconomicsystemwith:governmentownershipandcontrolofsomescarceresourcesgovernmentinterventionstoregulatetheactionsofprivatesectorfirmsandconsumersinsomemarkets How mixed?Government intervention:some problemsBycorrectingfailuresinsomemarkets,agovernmentmaydistorttheallocationofresourcesandcauseproblemsinothers:XHightaxesonpeopleandfirmscandistortmarketpricesignalsandreduceworkincentivesXLandregulationscanincreaseproductioncostsandthereforereducetheprofitabilityandsupplyofsomegoodsandservicesXPublicsectororganizationsmaybeinefficientandproducepoor-qualitygoodsandservicesbecausetheydonothavetomakeaprofitXSomegovernmentspendingmaybeforpoliticalorevenpersonalgainIGCSE/O Level Economics2.2 How markets workS3 What is a market?Themarket foragoodorserviceconsistsofallthoseproducerswillingandabletosupplyitandallthoseconsumerswillingandabletodemanditdemand goods and services to satisfy their needs and wantssupply goods and services to earn profits How many fizzy drinks?If cans were$5 eachManyproducersFewconsumersIf cans were 10 cents eachFewproducersManyconsumers DemandThewantorwillingnessofconsumerstobuyaproductTobeaneffective demandaconsumermusthaveenoughmoneytobuytheproductAsprice rises,thequantity demandedbyconsumerscontractsAsprice falls,thequantity demandedbyconsumersextendsAdemandcurveslopesdownwards Substitutes and complementsSubstitutescansatisfythesamewantComplementsareinjointdemandororor Market demandThesumofallindividualconsumerdemandsforaparticularproductA rise in demandThemarketdemandcurveshiftsoutwardsPossiblecausesare:anincreaseindisposableincomesaftertaxariseinthepriceofsubstitutesafallinthepriceofacomplementtastesandfashionfavourtheproductanincreaseinadvertisingariseinthepopulationotherfactors,e.g.hotweatherincreasesdemandforcolddrinksandsuncreams Market demandThesumofallindividualconsumerdemandsforaparticularproductA fall in demandThemarketdemandcurveshiftsinwardsPossiblecausesare:afallindisposableincomesaftertaxafallinthepriceofsubstitutesariseinthepriceofacomplementtastesandfashionfavourotherproductsareductioninadvertisingafallinthepopulationotherfactors,e.g.hotweatherreducesthedemandforwindercoatsNo,if the product is an inferior good Asincomerises,consumersbuylessastheyswitchtheirdemandtoothermorepreferableproductsYes,if the product is a normal good Asincomerises,consumersarewillingandabletobuymore Income and demandButwillariseinconsumerincomealwaysleadtoanincreaseindemandforaproduct?SupplyThewillingnessandabilityoffirmstomakeaproductavailabletoconsumersAsprice rises,thequantity suppliedbyproducersextends becauseproductionbecomesmoreprofitableAsprice falls,thequantity suppliedbyproducerscontracts becauseproductionbecomeslessprofitableAsupplycurveslopesupwards Market supplyThesumofallindividualproducersdecisionsaboutthesupplyofaparticularproductA rise in supplyThemarketsupplycurveshiftsoutwardsPossiblecausesare:otherproductsbecomelessprofitabletoproduceafallinthecostoffactorsofproductionanincreaseinthesupplyofresourcestechnicalprogressandimprovementsinproductionprocessesandmachineryanincreaseinbusinessoptimismandexpectationsofprofitthegovernmentsubsidizesproductionand/orcutstaxesonprofitsotherfactors,e.g.goodweatherboostscropharvests Market supplyA fall in supplyThemarketsupplycurveshiftsinwardsPossiblecausesare:otherproductsbecomemoreprofitabletoproduceariseinthecostoffactorsofproductionafallinthesupplyofresourcestechnicalfailures,suchasacutinpowersuppliesormechanicalbreakdownsafallinbusinessoptimismandprofitexpectationsthegovernmentwithdrawssubsidiesand/orincreasestaxesonprofitsotherfactors,e.g.warsandnaturaldisastersThesumofallindividualproducersdecisionsaboutthesupplyofaparticularproduct Market equilibriumPriceperunitQuantitytradedperperiodDDSSEquilibriumquantitytraded(Qe)Marketprice(Pe)0Amarketisinequilibrium wheremarketdemandequalsmarketsupplyAttheequilibriummarket pricethequantityconsumerswishtobuyisexactlyequaltothequantityproducerswishtosellIfamarketisinequilibriumtherearenopressurestochangethemarketprice Market disequilibriumPriceperunitQuantitytradedperperiodDDSSPe0Amarketisindisequilibrium ifthequantityconsumerswishtobuyisnotmatchedbythequantityproducerswishtosellP1P2AtpriceP1thereisanexcess supply.Pricewillneedtofalltopersuadeconsumerstobuymoreandforproducerstocontracttheirsupply.AtpriceP2thereisanexcess demand.Pricewillneedtorisetoreduceconsumerdemandandtoencourageproducerstosupplymore.An increase in market price IfmarketdemandrisesORIfmarketsupplyfallsPriceperunitQuantitytraded0DSDD1D1SP1PQQ1Quantitytraded0DSDSP1Q1QPriceperunitS1S1P A decrease in market priceIfmarketdemandfallsORIfmarketsupplyrisesPriceperunitQuantitytraded0D1SD1DDSPP1Q1QQuantitytraded0DS1DS1PQQ1PriceperunitSSP1How responsive is demand to changes in price?