CHAPTER 1

WHAT IS ECONOMICS
- Resources are Scarce  can’t produce all the goods and services ppl wish to have
- Eco is study of how SOCIETY manages its scarce resources  Ten Principle
Scarce = limited hb THỂ HIỆN QUA BIỂU ĐỒ PPF PRODUCT QUANLITY FROTIER
HOW PPL MAKE DECISIONS
1. Face Tradeoff : đánh đổi cái gì đó
- “ there is no such thing as a free luch “
Ex: 2 cái ly cf và ts thì mình xem xét về niềm vui và giá tiền. nếu chọn ly ts cái giả phải tả là tien
còn cf thì giá trả đó là niềm vui .

2. The cost of sth is what you give up to get it

To get onething, we usually have to give up another thing.
 Efficiency : hiệu quả # Equity = equality : công bằng
- Decisions requirement costs and benefits of alternatives
- The OPPORTUNITY COST of an item is what you give up to obtain that item
3. Rational ( lí trí ) people think at the Margin
- Assume ppl are RATIONAL  DO their best to achieve their objectives
- MARGINAL CHANGES are small, incremental adjustments to an existing plan of action
Marginal benefit >< Marginal cost
 Margin : lề, bờ
 Adjustment : điều chỉnh
 Incremental : gia tang
 Ss cái marginal benefit với marginal cost ( lợi or hại THÊM như thế nào )
4. People respond to incentive
 Incentives are sth that include ppl to act ( eg: p

HOW PPL INTERACT WITH EACH OTHER

5. Trade can make everyone better off

- Trade : trao đổi
 Ppl gain from their ability to trade with one another
 Competition results in gain from trading
 Trade allows ppl to specialize in what they do best ( trao đổi để có thể phát triển những gì
mình giỏi )
6. Markets are usually a good way to organize activity
- Market economy is an economy that allocates resources ( phân bổ nguồn nhân lực )
through the decentralized ( phi tập trung ) decisions of many firms and household as they
interact in markets for goods and services
 Household ( hộ gia đình ) decide what to buy and who to work for
 Firms ( doanh nghiệp ) decide who to hire ( thuê) and what to produce
- Adam Smith made the observation that household and firms interacting in market act as if
guided by an “ invisible hand “
7. Government can sometimes improve market Outcomes
 - Market failure ( thất bại ): occurs when the market fails to allocate resources efficiently.
Caused by :
 An externality is the impact of one person or firm’s action on the well-being of a bystander
( người ngoài cuộc )
 Market power is the ability of a single person or firm to unduly influence market prices
- When the market fails ( break down ) government can intervene to promote efficiency and
equity
-
THE FORCES AND TRENDS THAT AFFECT THE ECONOMY WORKS
8. A country’s Standard of living depend on its ability to produce goods and services
- Standard of living may be measured in different ways:
 By comparing personal incomes
 By capering the total market value of value of nation’s production
- Why ? -> Productivity ( means the amount of goods and services produced from each unit of
worker
9. Price rise when the government prints too much money
- Inflation
- One cause of inflation is the growth in the quantity of money
- When the government creates large quantities of money, the value of money fails
10. Society face a short run tradeoff between inflation and unemployment
- Short-Run inflation + more money to spend  higher demand  encourage firms to
produce more  hire more workers  unemployment -
- Long-Run inflation +  more money to spend  higher demand  prices +  value of
money -

CHAPTER 2
1. Thinking like An Economist
- Mathematic : integrals / axioms / vector space
- Economics : supply / opportunity cost / elasticity / consumer surplus / demand /
comparative / advantage / deadweight loss

2. Economics trains you to …

- Think in term of alternatives
- Evaluate the cost of individual and social choices
- Examine and understand how certain events and issues are related
3. The Scientific method : observation theory and more observation
- Develops theories, collects, analyzes data to evaluate the theories
- Instead of testing theory in the laboratories like other scientist  economists use
observations
4. The role of Assumptions
- Economists make assumption in order to make the world easier to understand ( Eg: learn about
trade, assume )
 -

5. Economic Models
- Use models to simplify in order to improve our understand of the world
- 2 basic economic models :
 The Circular flow diagram
 Is a visual model of how the economy is organized and how participants in the
economy interact with each other
 The productions possibilities frontier
 Is a graph that shows the combinations of output that the economy can possibly
produce given the available factors of production and the available production
technology

Chapter 3
Interdependence and gains from trade
1/
- Econimics is the study of how societies produce and distribute goods in
an attempt to satisfy the wants and needs of its members, considering
that resource are limited
- One of 10 principles : Everyone is better off with TRADE
we try to explain interdependence not only among individuals but also
among nations.

