ECON 201: Microeconomics (Week 6)
ECON 201: Microeconomics (Week 6) Econ 201
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This 4 page Class Notes was uploaded by Jensine Bonner on Monday March 14, 2016. The Class Notes belongs to Econ 201 at Towson University taught by Dr. Leppo II in Winter 2016. Since its upload, it has received 16 views. For similar materials see Microeconomic Principles in Economcs at Towson University.
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Date Created: 03/14/16
ECON 201 Microeconomics Notes taken interpreted and formatted by Jensine Bonner Terms to Know quot HH Household BF Business Firm G Government D Demand quot s services g goods I labor S supply P price quot QS Quantity Supply QD Quantity Demand Es Elasticity Supply quot K Capital Ed Elasticity Demand PD Price Demanded TR Total Revenue quot MC Marginal Cost MP Marginal Principle MB Marginal Bene t quot DWL Dead Weight Loss QR Quantity Restriction MRS Marginal Rate of Substitution Week 6 of Notes Conclusion of Chapter 5 Chapter 6 and the beginning of Chapter 7 3716 Inelastic Demand Elastic Demand Zero Elasticity Inelastic The prices will increase Eastic The prices will increase slightly and the QD will decrease Assumption There will not be an impact on anything else Consumer Surplus Difference between the maximum amount that a consumer is willing to pay vs what the consumer will actually pay Identity of consumer surplus below the demand and above the price Ex Cake 25 went prep to pay 25 but only had to pay 15 The consumer surplus is 1000 Producer Surplus The difference between the price that the consumer will receive and their marginal costwhat they are actually willing to accept Dead Weight Loss DWL A decrease in the total surplus is the result of any form of market intervention Market Equilibrium The largest surplus that any government intervention can cause inelasticity which a decrease in surplus Price Ceilind Price is setm equilibrium When working with graphs 1 Identify the starting price 2 Know your identity S below PampS P above PampS 3916 Will need to state how the Production Possibilities Frontier changes so Before and After Changesin P QD QS Surplus CS PS DWL When wages increase prices will increase and people will buy less This Chapter is about the consumer Look at the budget constraint that is based on 1 The price of items 2 How much you have for the good that you are willing to pay for Ta ste Prefe rence Utility A that represents the satisfaction derived from participating in a given activity Utile 1 unit of satisfaction Total Utility The total satisfaction that you gain Marginal Utility The change in the total utility This change will come from consuming 1 more item Utility bene t Consume too much and you will no longer value the item Law of Diminishing MU Marginal Utility Consumption of a particular good or service When the consumption increases the MU will decrease Indifference Curve An indifference curve is a visual rep of taste amp preferences De nition The differences combined of 2 goods that generate the same level of satisfaction With every Indifference curve there are 5 properties 1 Each point in the commodity space lies on 1 and only 1 indifference curve The point cannot exist anywhere else 2 Indifference curves are parallel amp never interact 3 Indifference curves negatively sloped 4 The further from the origin the higher the satisfaction will be 5 Indifference curves are convex to their origin MRS Marginal Rate of Substitution The rate at which a consumer is willing to substitute 1 good for another Will generally be larger at the top and decrease from there Buddet Constraint The quotbudget linequot and quotbudget setquot mean the same thing De nition The line showing the combination of 2 goods fully utilizing your budget Shows ability to consume certain goods A straight line only means 2 points Take the maximum amount of each good that you as the consumer could buy End of Week 6 Notes I hope that they were helpful to you Notes will be uploaded weekly so be sure to come back again Up Next Week 7 Notes Jensine
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