Introduction to Microeconomics
Introduction
Demand
Supply
Market Supply and Demand
2.301 Microeconomics
Cohort 1.1
Term 4, 2013
Continuous Double Auction Market
Introduction
Demand
Supply
Market Supply and Demand
Welcome!!
Continuous Double Auction Market
Introduction
Demand
Supply
Market Supply and Demand
Continuous Double Auction Market
Introduction
• Microeconomics is the study of how individuals and firms,
assumed to be self-interested, make constrained decisions in order to make themselves as well off as possible.
• It helps explains how the actions of all participants in a
market (buyers and sellers) determine prices and how prices influence the decisions and actions of individual
buyers and sellers.
• It does this through the development and analysis of
models.
Introduction
Demand
Supply
Market Supply and Demand
Continuous Double Auction Market
Three Fundamental Questions
Due to scarcity, people need to make trade-offs.
In society these trade-offs appear as three fundamental questions: • What goods and services are produced?
• How are those goods and services to be produced?
• Who gets those goods and services?
Prices answer all of these important questions by influencing decision-makers. Interaction between consumers and firms takes places in markets. Introduction
Demand
Supply
Market Supply and Demand
Continuous Double Auction Market
Models
• Microeconomics (and all of engineering, physics, etc.)
makes use of models to explain the relationships between various relevant quantities of interest.
• A simplification of reality that captures the most relevant
features to derive meaningful conclusions.
• Developing a good model is often a balancing act between
realism vs. tractability.
• Important to make the right simplifying assumptions.
• Largely an art that one develops with experience.
Introduction
Demand
Supply
Market Supply and Demand
Demand
Supply
Market Supply and Demand
2.301 Microeconomics
Cohort 1.1
Term 4, 2013
Continuous Double Auction Market
Introduction
Demand
Supply
Market Supply and Demand
Welcome!!
Continuous Double Auction Market
Introduction
Demand
Supply
Market Supply and Demand
Continuous Double Auction Market
Introduction
• Microeconomics is the study of how individuals and firms,
assumed to be self-interested, make constrained decisions in order to make themselves as well off as possible.
• It helps explains how the actions of all participants in a
market (buyers and sellers) determine prices and how prices influence the decisions and actions of individual
buyers and sellers.
• It does this through the development and analysis of
models.
Introduction
Demand
Supply
Market Supply and Demand
Continuous Double Auction Market
Three Fundamental Questions
Due to scarcity, people need to make trade-offs.
In society these trade-offs appear as three fundamental questions: • What goods and services are produced?
• How are those goods and services to be produced?
• Who gets those goods and services?
Prices answer all of these important questions by influencing decision-makers. Interaction between consumers and firms takes places in markets. Introduction
Demand
Supply
Market Supply and Demand
Continuous Double Auction Market
Models
• Microeconomics (and all of engineering, physics, etc.)
makes use of models to explain the relationships between various relevant quantities of interest.
• A simplification of reality that captures the most relevant
features to derive meaningful conclusions.
• Developing a good model is often a balancing act between
realism vs. tractability.
• Important to make the right simplifying assumptions.
• Largely an art that one develops with experience.
Introduction
Demand
Supply
Market Supply and Demand