📖 需求与供给基础

Economics

I. Lesson Focus

This lesson introduces the fundamental microeconomic concepts of demand, supply, market equilibrium, and elasticity. Candidates must be able to distinguish between movements along curves and shifts of curves, calculate various elasticities, predict equilibrium changes, and understand the efficiency implications of government intervention. These tools form the foundation for later topics in economics, equity valuation, and portfolio management.

II. The Problem

A city experiences a sharp rise in new-energy vehicle sales and a decline in traditional gasoline car sales following increases in household income and gasoline prices. Policymakers are considering subsidies for electric vehicles to reduce carbon emissions. How can demand and supply theory explain these simultaneous changes? How will equilibrium price and quantity adjust? What is the effect of a subsidy on market efficiency and total surplus? This lesson equips you with the analytical framework to answer such real-world and exam-style questions.

III. Basic Concepts of Demand

Demand refers to the quantities of a good or service that consumers are willing and able to purchase at various prices during a given period. It is effective demand — both willingness and ability must exist.

The demand function is expressed as:
$Q_d = f(P, I, P_r, T, E, N)$
where:
- $P$ = own price
- $I$ = income
- $P_r$ = prices of related goods
- $T$ = tastes and preferences
- $E$ = expectations
- $N$ = number of buyers

Law of Demand: Holding all else constant, there is an inverse relationship between price and quantity demanded. This results from the substitution effect and income effect.

A demand curve is downward-sloping. A change in quantity demanded is a movement along the curve caused by a change in own price. A change in demand is a shift of the entire curve caused by changes in the other five factors.

IV. Basic Concepts of Supply

Supply is the quantities of a good or service that producers are willing and able to sell at various prices during a given period.

The supply function is:
$Q_s = f(P, C, T, E, N_p, G)$
where:
- $P$ = own price
- $C$ = production costs (input prices, technology, taxes)
- $T$ = producer preferences
- $E$ = expectations
- $N_p$ = number of sellers
- $G$ = government policy

Law of Supply: Holding all else constant, price and quantity supplied are positively related, driven by the profit-maximization motive.

A supply curve is typically upward-sloping. A change in quantity supplied is a movement along the curve; a change in supply is a shift of the curve.

V. Market Equilibrium and Disequilibrium

Equilibrium occurs where quantity demanded equals quantity supplied ($Q_d = Q_s$). The market clears at the equilibrium price and quantity with no shortage or surplus.

• Shortage: $Q_d > Q_s$ → upward pressure on price
• Surplus: $Q_d < Q_s$ → downward pressure on price

Equilibrium price and quantity are determined by the intersection of demand and supply curves. Shifts produce predictable changes:

• Demand increase (right shift): equilibrium price ↑, quantity ↑
• Demand decrease (left shift): equilibrium price ↓, quantity ↓
• Supply increase (right shift): equilibrium price ↓, quantity ↑
• Supply decrease (left shift): equilibrium price ↑, quantity ↓

VI. Price Elasticity of Demand

Price elasticity of demand ($E_d$) measures the responsiveness of quantity demanded to a change in price:
$$E_d = \frac{\%\Delta Q_d}{\%\Delta P} = \frac{\Delta Q_d / Q_d}{\Delta P / P}$$

We usually discuss the absolute value. Classifications:
- $|E_d| > 1$: elastic
- $|E_d| = 1$: unit elastic
- $|E_d| < 1$: inelastic
- $|E_d| = 0$: perfectly inelastic
- $|E_d| = \infty$: perfectly elastic

Key determinants: availability of substitutes, necessity vs luxury, time horizon, proportion of income spent.

Income Elasticity ($E_I$):
$$E_I = \frac{\%\Delta Q_d}{\%\Delta I}$$
- Positive: normal good (>1 = luxury, 0 to 1 = necessity)
- Negative: inferior good

Cross-price Elasticity ($E_{XY}$):
$$E_{XY} = \frac{\%\Delta Q_X}{\%\Delta P_Y}$$
- Positive: substitutes
- Negative: complements

VII. Price Elasticity of Supply

Price elasticity of supply ($E_s$):
$$E_s = \frac{\%\Delta Q_s}{\%\Delta P}$$

Determinants include time to adjust production, mobility of inputs, and inventory levels.

VIII. Market Efficiency and Government Intervention

In a competitive market equilibrium, the sum of consumer surplus and producer surplus (total surplus) is maximized, achieving Pareto efficiency.

