Microeconomics chapter 1 notes:
economic way of thinking - A framework to analyze solutions to economic problems.
Gives you the power to reach informed conclusions about what is happening in the real
economic analysis - Helps you make better decisi
Macroeconomics chapter 5 notes:
inferior good - a good whose demand curve shifts leftward when the incomes of buyers
substitution effect - the change in the quantity demanded of a good that results because
buyers switch to or from substitutes whe
Microeconomics Chapter 6 notes:
excess demand - the amount by which quantity demanded exceeds quantity supplied
when the price of a good lies below the equilibrium price
price ceiling - a max. allowable price, specified by law
change in the quantity deman
Microeconomics chapter 2 notes:
systematic decisions - Economists assume that individuals act as if motivated by selfinterest and respond predictably to opportunities for gain.
Self-interest The pursuit of one's goals, does not always mean increasing one'
Microeconomics Chapter 3 notes:
market - an institution that brings together buyers and sellers.
Markets explained on the basis of supply and demand - assume many buyers and many
sellers of a standardized product
supply curve - a curve or schedule showing
Microeconomics chapter 7:
seller's surplus - the difference between the price received by the seller and his or her
total surplus - the difference between the buyer's reservation price and the seller's
cash on the table
Microeconomics chapter 4 notes:
efficient quantity - the quantity that results in the maximum economic surplus from
producing and consuming the good
economic efficiency - condition that occurs when all goods and services are produced
and consumed at their
Microeconomics chapter 9 notes:
Perception of Luxury or Necessity - The more we perceive the good to be a luxury, the
more elastic our response to to price change.
Time Frame Consumers have to Adjust to a Price Change - The longer the time over
Microeconomics chapter 11 notes:
Production Function - the relationship between the quantity of inputs a firm uses and
the quantity of output it produces
Fixed Input - an input whose quantity is fixed for a period of time and cannot be varied
Microeconomics chapter 10 notes:
Price Elasticity of Supply - Measure of responsiveness of a producer's (seller's) quantity
supplied to a change in the price of the good.
Price Elasticity of Supply, Determinants There is only one determinant of price elas
Microeconomics chapter 8:
Price Elasticity of Demand Formula/Mathmatical Symbol:
Elasticity = the percentage change in quantity demanded divided by the percentage
change in price.
E = % in Qd / % in P
Coefficient of Elasticity - It is the ratio of the per