Micro formula Sheet

ingeras;firtic mine;
•
Principles :
economics
happen because there is
scarcity that results in
tradeoffs Consumer Surplus : difference between
p
maxamountapersonis
p
willing topayandibmarhetpria
" Mc)
• Ockham's Razor : delete irrelevant details
••
Area D= E' b. h
Pxo pxo
☐
Models formal : statement /
theory of presumed variable relationships I •
✗

Gterisparibus Producer Surplus difference between current marhetpriaandcostofproductionofafirm

"
☐
All else while others are kept
"
:
equal .
analyze relationships between Zvar , .
:

☐
Opportunity cost (Oc) : best alternative that when
taking decisions pcsand PS in market equilibrium Total surplus is Cst Ps
give up
=
we •

Smc
Marginalism
☐
Analysis of incremental cost benefit Total
"
:
or from a decision p
Revenue TR =P -

Q
,

Production possibility frontier (Ppt) graph : that shows all combinations of goods
ps
VC / D
•
the
quadrilateral including psandvcis Total Revenue
A ,,

Efficient
•

Deadweight loss
µ
moxa A. B. Care efficient and services produced if resources are used efficiently
•
(Dwt) : total loss from over /underproduction
•E
o

• D oc
D is not overproduction underproduction
P S P
S

mq§→• C- is not considered p ✓

DWL
p •
B

D D
X ,,
Xo X

Demand
,
✗ I
✗0

illustrating how much of product will purchased at given time scenario ( Dshiftsup )
:
•
downtrend curve a
be scenario sshifts Down
ell p

.lk?,7Re=mp.(awofDemand:P&,QP/ ③ total inelastic Riot Hot

① normal pxof.xof.PH?7RF,vcF CSF ,B ? emo
, , ,

Pf Qb ② Total elastic

Government policies
,

§ Disaffected by income
, price substitute price ,
,
consumers
:
measures taken
by gout to regulate market
① Q×VsI( income ) ② QX Py Vs •
price
rationing :
process where system allocates goods /services to consumers on
shortage
• It Q✗TtfI&Qd normal •PyPD×tDPy&D×t substitute •
Invisible hand :
metaphor for price setting mechanism
• If 'P×d BIIPxtinj.cn.or•PyÉD×bHPyÉD×t complimentary Reasons for gov't intervention failure
market too
high / low taxes incentives
:
price
•

IFÉ ,Q×→
" , , ,

PyÉdDxa•
'

•
neutral
'
independent
D
Price ceiling
&
:
maxpriaforagoodorserviasetby Gout benefits buyers
g
P
.
.
govt sells difference
③ R, vs Dx ④ DX vs Ukip shift :
change to
Dxcorresponding gov
sells XD Xs
-
Pm"
: :
gout expenses Xs
-

Xp
Po •
"
•
pxf.Qxbtfpxt.IQ/flawofdemand.ut.DxTdfUto,Dyt to relationships Pando,
%" : :
☐ ✗
•
÷
:

is
new
Xo :X , XD Xo Xs
✗

•
Rift ,Q×d • total inelastic •

exptvc ☐ DXF Movement :

change Qbychangep
in
•
Price floor : a minimum
price .

benefits supplies ,
Govt buys excess supply
•
Pxfixed ,
=D total elastic market demanded individual curve
•
tax incidence
P Stax
: ultimate distribution ofataxburden (can be to seller or
buyer)
% DQX s

Price elasticity of demand e =

%DP× est elastic
,
eel unitary ocecl inelastic B
B- Ps=tax taxperunit : ✗ &
,
P☐F ,
Pst
Pxo

( Ps

Total TR =P if tax
revenue eco ,
something is
wrong % gov
.

Xi Xo

Supply :
upstanding curve
illustrating relationship between Pano of good supplied International trade
law of supply supply determinants • world price :
price of a
good in the world market

pFQT^MPtQ& ① wage ② mpcctech ) ③ exp guture price ④ •

Domestic Price :
opportunity cost of good on the domestic market
p

si.mcmc-wp-miwfst.tl/wbstMpef.stfMpldstexpto,stvPeypl ,sFNsf,sFdNStSt If Domestic ptworldp Domestic p > world p

g shift Ds : price , tech , expect .NmouementAQ :

price of good country has comparative advantage world has comparative advantage

export the good import the good

Equilibrium :
point where demand and supply meet
P
Exporting Country Bet aft D
P
Importing Country before aft
ABD
D
BD
"
Sbom CS AB A -
B
S☐°m cs
A

individual has effect Goods

market
homogeneous only price affects
A
PS PS
player
B
☐
C D
•
no on •
are •

consumers BCD BD Bc C -

C TS ABC ABCD D B D
TS ABC ABCD ☐

Demand equilibrium point Excess Supply

C
excess A- is Doom Doom
D p K ,
S S

XD > Xs Px , • •
Xs >
XD
A

to
myself
Pxo Pxo
•
Prices rise
•

a Priastendtofall Note
Px ,
• •

☐
shortage ,
☐
surplus
•
read word byword every Q
✗
Xs Xo Xp XD Xo Xs ✗

• take time
my
•
explain clear each answer

•
'

23m£ }?
 2/3 v
(Represource) 1) AV2 =
=
v 90.2/3
= 60
=

68/6 18 10/4 5
=

1
ATC
AVC -

FC TC =
-

VC

UC TC (FC +
=

-agecerone

shortrun-atleastoneimputisfixed(only ad see

(no supply curve) (price maker n o tprice taker)

(firm has market power)

is above
set eg. price
bimdling price floor always
trade allows specialization and increases output

complete downward slopingdemand

save
competitive
large of small
monopolistically girons
hr.

6) epelcientscaleoneorproductionoccurswhenMandlAtccollide
imposed market.
seroyers in

5) a shortage results
is on a
when:a binding arice
ceiling

airline 15,000
=