Review doesn t like to test definitions need to know definitions to solve problems Scarcity resources are scarce 7 principles of microeconomics Trade offs efficiency vs equity Opportunity cost Thinking at the margin Positive vs normative economics this class is mostly positive Markets perfectly competitive all the goods produced are the same and all consumers producers are price takers Demand supply Schedule curve individual curves market curves law of supply law of demand change in quantity demanded vs change in demand along the curve or shifting the whole curve Demand shifters movements of the whole curve substitutes complements normal inferior goods Supply shifters shift supply curve in or out Equilibrium not at equilibrium excess supply or excess demand Comfortable shifting demand and supply curves around Elasticity Price elasticity of demand Cross price elasticity of demand Income elasticity of demand Supply elasticity Inelastic demand curves elastic demand curves unit elastic demand curve Calculate elasticity mid point method How price elasticity s affect expenditures Willingness to pay related to demand curve Consumer surplus how to find it how to measure it and what it means Producer surplus Total surplus Efficiency economy maximizes total surplus economic pie as big as possible Government intervention Price floors Price ceilings Quantity ceilings kidney donations Statutory tax incidence economic tax incidence economics care about economic tax incidence effect of t axes on deadweight loss efficiency of the economy Deadweight loss comes from distortion of behavior raised by taxes Current events know what they are and why there are important Jobs report Income and poverty in America census beuro report Federal tax system o Fiscal cliff o 47
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