Micro Midterm Study Guide
Micro Midterm Study Guide ECON 105
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This 0 page Study Guide was uploaded by Michaela Clarke on Wednesday February 10, 2016. The Study Guide belongs to ECON 105 at DePaul University taught by Anthony Krautmann in Winter 2016. Since its upload, it has received 18 views. For similar materials see Priciples of Microeconomics in Economcs at DePaul University.
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Date Created: 02/10/16
Microeconomics Midterm Study Guide Midterm Mon Feb 15 Important Vocab gt gt gt Opportunity Cost the cost of a decision what did you give up as a result of a choice Law of Diminishing Returns the more you do an activity the more difficult it is to continue pursuing Ceteris Peribus guidelines that allow us to focus on one variable at a time while holding all others constant Rate of Exchange terms of a trade determined in the World Market Law of Demand people buy more when the price is low rather than when the price is high Law of Supply sellers are willing to sell more when the price is high rather than when the price is low Market Equilibrium price in the market allows the market to clear when the amount people want to buy is equal to the amount people want to sell quantity exchanged is equal to price product is sold Market determines the amount consumers are willing to buy and amount suppliers are willing to sell Normal Good when income rises people demand more of product Inferior Good when income rises people demand less of product when income decreases poor people demand more Complements in Consumption products consumed together Substitutes in Consumption consumers willing to consume one or the other Price Ceiling government is setting a maximum allowed price for the product to be sold at Price Floor government sets a minimum allowed price that a price must be sold at Elasticity the strength of a relationship 0 Elastic sensitive strong relationship 0 Inelastic insensitive weak relationship Rule of Rational Life continue to pursue an activity as long as the marginal benefits outweigh the marginal costs Utility individual consumer s happinesssatisfaction Demand Curve Shifters l 2 3 4 of consumers Income normal v inferior goods Prices of other goods substitutes and complements Tastespreferences Supply Curve Shifters 1 2 of producers taxes technology price of inputs 3 nature 4 price of other goods Elasticity of Demand Equations change in Qd Quantity demanded change in P Price 0 greater than 1 elastic 0 equal to l unit elastic proportional 0 less than 1 inelastic Marginal Utility Equation change in utility change in quantity change in total utility change in Quantity Total Expenditure Price X quantity
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