Lecture 1: Key Concepts & Trade Principles | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

Lecture 1: Overview 1. Basic concepts
- Scarcity: limited resources unlimited needs 
- Factors of production: N, K, L, H, Entrepreneurship
- 3 economic problems: what to produce, how to produce, for whom produce
- An economy  3 members: HHs, Fs, Gov & 3
systems: Command; Market (The circular flow model)
– tương tác giữa cả người mua và người bán + giải
quyết 3 câu hoi What, How, For whom; Mixed - Economic: + Micro vs Macro
+ Normative vs Positive statements 2. Methods (3 steps) 1) Observe ≠ See R
 esearch Questions: Causality (quan hệ nhân quả)
2) Modelize ≡ a theory to explain the relationship | simplify the real world by making assumption
+ “assumption” ~ “CETERIS PARIBUS”: keep other things being equal A theory includes: + Concepts + Type of relationship 
Correlation (có cùng quan hệ nhưng kh biết ai nguyên nhân ai kết quả)
Eg: Emotion of retailer <–> sales  Causality
Eg: experience ---(diminishy)---> wage  Moderaty
Eg: wage ---(gender)---> job satisfaction  Mediating
Eg: High education (healthier lifestyle)  – mediating  longer life expectancy + Mechanism 3) Testing model
Testing assumption (giả thiết) & Testing prediction WHY NATIONS TRADE? - Absolute advantage Assumption + 2 countries: Brazil vs VN + 1 input: labour + 1 product: footballs
+ Different in technology: Tech Br > Tech Vn Br: 5 days/ 1 fb & Vn:  10 days/ 1fb
 Cost Brazil < Cost VN  Price Brazil < Prize VN Brazil:  exporter & VN: importer
 Testing prediction sai: Mỹ tech luôn hơn VN...
 Đổi testing assumption thành 2 input: K, L VN nhiều L hơn thì sản 
xuất sp cần L; Mỹ sx sp cần K
(chỉ hợp lí tại thời điểm đấy cho đến khi lí thuyết mới ra đời)
CETERIS PARIBUS (Keep other things being equal) 3. Principles 3.1. Trade off
- Has to give up smt when making a choicie
- Reasons: Scarcity (sự khan hiếm)
- There is NOTHING such as a free lunch 3.2. Rational choices
- Rational ≡ Company costs (opportunity costs – the value of the BEST
foregone opportunity when u make a choice) vs benefit *eg: resource: 500k; 3h Opt 1: go to cinema Opt 2: go to work + keep 500k + earn 60k  Get 560k Opt 3: go to private tutor + keep 500k + earn 200k/1h  Get 1100k  Go to cinema costs 1100k 3.3. Marginal choices
- Margin: a small change from the current decision + A change in TB ≡ MB + A change in TC ≡ MC
=> optimal choice Q* (lựa chọn tối ưu)
If MB>MC or MB*Rational choice: TB (total benefit) vs TC (total cost)
+ Rational people make decision at the margin
Marginal choices: Marginal benefit X Marginal cost
MB (Q): the increase in TB (Q) from consuming/ producing 1 additional unit of product MC (Q): the increase in TC...
MB (Q) = TB (Q) – TB (Q-1) (tăng thêm 1 đơn vị)
= ΔTB/ ΔQ (mỗi lần tăng thêm nhiều hơn 1 đơn vị)
=dTB/dQ = TB (Q)’ (tăng thêm eg: 0.001 mg) MC (Q) = TC (Q) – TC (Q-1) = ΔTC/ ΔQ = dTC/dQ = TC (Q)’
Rule: Marginal choices: Max Net benefit: let MB = MC (tối đa hóa lợi ích dòng lựa chọn tối ưu)  NB (Q) = TB (Q) – TC (Q)
Optimal choice: By choosing Q* at which MB (Q) = MC (Q) (chọn Q tại
mức lợi ích cận biên bằng chi phí cận biên)
Eg: Q=3 Q tại MB, MC là của sp thứ 3 còn Q ở TB, T  C là tổng cả 3 sp
4. People do respond to incentive (khuyến khích)
PRODUCTION POSSIBILITY FRONTIER (PPF)
- PPF: All MAX combination of goods/services that an
economy can produce with GIVEN resources and technology Eg: Assume: + 1 input: Labor + 2 outputs: + pork + rice Pork Rice A 0 25 B 5 23 C 10 20 D 15 16 E 20 10 F 25 0 CONCLUSION:
-All points outside PPF  UNATTAINABLE
-All points inside PPF  ATTAINABLE & INEFFICIENT
- All points on PPF  ATTAINABLE & EFFICIENT -PPF: + bows outward + downward slope ≡ Trade-off
*Eg: Opportunity cost of pork: the amount of rice sacrified for 1 additional unit of pork
+ the more you do smt, the higher opportunity cost is Pork Rice OC pork OC rice A 0 25 B 5 23 2/5 5/2 C 10 20 3/5 5/3 D 15 16 4/5 5/4 E 20 10 6/5 5/6 F 25 0 10/5 5/10 Pork increase OC pork incr 
ease => Law of increasing OC
OC pork = Δrice/Δpork = ΔY/ΔX = SLOPE
OC rice = Δpork/Δrice = ΔX/ΔY -invisible hand Lecture 2: Supply & Demand 1. Demand (D) 1.1. Def -All quantity tha