Principles of Microeconomics Midterm 1 "Cheat Sheet"

Definitions and charts for microeconomics; Topics include: trade, opportunity cost, shifts in supply and demand, consumer and producer surplus, etc. (Made for ECON 10010 at University of Notre Dame)

1. SGD PGQ
Opportunity
Cost
:
the valueof Costs
:
expenses
afirm
Mct=s→
pt
Qin
the next best alternative incurs from
engaging
initsMcT=s←
PtQt
Absolute
Advantage
:
fewer resources business activities
D
→
PTQ4
D
←
p1Q1
are used in production Profit
:
total revenue (TR)minus
*
Comparative Advantage
:
lower
opp
.
total cost(TC) Determinants Of
cost of production Marginal
Revenue :(MR)addi
-
Demand
:
population
,
Terms of Trade
:
ratioofgoods at tional revenue a firm receives income
,
prices
of subs
Which countries
agree
to trade at fromselling
one more unit 4
complements
,
tastes1
Production Possibilities Frontier
:
Marginal Cost
:
(MC)the
preferences
,
expectations
(PPF)a
graphical representation ofthe additional Cost a firm incurs Determinants of
Supply
:
goods
a
country
can produce given
When
they
sell I more Unit MC shifters
,
expect
a
-
their
productivity
E constraints Market Power
:
the
ability
Ofa tons
,
#of sellers
Consumption Possibilities Frontier
:
firm to set its own price
p
(CPF)
:
graphical depiction of what Producer surplus
:
(Ps)differ
.
'
E
price
to Max
-
profit
:
a
country
can consume given
its end between
price
received
-
$6
6-
productivity
,
constraints
,
da
trading
E the costof production
-
I
.
-
opportunities
Law of Demand
:
The
price
-
:
Mc
-
•
Spontaneous
(
emergent
)order
:
of a
good
or service is
-
,
iii.MR
D
0 4 S 10
a phenomenon
in
Society
thatis
inversely
related to the
•
individual Firm in
Perfect Competition
the resultOf human action but quantity
demanded (PTQtr)
cindividual firm's supply)
B
=5 p 1
1
1 1
11 1 H
1
1 1 1
not human design
Law of Supply
:
PricesGalan
-
.
.=3
,
;;
.ly#..y.EIiYb?3IFr?
Demand
:
the relationship
between titles supplied aredirectly
QHOO
"='
a. ÷
.
aEEM
"
the priceofagood
or services related (PTQT) bk(
Pqmerwagrgtaottsqwmweasitintion
the quantity demanded Perfectly CompetitiveEquili
-
100
•
S
= MC
InferiorGoods
:
as income increases
,
brium
:
occurs ata price where sellers
.
demand decreases
QD is
equal
toQs
•
a
p
100 SOO 900
Normal Good
:
as income increases
,
Dead
weight
Loss
:
LDWL)the
20
s=Mc
=
demand increases reduction intotal surplus
from I
=
Ims
Substitute Goods
:
an increase Market

inefficiencies
12=11111
•%;y••
Iii(ill
PE
-
-
nrr
(decrease )intheprice
Of One 8=1111
iii.
111111
good
causes an increase (decrease)
Winners fromInt
'
lTrade
:
=
shortage
•
Consumers /producers
from I II
D
Intheprice
ofthe othergood
i i
1 i i 1
1 1 11
Q
increased
variety
4001^600
Complimentary
Goods
:
an increase
QD=Qs
(decrease)intheprice
of one
•
firms1Workers inexport
p
mc=s
good
causes a decrease (increase)
intensive industries
inthe demand fortheothergood
°
lower
prices
'
§*tpI
"'
'
.
Consumer Surplus
:
(Cs)differ
.
Losers from Int
'
1
Trade
:
a
end between consumers
'
•
firms1workers inimport
willingness
to
pay
(wtp){the
intensive industries s s→ s←
price
(P)ofthe
good
or service
°
increased expenditures D PQ PfQPPTQt
Revenue
:
income a firm
On displaced
Workers
D
→
ppQTp?Qp Pga?
receives for
engaging
inits
CPSGIPWIPMEP ts= (s
+
Ps
D
←
PtQt
PTQ?P?Qt
business activities