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 aroundElasticity - 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 meansProducer surplus Total surplusEfficiency >> economy maximizes total surplus; economic pie as big as possibleGovernment 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 systemo Fiscal cliffo
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