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. | |
| | |
|2. | |
| | |
|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) |
| | |
| | |
| | |
| | |
|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. |
| | |
| |2. |
| | |
| |3. |
| | |
| | |
| | |
|Rule: | |
| |Elastic Demand (ex: soda) |
| |Characteristics: |
| |1. |
| | |
| |2. |
| | |
| |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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