Government interventions (price ceilings, floors, taxes, subsidies) generally create deadweight loss and reduce total surplus.

Worked Cases

Case 1: Demand Increase with Constant Supply

The initial equilibrium in the coffee market is $20 per cup and 5,000 cups per day. Rising incomes shift the demand curve rightward. The new equilibrium price is $25 and quantity is 6,500 cups. Calculate the percentage changes and determine whether coffee is a normal good.

Solution:
Percentage change in price = (25 − 20)/20 = 25%
Percentage change in quantity = (6,500 − 5,000)/5,000 = 30%
Positive income elasticity confirms coffee is a normal good.

Case 2: Supply Decrease and Equilibrium Adjustment

The oil market equilibrium is initially $60 per barrel and 1 million barrels per day. A Middle East conflict shifts supply leftward. New equilibrium price is $80 and quantity falls to 850,000 barrels. Calculate supply elasticity assuming demand elasticity is −0.8.

Solution:
%ΔP = (80 − 60)/60 ≈ 33.33%
%ΔQ = (850,000 − 1,000,000)/1,000,000 = −15%
$E_s = (−15\%)/33.33\% ≈ 0.45$ (inelastic supply)

Case 3: Elasticity and Tax Incidence

Cigarette demand elasticity is −0.6 and supply elasticity is 1.2. A specific tax of $10 per pack is imposed. Calculate the proportion of the tax borne by consumers and producers.

Solution:
Consumer share = $E_s / (E_s + |E_d|) = 1.2 / (1.2 + 0.6) = 1.2/1.8 = 66.7\%$
Producer share = 0.6/1.8 = 33.3\%
Consumers bear more of the burden because demand is relatively inelastic.

Traps

Key Formulas

• Price elasticity of demand: $E_d = \frac{\%\Delta Q_d}{\%\Delta P}$
• Income elasticity: $E_I = \frac{\%\Delta Q_d}{\%\Delta I}$
• Cross-price elasticity: $E_{XY} = \frac{\%\Delta Q_X}{\%\Delta P_Y}$
• Price elasticity of supply: $E_s = \frac{\%\Delta Q_s}{\%\Delta P}$
• Tax incidence — consumer burden = $\frac{E_s}{E_s + |E_d|}$
• Equilibrium condition: $Q_d = Q_s$
• Demand increase: $P^ \uparrow,\; Q^ \uparrow$
• Supply increase: $P^ \downarrow,\; Q^ \uparrow$

Practice Questions

Q1. Which of the following would shift the demand curve for coffee to the right?
A. A decrease in the price of coffee beans
B. An increase in consumer income when coffee is a normal good
C. A decrease in the price of coffee
D. A decrease in the price of tea

Q2. If the price elasticity of demand for a good is −1.5, the good is:
A. Perfectly inelastic
B. Inelastic
C. Elastic
D. Unit elastic

Q3. When consumer income rises 10% and the quantity demanded of a good falls 5%, the income elasticity is:
A. 0.5
B. −0.5
C. 2.0
D. −2.0

Q4. Which situation creates a market shortage?
A. An effective price floor
B. An effective price ceiling
C. A rightward shift in supply
D. A leftward shift in demand

Q5. Supply elasticity is 0.8 and demand elasticity is −1.2. With a per-unit tax, the proportion of the tax borne by producers is closest to:
A. 40%
B. 60%
C. 0.4
D. 0.6

Q6. In a competitive market equilibrium:
A. Deadweight loss exists
B. The sum of consumer and producer surplus is maximized
C. Price is set by government
D. Supply exceeds demand

Q7. If the cross-price elasticity between two goods is −0.7, the goods are:
A. Substitutes
B. Complements
C. Inferior goods
D. Luxuries

Q8. Technological progress typically causes:
A. A rightward shift in demand
B. A rightward shift in supply
C. An increase in equilibrium price
D. A decrease in equilibrium quantity

Answers

Takeaways

• Law of demand: price ↑ → quantity demanded ↓ (ceteris paribus)
• Law of supply: price ↑ → quantity supplied ↑ (ceteris paribus)
• Movement along vs shift of curves: only own-price causes movement; other factors cause shifts
• Elasticity signs: demand price elasticity is negative, income elasticity positive for normal goods and negative for inferior goods, cross-price positive for substitutes and negative for complements
• At equilibrium $Q_d = Q_s$ and total surplus is maximized
• Tax burden falls more heavily on the side of the market with lower elasticity