Writing's on the wall by Chi Chi

Theory

chiny175 — 2021-08-10 07:33:37 UTC

1. Ten principles of economics
How people make decisions
- Principle 1: People face trade-offs
- Principle 2: The cost of something is what you give up to get it
- Principle 3: Rational people think at the marrgin
- Principle 4: People respond to incentives
How people interact
- Principle 5: Trade can make everyone better off
- Principle 6: Markets are usually a good way to organize economic activity
- Principle 7: Governments can sometimes improve market outcomes
How the Economy as a Whole Works
- Principle 8: A country's standard of living depends on its ability to produce goods and services
- Principle 9: Prices rise when the government print too much money
- Principle 10: Society faces a short-run trade-off between inflation and unemployment
2. Thinking like an economist
- The scientific method: observation, theory, and more observation
- The role of assumptions
- Economic models
- Our first model: The circular-flow diagram
- Our second model: The production possibilities frontier
- Microeconomics and Macroeconomics
3. circular flow
4. What is PPF?

Exercises

chiny175 — 2021-08-10 07:36:29 UTC

1. determine which principle to use in cases
2. know draw PPF
3. determine which goods can ability to produce based on PPF

Theory

chiny175 — 2021-08-10 07:43:14 UTC

1. Concepts of the 'Market', Market Forces & the Price Mechanism
2. Demand
- Concepts
- Law of Demand
- Demand curve
- Determinants
3. Supply
- Concepts
- Law of Supply
- Demand curve
- Determinants
4. Equilibrium
- Concepts
- Importance of market equilibrium in market theory
- Disequilibrium conditions
- Changes in Equilibrium

Theory

chiny175 — 2021-08-10 07:43:45 UTC

1. Elasticity
- Measure of the responsiveness of quantity demanded or quantity supplied
- To one of its determinants

2. Price Elasticity of demand
Price elasticity of demand= percentage change in quantity demanded/ percentage change in price

3. The relationships between elasticity & Total revenue

4. Income Elasticity of demand

5. Price Elasticity of supply
Price elasticity of supply = delta Qs/ delta Qp

6. Applications of Elasticity

Theory

chiny175 — 2021-08-10 07:44:59 UTC

1. Consumer Surplus:
CS = WTP - P
2. Producer surplus
PS = P - Cost to seller
3. Market efficiency:
TS = CS + PS
TS = WTP – Cost to seller

Exercises

chiny175 — 2021-08-10 07:46:12 UTC

1. Draw Supply Curve & Demand Curve
2. Solve for the equilibrium price & quantity
3. Compute shortage or surplus

Exercises

chiny175 — 2021-08-10 07:46:21 UTC

1. Mid-point
2. Effect of elasticity on demand or supply

Exercises

chiny175 — 2021-08-10 07:46:25 UTC

1. Compute WTP
2. compute CS, PS
3. Draw Supply Curve&Demand Curve

Theory

chiny175 — 2021-08-10 08:07:23 UTC

1. Price control:
- P ceiling: Pc>Pe (not binding), Pc- P floor: PfPe (surplus)
2. Tax
- Tax burden on sellers & buyers
- When S curve is more elastic than D curve: Consumer > Producer
- When D curve is more elastic than S curve: Consumer < Producer
3. Deadweight loss
- DWL=1/2*price difference*quantity differents
- Inelastic D: DWL small
- Elastic D: DWL large

Exercises

chiny175 — 2021-08-10 08:07:36 UTC

1. Compute DWL
2. Compute Tax Revenue

Theory

chiny175 — 2021-08-10 08:07:44 UTC

1. Explicit costs and implicit costs.
2.Economic profit and Accounting profit.
3.Production fiuction and total -cost curve.
4. FC, VC, TC, AFC, AVC, ATC, MC.
5. Many types of cost curve

