Microeconomics Review #1



|Unit 2: Demand, Supply, and Consumer Choice |

|Demand* |Supply* |

|The Law of Demand: |The Law of Supply: |

|P ______ Qd _______ |P ______ Qs _______ |

|P ______ Qd _______ |P ______ Qs _______ |

|Why is demand downward sloping? |Why is supply upward sloping? |

|1. | |

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|2. | |

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|3. | |

|Changes in Quantity (Moving Along the Curve) |

|What changes quantity demanded? |What changes quantity supplied? |

|Changes in Demand and Supply (Shifting the Curve) |

|What changes demand? (5 Shifters of Demand) |What changes supply? (6 Shifters of Supply) |

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|Substitutes : Price of A↑ Demand for B ____ |Normal Goods: Income ↑ Demand _____ |

|Price of A↓ Demand for B ____ |Income ↓ Demand _____ |

| | |

|Complements: Price of A↑ Demand for B ____ |Inferior Goods: Income ↑ Demand _____ |

|Price of A↓ Demand for B ____ |Income ↓ Demand _____ |

|Equilibrium and Disequilibrium* |

| | |

|Shortage Surplus |Equilibrium- Qd____Qs |

|[pic] | |

| |Shortage- Qd____Qs |

| | |

| |Surplus- Qd____Qs |

| |Government Controls* |

| |Price FLOORS go ______________ equilibrium and result in a|

| |_________. |

| | |

| |Price CEILINGS go _____________ equilibrium and result in |

| |a _________. |

|Consumer Surplus (CS), Producer Surplus (PS), and Efficiency* |

|Before tax |[pic] |

|CS before tax: | |

|PS before tax: | |

|After Tax | |

|Tax per unit: | |

|CS after tax: | |

|PS after tax: | |

|Dead weight loss: | |

|Total tax revenue to gov: | |

|Total spending by buyers: | |

|Total revenue to sellers: | |

|10. Amount of tax buyer pay: | |

|11. Amount of tax sellers pay: | |

|Double Shifts in Demand and Supply* |Elasticity of Demand* |

|If demand increase AND supply increases, what |Inelastic Demand (ex: gas) |

|happens to P _____ Q_____? |Characteristics: |

| |1. |

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| |2. |

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| |3. |

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|Rule: | |

| |Elastic Demand (ex: soda) |

| |Characteristics: |

| |1. |

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| |2. |

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| |3. |

|Elasticity of Demand Coefficients* |Total Revenue Test* |

|Perfectly Inelastic = |Inelastic Demand |

|Relatively Inelastic = |When price ↑, TR ____ |

|Unit Elastic = |When price ↓, TR ____ |

|Relatively Elastic = |Elastic Demand |

|Perfectly Elastic = |When price ↑, TR ____ |

| |When price ↓, TR ____ |

*See videos on YouTube channel ACDCLeadership

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