A PARABLE FOR THE MODERN ECONOMY

- Assumption :
 Only 2 goods : meats and potatoes
 Only 2 people : the rancher and Famer
2 mạnh ai nấy sống
A chỉ trồng đckhoai tây
B chỉ chhawsc nuôi thịt
 Không giống nhau
  If trade, both people have more options for foods (Thương lượng
trao đổi hang hóa, đôi bên cùng có bên)
Cost of the production
- How to decide who produces what and how much ?
 Cost of the production
- Measured in 2 ways :
 Productivity (1 sp cần bnh input) – Number of Input Unit Required to
produce 1 unit of output  Absolute Advantage
 Opportunity Costs  Comparative Advantage

Absolute Advantage ( lợi thế tuyệt đối )

- The comparison among producers of a good according to their
Productivity  Absolute Advantage

Comparative Advantage ( lợi thế ss )

- Compares producers of a good according to their opportunity cost
- The producer who has the smaller opportunity cost of producing a good
is said to have a comparative advantage in producing that good
- Example :
Opportunity cost of 1oz of potatoes
 Of the rancher : ¼ of meat
 Of the famer : ½ of potatoes
 ¼ < ½ so the Famer should produce Potatoes

Absolute vs comparative Advantage

- Although it is possible for one person to have an absolute advantage in
both goods, it is impossible for person to have a comparative advantage
in both goods
- Comparative advantage and differences in opportunity costs are the
basics for specialized production and trade.

Comparative advantage and trade

- Whenever potential trading parties have differences in opportunities
costs, they can each benefit from trade.
- For both partíe to gain from trade, the prices at whichs they trade must
lie between the 2 opportunity costs

There are two ways to compare the

ability of two people producing a good.
 The person with a smaller opportunity

cost  comparative advantage.

4 factor: -

Xuất khẩu
Linh kiện , gạo , giày
China- usa- japna or korea
Nhập khẩu
Linh kiện , telephone, petro,
China- south korea – japna\

Điểm A B C là efficient level . sử dụng tất cả các nguồn để sant xuất ra

sản phẩm tốt nhất

CHAPTER 4
SUPPLY AND DEMAND
CUNG VÀ CẦU
FIRM : SUPPLY – provider-seller
HOUSEHOLD : DEMAND – buyer
1. Market and competition
- Market is a group of buyers and sellers of a particular good and service
- The terms Supply and demand rrefer to the behavior of people ... as they interact with one
another in markets.

2. Competitive market
- A competitive market is a market in which there are many buyers and sellers so
that each has a negligible impact on the market price.

3. Perfect competition
- Assumption: Markets are perfectly competitive
a. All products are the same
b. The buyers and sellers are so much numerous that no one can influence over price
c. Buyers and sellers are Price Takers
 Price takers : kh qtr mua bán bnh thì cũng phải trả cùng cái giá đó
- Other forms of markets :
 Monopoly ( độc quyền ) : one seller, control price ( xưa có Vietnam airline )
 OligopOligop: few sellers, control prices (những nhà cung cấp thông đồng với nhau để đưa
ra giá cả hợp lí ( hiệp hội xăng dầu, điện , nước)
 Monopolistic : many sellers each set a price

4. Demand
- Quantity demanded is the amount of a good that buyers are wiling and able to purchase.
- Law of demand : giá tăng  giảm sự tiêu thụ other things equal, the quantity demanded
of a good falls when the price of the good rises.

5. Demand schedule vs demand curve

- The demand schedule í Table that shows the relationship between the price of the good and
the quantity demanded
- The demand curve ( mỗi người có nhu cầu khác nhau tiêu thụ khác nhau sẽ có demand
curve khác ) illustrates how the quantity demanded of the good changes as its price varies
DOWNWARD sloping
6. Market demand vs individual demand
- Market demand refer to the Sum of all individual demand for a particular good or service
- Graphically, individual demand curves are summed horizontally to obtain the market
demand curve

move along : giá thay đổi  chỉ trượt trên đường

shift : yếu tố bên ngòi , consumer income, tastés, price of ralated good, expectation,
number ò buyers  trượt sang trái or phải
 7. Shift in the damand curve
Change in Demand
- A shift in the demand curve, either to the left or right
- Caused by any change that alters the quantity demanded at every price :
- Cùng 1 giá nhưng khả năng tiêu thụ sẽ thay đổi
 Consumer income
 Price of related goods : compliment ( bổ trợ ) – substitute ( thay thế )
 Taste : thị hiếu – trend
 Expectations
 Number of buyers số lượng người tiêu thụ

8 Supply
- Quantity supplied is amount of a good that sellers are willing and able to sell.
- The law of supply states that, other things equal the quantity supplied of a good rises when
the price of the good decreased

9 Supply schedule vs demand curve

- Supply schedule is table that shows the relationship giữa the price of the good and quantity
supplied.
Giá bán cao hơn  surplus
Giá bán thấp hơn  shortage
- Supply Curve illustrate how the quantity supplied of a good changes as its price varies
 UPWARD sloping
A change in Supply:

 Price : move along

 Input prices: Shift
 Technology: Shift
 Expectation: Shift ( miễn thuế nhìu ngừi đầu tư hơn , qta đến sk -> đầu tư các vấn
đề lquan ddeesn sk )
 Number of sellers : Shift

