Principles Of Economics Asia-pacific Edition May 2026

A new factory opened in the industrial park near Bình Dương, bringing 2,000 workers who commuted past Linh’s street. Demand for breakfast increased —the demand curve shifted right. Linh raised the price from 35,000 VND to 40,000 VND. At the higher price, she could justify the second pot (lower opportunity cost because revenue per bowl was higher). Quantity supplied increased to 110 bowls. Equilibrium moved.

When a typhoon damaged the cinnamon crop in the Central Highlands, cinnamon prices tripled. Linh’s pho spice mix cost more. She worried: if she raised the price, would customers leave? She tested a 5,000 VND increase. Sales dropped only 2%. Demand was inelastic —workers needed quick, hot breakfast. She passed most of the cost to consumers. principles of economics asia-pacific edition

The factory created positive externalities (more customers) but also negative externalities (exhaust fumes and litter). Linh started a recycling program: customers who returned a clean bowl got a 2,000 VND discount. This internalized part of the litter externality. The city noticed and offered her a tax deduction for being the first "green pho" shop. A new factory opened in the industrial park