Final Study Guide Lecture and Textbook ECO 2023 Dr McCaleb Table of Contents FORMULAS TO KNOW 3 CHAPTER 1 NOTES 6 ECONOMIC METHODOLOGY LECTURE 12 CHAPTER 3 NOTES 15 SCARCITY AND MARGINAL ANALYSIS LECTURE 19 PRODUCTION POSSIBILITIES AND COMPARATIVE ADVANTAGE LECTURE 23 CHAPTER 4 NOTES 26 DEMAND AND SUPPLY LECTURE 31 CHAPTER 5 NOTES 40 ELASTICITIES OF DEMAND AND SUPPLY LECTURE 44 CHAPTER 6 NOTES 52 CHAPTER 8 NOTES 55 EFFICIENCY OF MARKETS LECTURE 57 CHAPTER 7 NOTES 62 PRICE CEILINGS AND PRICE FLOORS LECTURE 64 CHAPTER 10 NOTES 67 EXTERNALITIES LECTURE 69 CHAPTER 11 NOTES 74 PUBLIC GOODS AND COMMON RESOURCES LECTURE 76 CHAPTER 14 NOTES 80 COST AND PROFIT LECTURE 82 CHAPTER 15 NOTES 86 PERFECT COMPETITION LECTURE 88 CHAPTER 16 NOTES 92 MONOPOLY LECTURE 94 CHAPTER 17 NOTES 99 CHAPTER 18 NOTES 100 MONOPOLISTIC COMPETITION AND OLIGOPOLY LECTURE 101 CHAPTER 12 NOTES 104 SPECIAL TOPICS UNCERTAINTY AND INFORMATION LECTURE 105 CHAPTER 20 NOTES 109 INEQUALITY POVERTY AND INCOME DISTRIBUTION 110 EXAM 1 REVIEW 113 EXAM 2 REVIEW 115 EXAM 3 REVIEW 117 2 Formulas To Know Midterm 1 Slope of a Line o M Change in Y over change in X o M Y X o M Y2 Y1 X2 X1 Net Benefit NB o NB Total Benefit Total Cost o NB TB TC The optimal amount of any activity o Is when the Marginal Benefit is equal to the Marginal Cost o When MB MC Marginal Benefit MB o MB Change in Total Benefit Change in Quantity o MB TB Q o MB TB2 TB1 Q2 Q1 Marginal Cost MC o MC Change in Total Cost Change in Quantity o MC TC Q o MC TC2 TC1 Q2 Q1 When to increase the amount of an activity Production Possibilities Frontier When to decrease the amount of an activity Production Possibilities Frontier o If Marginal Benefit Marginal Cost o If MB MC o If Marginal Cost Marginal Benefit o If MC MB Labor Force LF o Employed Unemployed o E U Market Equilibrium o When the quantity demanded equals the quantity supplied o Equilibrium QD QS Midterm 2 Price Elasticity of Demand o Elasticity Change in Quantity Demanded Change in Price o QD P Midpoint Method to Calculating the Price Elasticity o Percent Change in Quantity New Quantity Initial Quantity New Quantity Initial Quantity 2 x 100 o Q Q2 Q1 Q2 Q1 2 x 100 o Percent Change in Price New Price Initial Price New Price Initial Price 2 x 100 o P P2 P1 P2 P1 2 x 100 3 Price elasticity of supply o Elasticity change in quantity supplied change in price o QS P Cross elasticity of demand o Elasticity change in quantity demanded of a good change in the price of one of its substitutes or complements o QD PS C Income elasticity of demand o Elasticity change in quantity demanded change in income o QD I Total Revenue and the Price Elasticity of Demand o Total Revenue TR Total Expenditure TE Price P x Quantity Q o TR PQ or TE PQ o Change in Total Revenue Change in Price Change in Quantity Demanded o TR P Q Consumer Surplus o Consumer Surplus CS Marginal Benefit Price o CS MB P Producer Surplus o Producer Surplus PS Price Marginal Cost o PS P MC Efficient Quantity o When Marginal Benefit Marginal Cost o When MB MC Market Equilibrium o When quantity demanded quantity supplied o Where QD QS Consumer Surplus quantity consumed o CS MB QD Producer Surplus supplied o PS MC QS Total Surplus Deadweight Loss and price TSI o The marginal benefit from a good or service in excess of the price paid for it summed over the o The price of a good in excess of the marginal cost of producing it summed over the quantity o The sum of producer surplus and consumer surplus o TS PS CS o The Total Surplus of Efficient quantity and price TSE the total surplus of the inefficient quantity 4 o The marginal private cost with the ITQ equals the marginal social cost and the equilibrium with the o TSE TSI Marginal Social Benefit Marginal Social Cost o The sum of the marginal private benefit and the marginal external benefit o MSB MB MEB o The sum of the marginal private cost and the marginal external cost o MSC MC MEC Midterm 3 Individual Transferrable Quotas ITQ ITQ is efficient o MC Price of ITQ MSC Private Property Rights o The marginal cost of fishing equals the marginal social cost o S MC MSC Economic Profit o Total Revenue minus the total cost o Price x Quantity explicit costs implicit costs o PQ EC IC o PQ Total Fixed Cost Total Variable Cost o PQ TFC TVC Total Cost o Explicit Costs Implicit Costs o Total Fixed Cost Total Variable Cost o Opportunity Cost Average Total Cost o Average Fixed Cost Average Variable Cost o AFC AVC o Total Cost Quantity o TC Q Marginal Revenue Equals Price o When an additional unit is sold the increase in total revenue equals the price o TR Q MR P Average Fixed Cost o Total Fixed Cost Quantity o TFC Q Average Variable Cost o Total variable cost Quantity o TVC Q Marginal Cost 5 o Change in Total Cost Quantity o TC Q Chapter 1 Notes Citation Scarcity Economics Microeconomics Macroeconomics Bade Robin and Michael Parkin Foundations of Microeconomics 6th ed Boston Pearson Addison Wesley 2013 Print The condition that arises because wants exceed the ability of resources to satisfy them 2 Our ability to satisfy our wants and needs is limited by our resources time money land labor capital entrepreneurship etc Due to these limits everyone the lower middle and upper class is left with unsatisfied wants Scarcity is what causes decisions or trade offs We must choice between the available alternatives The social science that studies the choices that individuals businesses governments and the entire societies make as they cope with scarcity the incentives that influence those choices and the arrangements that coordinate them 2 The study of the choices that individuals and businesses make and the way these choices interact and are influences by governments 2 An example of an individuals choice is whether or not to buy an iPhone versus an Android The study of the aggregate or total effects on the national economy and the global economy of the choices that individuals businesses and governments make 3 An example of a macroeconomic choice is whether or not to raise taxes or how much money to borrow from other countries and what to spend that money on Goods and Services The objects goods and the actions services that people value and produce to satisfy human wants 3 An example of a good is a shoe or any other physical material that can be used or sold There are two types of goods intermediate goods goods that are used to make a final product and final goods the final product This determines the quantities or amount of something that is
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