EC 301 Micro Chapters 1 and 2 - Custom Scholars
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EC 301 Micro Chapters 1 and 2

question
Law of Demand
The demand curve is downward sloping.
question
Determinants of Demand
income
Price of substitutes
Price of complements
Population
Consumer Expectations
question
The Demand Function
Qxd = f(Px ,PY , M, H,)
-Qxd = quantity demand of good X. -Px = price of good X.-PY = price of a substitute good Y.-M = income.-H = any other variable affecting demand
question
Shift down on the curve
Change in quantity demanded
question
Shift in the curve
Increase or decrease in demand
question
Consumer Surplus:
The value consumers get from a good but do not have to pay for
question
Law of supply
Upward sloping
question
Supply shifter
input prices
technology
government regulations
number of firms
substitutes in productions
taxes
producer expectations
question
The supply function
QxS = f(Px ,PR ,W, H,)
-QxS = quantity supplied of good X.
-Px = price of good X.
-PR = price of a related good -W = price of inputs (e.g., wages)
-H = other variable affecting supply
question
Full Economic Price
The dollar amount paid to a firm under a price ceiling, plus the non pecuniary price.
question
PF = Pc + (PF - PC)
PF = full economic price•PC = price ceiling•PF - PC = nonpecuniary price
question
Elasticities
How responsive is variable "G" to a change in variable "S
question
Elasticity equation
change in g/ change in s percentage
question
elastic
greater than 1
question
Inelastic
less than 1
question
Unitary
equal to 1
question
Perfectly Elastic Graph
straight horizontal line
question
perfectly inelastic
straight vertical line
question
Elastic Means
Increase (a decrease) in price leads to a decrease (an increase) in total revenue.
question
Inelastic
Increase (a decrease) in price leads to an increase (a decrease) in total revenue.
question
Unitary
Total revenue is maximized at the point where demand is unitary elastic.
question
Factors Affecting Own Price Elasticity
available substitutes, time, expenditure share
1 of 22
question
Law of Demand
The demand curve is downward sloping.
question
Determinants of Demand
income
Price of substitutes
Price of complements
Population
Consumer Expectations
question
The Demand Function
Qxd = f(Px ,PY , M, H,)
-Qxd = quantity demand of good X. -Px = price of good X.-PY = price of a substitute good Y.-M = income.-H = any other variable affecting demand
question
Shift down on the curve
Change in quantity demanded
question
Shift in the curve
Increase or decrease in demand
question
Consumer Surplus:
The value consumers get from a good but do not have to pay for
question
Law of supply
Upward sloping
question
Supply shifter
input prices
technology
government regulations
number of firms
substitutes in productions
taxes
producer expectations
question
The supply function
QxS = f(Px ,PR ,W, H,)
-QxS = quantity supplied of good X.
-Px = price of good X.
-PR = price of a related good -W = price of inputs (e.g., wages)
-H = other variable affecting supply
question
Full Economic Price
The dollar amount paid to a firm under a price ceiling, plus the non pecuniary price.
question
PF = Pc + (PF - PC)
PF = full economic price•PC = price ceiling•PF - PC = nonpecuniary price
question
Elasticities
How responsive is variable "G" to a change in variable "S
question
Elasticity equation
change in g/ change in s percentage
question
elastic
greater than 1
question
Inelastic
less than 1
question
Unitary
equal to 1
question
Perfectly Elastic Graph
straight horizontal line
question
perfectly inelastic
straight vertical line
question
Elastic Means
Increase (a decrease) in price leads to a decrease (an increase) in total revenue.
question
Inelastic
Increase (a decrease) in price leads to an increase (a decrease) in total revenue.
question
Unitary
Total revenue is maximized at the point where demand is unitary elastic.
question
Factors Affecting Own Price Elasticity
available substitutes, time, expenditure share

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