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Trade offs and opportunity Costs and - Opportunity Cost of a decision is the value of
the next best alternative is the Positive Statement: a statement of fact. A testable settete Normative Statement: a statement of opinion (Valve Judge) Production Possibilities Frontiers poppe):
A- GC Feasible bundle, below limit (A,B)
bob Infeasible bundle, Above limit (c)
Specialization : Countries w/ good opportunity cost can benefit I from trading a particular good. wague Comparative Asdvantage : Means having a lower opportunity cost. Law of Demand. If all else is caistant and price goes use then quantity goes down. If Pt then QT Equilibriomi Where quantity demanded equals quantity supplieds Excess Supply: insentives in marking down the price. Pre Excess Demand: Msetives in bidding the price vp. pod
If you want to learn more check out What are the 8 steps of the eightfold path?
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Shifts in demand: If demand increases it means a bigher quantity demanded at every price. If D1. it shifts Fright. If it shifts leftovtoled Shifts in Supplyó If supply increases it means supplit shifts to the rignt. A decrease in supply means Lit shifts to the left. Compliment: A good that is consumed along with another good. (Demand Shifters S Substitute: A good consumed letters and another good. inferior good: When income increases, demand decreases, If you want to learn more check out Why is genetic variation in a population necessary for evolution?
abwo ubut Normal Good: When income inereases, demand increases Ex Demand Shifterson
Taste and Preferences - If ppl like it, demand 1 @ Income - Inferior Vs. Normal good & Price of substitutes & Compliments and We also discuss several other topics like What is the concept of yin and yang?
P of subt, D for good ni dhaod nohubong P of sub & D for good fi Pof comp ^ D for good & ad
P of compte, D for good to 3 Number of buyers-lf #1, Dermand r. lf #v, Demand & * Expectations of future price - 18 P1, D1, If PV, DV If you want to learn more check out Who discovered cells by observing the slices of cork?
Supply Shifters: ako to fra fabiauto o cost- If cost , Supply X, if cost vi supply putt is cu 2 e Nomber of Sellers - # of sellers 1; Supply 7. #of sellers upplyst
Expectation of future Price - if P1, supplyv. IR paksupplyí bailage Elasticity of Demand: Measures the quantity demanded
to changes in price. E-Pos QD)/(%5p) Elastic. Dewand is very sensitive to prace changer Inelastico Demand is not sensitive to price change. We also discuss several other topics like Is there a difference between signs and symptoms?
Perfectly inelastic Perfectly elastic
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Relatively inelastic Relatively elástic 2011 "Steeperplaque 1 "Flatter" Don't forget about the age old question of What are case studies and why is it the worst way to do research?
Calculating Elasticity: Midpoint Method
%2X = X2-X TEL<! = Inelastic Doon seno axit xz)/2 l Epl=/= Unit Elasticity 32921192 bouw e n van. Fel>] - Elasticity J
Elasticity of Supplyó Es =%AQs)/(%SP) Inconie elasticitū of denrand: E27% s Qp)/(%S I)
Cross Price Elastico ty of Demandóf 3% QA Good A sa in Consumer Surplus: Lausna hep % 0 PB Good B - ve Deniand represents a "Willingness to pay" for a gooda
The area below demand, above price and left of
I kas ass Consumer E t Producer
Producer Surplus: Supply can be willingness to accept payment. The area above supply, below prices and left of quantity. Total Surplus: Measure's the efficientcy of the markéto Consumer Surplus + Producer Surplus. rs
Los Total a Markets are efficient =
surplus Total surplus maximized. Floor Price: legally conscimerenaea bindding minimum price.
R NON Binding pa. . Binding P -t Price floor X Floor Price
PAP Aprice floor will affect market if its above market price. Bindding price floor causes surplus and dead weight losse Price ceilings. A Binding maximum price.
Paf .pl. - NON Binding
Aa Binding Dead weight loss? Amount less than the maximum total surplus you get from some change. Tax Incedents) Depends on relative elasticity of supply
Inelastic Demand: Consuemer will have a
higher tax burden. Dead weight loss will sebe lower and tax revenue will be higher
Elastic Demand: Consumers will have a lower tax burden, Deadweight loss will be lliber higher and tax revenue will be lower,
Inelastic Supply producers will pay more of the tax, dead weignt loss will still be lower and tax revenue will be higher. Elastic Supply. Producers will pay rappelle less of the tax, dead weight loss will still be higher and tax revenue will be lower
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