most important micro graphs. non-graph concepts comparative advantage problems –calculating...
TRANSCRIPT
Most Important Micro Graphs
Non-graph Concepts
• Comparative Advantage problems– Calculating opportunity costs– Calculating terms of trade
• Elasticity– Calculating price elasticity of demand– Calculating arc elasticity– Elastic, inelastic, unit elastic– Perfect elasticity, perfect inelasticity– Cross-elasticity
• In product market, MC = MR• In factor market, MRP = MFC
Non-graph Concepts
• Perfect Competition– Define, and required conditions (price takers,
etc.)– Finding profit or loss– Economic (Supernormal) vs. Accounting
(Normal) profits– Shutdown price– Breakeven price
• Monopolies and Monopsonies– Define, required conditions
• Imperfect Competition– Monopolistic competition– Oligopoly
Non-graph Concepts
• Unions• Business regulation • Trade restrictions• Income distribution and inequalities
Demand
• “Demand” v. “Quantity Demanded”
• Substitutes• Complements• Other Factors• Price Elasticity of
Demand• Price Arc Elasticity
of Demand
Quantity
Price
D
Supply
• “Supply” v. “Quantity Supplied”
• What “supply curve means”
• Factor costs• Supplier Substitutes• # of Suppliers• Price elasticity of
supply• Price arc elasticity
of supply
Quantity
Price S
D & S Together
• How to graph:– Shortages– Surpluses– Price ceilings– Price floors
****Difference between “Demand” and “Quantity Demanded”
****If 2 curves shift, only one variable can be known
Elasticity and Ranges of Curve
Quantity
Price
D
Elastic
Unit Elastic
Inelastic
Failure to produce at equilibrium
Consumer and Supplier Surpluses
Maximizing Utility
y
y
x
x
P
MU
P
MU
Indifference Curves
Demand: Substitution and Income Effect
Total Product Curve
y
y
x
x
P
MU
P
MU
Total Costs, Total Fixed, Total Variable
Marginal Cost
All Cost Curves Together
Know how the curves relate!
Long Run Cost Curve
Short-run Perfect Competition
Long-run Perfect Competition
Monopoly
Long-run Monopolistic Competition
Game Theory Matrix
Price Descrimination
Marginal Revenue Product
MRP = MFC
Supply of Labor
Monopsony
Tax Incidence
Market Failure: Social Costs
Market Failure: Social Benefits
Domestic Effect of Exports and Imports