11. Supply and demand together

- Equilibrium ( điểm giao nhau ) refers to a situation in which the price has reached
the level where quantity supplied equals quantity demanded
 At intersection: EQUILIBRIUM PRICE & EQUILBRIUM QUANTITY
 EQUILIBRIUM PRICE : the price that balance quantity supplied and quantity
demanded
  EQUILIBRIUM QUANTITY : the quantity supplied and the quantity demanded at the
quilibrium price
a. Surplus: Price > equilibrium price
 Quantity supplied > quantity demanded
 There is Excess Supply or a Surplus
b. Shortage : price < equilibrium
 Quantity supplied < quantity demanded
 There is Excess Demand or a Shortage

CHAPTER 5
ELASTICITY SỰ CO DÃN
1. DEFINITION
- LAW of demand : everything equal, Price + quantity damanded –
- Elasticity is a measure of how much buyers and sellers respond to changes in market
conditions ( prices )

2. The elasticity of demand

- Price elasticity of demand is a measure of how much the quantity demanded of a
good responds to a change in the price of that good
- Price elasticity of demand is the percentage change in quantity demanded given a
percent change in the price.

3. Determinants of the price lasticity of demand:

 Availablility of close Substitutes ( denta P giá thay đổi 1 ít thì Q thay đổi rất lơn vì họ có
thể dễ dàng chọn những sp rẻ hơn )
 Necesssities vernus Luxuries ( giá luxuries product tangw 1 ít thì thay vì cùng số tiền đó
họ sẽ mua nhìu những thứ rẻ hơn )
 Definition of the market ( narrow elastic & wide inelastic ) ( đn thị trường quá lớn thì kh
có sp thay thế )
 Time horizon ( long run more elastic & short run inelastic )
 4. Computing the price elasticity of demand
- The price elasticity of demand is computed as the % change in the quantity demanded
divided by the % change in price
Price elasticity of demand = ( % change in quantity demanded ) / ( % change in price )
- Inelastic Demand
 Quantity demaded does NOT respond strongly to price changes

 Price elasticity of demand < 1

- Elastic demand
 Quantity demaded respond strongly to price changes
 Price elasticity of demand > 1

Price elasticity of supply = ( % change in quantity supplied) / (% change in price )

5. The Midpoint Method

Price elasticity of demand = (Q1-Q2)/ [(Q2+Q1)/2]

(P2-P1) / [(P2+P1)/2]

CHAPTER 6
GORVERMENR POLICIES
1. Controls on prices
- Price Ceiling : giá trần là giá cao nhất có thể bán ra
 Ngưng việc giá trên thị turruowgnf tăng dần
 Không được cao hơn PE vì nó sẽ ngăng việc giá tăng đến PE quá cao so với người dân
 Vấn đề của Price Ceilling : Shortage
- Price floor : giá nền là thấp nhất mà sp có thể bán ra
 Ngưng việc giá đầu đưa trên thị trường điều chỉnh
 Không được thấp hơn PE vì thấp hơn sẽ kh có lợi cho nguwofi sản xuất
 Vấn đề : Surplus

Vd : áp dụng minium wage : lương cua em là price của em ( wage = price ) nhìu người mún đi làm hơn
nhưng ít ngừi muốn thuê ngừi làm hơn  demand < supply

CASE STUDY
 CHAPTER 7
EFFICIENCY OF MARKETS

1. Welfare economics
- Is the study of how the allocation of resource affect economic well-being.
Equilibrium thì cả ngừi mưa và ngừi bán đều happy , giá TB ngừi mua muốn mua =
với giá ngừi bán muốn bán
- The equilibrium in a market maximizes the total welfare of buyers and sellers.

2. Consumer surplus ( lợi ích của ngừi mua khi tham gia trong market )
- Sự khác biệt trong giá mình chi trả và giá mình định giá
- Cái sự vui sướng chi mua đc cái đồ vật rẻ hơn mình nghĩ
- Giá càng rẻ  comsumer surplus càng lớn
- Willingness to pay is the maximum amount that a buyer is willing to pay a good
- Consumer surplus is the buyer’s willingness to pay for a minus the amount the buyer
actually for it
3. Producer surplus
- Sự khác biệt trong giá mình bán và giá mình định giá cho sản phẩm đó
- Niềm vui khi người bán bán đc giá cao hơn dự định
- Producer surplus is the amount a seller is paid for a good minus the seller’s cost
- It measures the benefit to sellers participating in a market

4. Market Efficiency
- Consumer surplus & producer surplus là 2 yếu tố để t có thể đo lường cái market efficiency
- Total surplus :
 CS + PS
Or
 Value to buyers – Cost to sellers
- Efficiency is the property of a resource allocation of maximizing the total surplus
- Also, care about equity – the fairness of the distribution of well-being among the various
buyers & sellers
 3 insight concerning Market Outcomes
a) Free markets allocate the supply of good to thẻ buyer who value them most
highly, as measured by their willingness to pay
b) The demand for goods to the sellers who can produce them at least cost
 c) Produce the quantity of goods that maximize the sum of consumer and
producer surplus

EXTERNALITIES AND MARKET INEFFICIENCY

- Efficient sacle : sản xuất hiệu quả nhất , chi phí sx thấp nhất
- Marginal revenue : lợi nhuận khi bán thêm đc 1 sản phẩm
- Marginal revenua = marginal cost
- Maximize revenue but minimize cost  maximize profit
- Sunk cost :