$1 per canNow only 90 centsAfterBeforeIf demand is relatively elastica small change in price causes a relatively large change in quantity demandedHow responsive is demand to changes in price?AfterBeforea small change in price causes only a relatively small change in quantity demandedNow only$2$2.20If demand is relatively inelastic Price elasticity of demandHowresponsiveconsumerdemandistoachangeinprice,andthereforehowrevenuesmayrespondfollowingachangeinpricePercentagechangeinprice=$1/$5=20%Percentagechangeinpassengernumbers=5/100=5%Price elasticity of demand=20%/5%=4Percentagechangeinprice=$0.5/$2.00=25%Percentagechangeinpassengernumbers=10/50=20%Price elasticity of demand=20%/25%=0.8ELASTICINELASTICDemandforaproductwillbeprice elasticif:Why?Because:theproducthasmanyclosesubstitutesconsumerscanbuyinsteadifthepricerises,e.g.differentwashingdetergentstheproductisexpensive,suchasmanyluxuryitems,soevenasmallincreaseinpricemaybeunaffordableconsumersdonotneedtopurchasetheproductfrequentlysotheyhavetimetosearchforalternativesifpricerises Price elasticity of demand10%off%changeinquantitydemandedisgreaterthanthe%changeinpricePED 1Demandforaproductwillbeprice inelasticif:Why?Because:theproducthasveryfewclosesubstitutesforconsumers,e.g.electricitytheproductisalow-costitem,e.g.adailynewspaperorboxofmatchestheproductisanessentialitemandneededregularly,e.g.manybasicfooditemssuchasbread,riceandvegetables Price elasticity of demand10%offPED 1Supply is price inelasticWhen the%change in quantity supplied is less than the%change in pricePES total social costIf total social cost total social benefitEconomic welfare can be improved by reducing production and consumptionEconomic welfare can be improved by encouraging more production and consumptionTax on landfill to increase by 20%as the government attempts to reduce the amount of waste that ends up in the ground.Correcting market failureHowcanagovernmentinamixedeconomyensurethatfirmsandconsumerstakeaccountoftheexternalcostsandbenefitsoftheirdecisionsandactions?India to enforce new regulations to curb noise pollutionSouth Africa bans plastic bags to reduce litterRetailerscaughthandingoutthebagsnowfaceafineof100,000rand($13,800)ora10-yearjailsentenceThe Chinese government announces 18 recycling projects are to receive government subsidies covering up to 50%of total investment costs The Australian government has banned live cattle exports to Indonesia until safeguards are adopted to end the brutal slaughter of animalsGovernment unveils plan to tax the carbon emissions of the worst polluters Correcting market failuresTo reduce external costsRaisetaxesonfirmswithactivitiesthatcreateexternalcoststoreducethosefirmsafter-taxprofits,e.g.taxesonemissionsfromtheuseoffossilfuels,onlandfillwasteandmineralextractionIncreaseindirecttaxesonproductsthatareconsideredharmfultoraisetheirpricesanddiscouragetheirconsumption,e.g.taxesoncigarettes,petrol,plasticbagsUseregulationsandfinestodiscouragetheproductionorconsumptionofproductsoractivitiesthatareharmful,e.g.smokingbans,planningcontrols,legallimitsonairandwaterpollutants,anti-litterlawsTo increase external benefitsEnsurepublicsectorprovisionofsociallyandeconomicallydesirablegoodsandservices,e.g.providingfreevaccinationsandeducation,publicparks,publictransportandroadsProvidesubsidiestoprivatesectorfirmstoreducethecostofactivitiesandproductsthathaveexternalbenefits,e.g.subsidiesforrecycling,renewableenergy,organicfarmingUseregulationstoencouragefirmstochangetheirproductionmethods,e.g.rulestophaseouttraditionallightbulbstoencourageaswitchtolow-energylightbulbs,healthandsafetyregulations,animalwelfarelawsIGCSE/O Level Economics3.1 Money and financeS5 Why do we need money?Toexchangeforthosegoodsandservicesweeachneedandwantbutareunabletoproduceforourselves,becausewearenotself-sufficient(individuallywecannotproduceeverythingweneedandwant)wespecializeinthosetasksandproductiveactivitieswearebestabletodoandthereforeneedtotradewithproducersofotherproducts BarterBarterinvolvesexchanginggoodsandservices,i.e.paymentforoneproductismadewithanotherProblems with barter are:findingsomeonetoswapwith(theremustbeadoublecoincidenceofwants)howtoagreevalues(howmanyapplestoonecow,andhowmuchcheeseforoneapple?)The functions of moneya medium of exchangea good store of value a measure of valuea means of deferred paymentToovercometheproblemsofbarteramoneymustbe:Prices Choo