ECO 313 Intermediate Microeconomics
Chapter 1: Supply, Demand, and Equilibrium:
Law of Demand: The observation that when the price of a good
goes up, people will buy less of that good.
Quantity Demanded: The amount of a good that a given individual
Chapter 4: Consumers in the Market Place
Changes in Income:
If your income rises, then your budget line will now shift outward, demonstrating that you
can afford more of good Y.
If your income increases by $5, given any point on your former budget line,
Chapter 5: The Behavior of Firms
Weighing Costs and Benefits:
Firm: An entity that produces and sells goods, with the goal of maximizing profits.
Marginal Benefit: the additional benefit gained from the last unit of an activity.
Marginal benefit will be
Chapter 3: The Behavior of Consumers
Indifference curve: A collection of baskets, all of which the consumer considers equally
Properties of indifference curves:
1. Indifference curves slope downward.
This is because if it sloped upward,
Chapter 2: Prices, Costs, and the Gains from Trade
Why do people trade?
1. People trade because they have different tastes
2. People trade because they have different abilities
Absolute vs. Relative Prices
The number of dollars that can be
Chapter 6: Production and Costs
Production and Costs in the Short Run:
Assumption: In the short run, firms can only vary their labor, not their capital.
Total Product (TP): the quantity of output produced by the firm in a given amount of time.
Q: In which year are you happier?
A: We are happier in 2014. This is due to the higher indifference curve that resulted
from the adjusting income and prices in both beer and pizza. After the new budget
Graded assignment #2
a. You are buying fewer circus tickets than you were before.
b. Yes, you can still afford your original market basket, as both the previous
budget line and the new budget line will inter