Exercises

chiny175 — 2021-08-10 08:07:49 UTC

1.Calculate TC, AFC, AVC, ATC, MC:
- TC=FC+VC
- AFC=FC/Q
- AVC=VC/Q
-ATC=TC/Q
-MC=TC/Q=TR/Q.
2. Calculate:
- profit= TR-TC
- economic profit=TR-TC( TC= explicit+implcit cost)
- accounting profit=TR- total explicit cost

Exercises

chiny175 — 2021-08-10 08:08:09 UTC

1. Compute total revenue ( TR = P x Q )
2. Compute profit ( Profit = TR - TC = (P – ATC) x Q)
3. Compute marginal revenue ( MR = P for competitive firms)
4. Compute average revenue (AR= P for competitive firms)

Theory

chiny175 — 2021-08-10 08:08:15 UTC

1. What is a competitive market?
2. Profit Maximinzation and competitive firm's supply curve
- Measuring profit
if P>ATC
profit= TR-TC=(P-ATC)*Q
if PLoss = TC- TR=(ATC-P)*Q
= Negative profit
3. Supply curve in competitive market
- short run
- long run
- a shift in demand in the long run and short run
profit= total revenue- total cost

Theory

chiny175 — 2021-08-10 08:08:37 UTC

1. characteristics , monopoly market power
2. why monopolies arise - 3 sources of barrier to entry
3. demand curve of monopoly vs competition
4. understanding the monopolist's MR
5. monopoly profit maximization
6. inefficiency of monopolies
7. price discrimination
8. monopoly's revenue

Exercises

chiny175 — 2021-08-10 08:08:46 UTC

1. calculate the monopolist's profit
2. find DWL in monopoly firm price discriminates/ non discriminate
3. draw demand curve

Theory

chiny175 — 2021-08-10 08:08:52 UTC

1. Definition
2. Characteristics of monopolistic competition
- Many sellers
- Product differentiation
- Free entry & exit
3. Monopolistically competitive firm in:
- Short run

Max profit when

+ MR=MC

+ P = D curve

If P > ATC: profit
If P < ATC: loss

- Long run

0 economic profit

+ D curve= ATC curve at MC= MR

+ P= ATC

+ P> MC

4. Mono Competiton: less efficient
- Excess capacity
- Markup over MC (P>MC)
5. Welfare
- P>MC -> DWL
- Number of firms: may not optimal
6. Advertising
Critique:
- Manipulate people's tastes
- Impede competition
- Increase product differentaition
- Less concern price
Defense:
- Provide information
- Foster competition
- new firm enter easily

Exercises

chiny175 — 2021-08-10 08:09:00 UTC

1. Graph: determine important lines, points, intersection
2. Calculation: based on formulas
- total revenue, marginal revenue, average cost, and marginal cost

Oligopoly

chiny175 — 2021-08-10 08:09:09 UTC

1. Def
- only few sellers
- offer similar or identical products
- interdependent
2. Characteristics of an Oligopoly Market, its outcome
- nash equilibrium
- Duopoly
- the output & price effect
- the size of the oligopoly
3. Game theory
- prisoner's dilemma
-dominant strategy
4. Public policies toward oligopoly

Exercises

chiny175 — 2021-08-10 08:10:25 UTC

1. Game theory
- Prisoner's dilemma
- dominant strategy
2.

Theory

chiny175 — 2021-08-10 08:10:30 UTC

1. Externalities
- Positive externalities
- Negative externalities
- Internalizing externalities: Imposing taxes and subsidies
2. Public Policies
- Corrective taxes and subsidies
- Tradable pollution permits
3. Private solutions
- Types of private solutions
4. Excludability
- Public goods
- Private goods
- Common resources
- Natural monopolies

Exercises

chiny175 — 2021-08-10 08:10:37 UTC

1. Recognizing excludable and non - excludable
2. Positive or negative -> Solution

Theory

chiny175 — 2021-08-12 01:59:33 UTC

Theory

1804010064 — 2021-08-23 13:59:33 UTC