Microeconomics Fundamentals for Year 13

Understanding Individual Economic Behaviour Market Forces and Consumer Choice NZ Curriculum Economics

WALT: We Are Learning To...

Understand the basic principles of microeconomics Analyse supply and demand relationships Evaluate consumer and producer behaviour Apply economic concepts to real-world NZ examples

Success Criteria

I can explain the law of supply and demand I can draw and interpret economic graphs accurately I can identify market equilibrium points I can apply economic theory to New Zealand case studies I can evaluate the impact of price changes on consumer behaviour

What is Microeconomics?

Think about your last purchase decision What factors influenced your choice? How did price affect your decision?

Microeconomics Defined

Study of individual economic units Focus on consumers, firms, and markets How individuals make choices with limited resources Examines price formation in specific markets Contrasts with macroeconomics (whole economy)

Microeconomics vs Macroeconomics

{"left":"Individual consumer behaviour\nSingle firm decisions\nSpecific market prices\nSupply and demand in one market\nPersonal income and spending","right":"National economic growth\nUnemployment rates\nInflation across the economy\nGovernment fiscal policy\nInternational trade balances"}

The Law of Demand

As price increases, quantity demanded decreases As price decreases, quantity demanded increases Inverse relationship between price and quantity Assumes all other factors remain constant (ceteris paribus) Foundation of consumer behaviour theory

Demand in Action: Coffee Prices

Scenario: Local café increases coffee price from $4 to $6 Predict what happens to coffee sales Draw a simple demand curve Discuss with a partner your reasoning

The Law of Supply

As price increases, quantity supplied increases As price decreases, quantity supplied decreases Positive relationship between price and quantity Higher prices incentivize more production Suppliers seek maximum profit

Market Equilibrium: Where Supply Meets Demand

Factors Affecting Demand

Consumer income changes Price of substitute goods Price of complementary goods Consumer tastes and preferences Population size and demographics Future expectations

Application Challenge

The government increases minimum wage in NZ How might this affect demand for restaurant meals? Consider both income effect and price effect What about demand for luxury goods?