MICROECONOMICS.doc

MICROECONOMICSCHAPTER 11. Scarcity and choice2. opportunity cost3. production possibility curve and its shape4. good market and factor marketCHAPTER 21. QUESTION ABOUT DEMAND1) the law of demand the income effect the substitution effect2) Other determinants of demand3) change in quantity demanded4) change in demand2. QUESTION ABOUT SUPPLY 1) Other determinants of supply 2) change of quantity supplied3) change of supply3. THE FORMATION OF EQULIBRIUM PRICE4. QUESTION ABOUT ELASTICITY 1) Price elasticity of demand - Determinants of price elasticity of demand - Calculation - Price elasticity of demand and consumer expenditure - Different elasticities along a straight-line demand curve 2) Price elasticity of supply3) Income elasticity of demand4) Cross-price elasticity of demandCHAPTER 31. Minimum prices justification problems how to Solve these problems2. Maximum prices justification problems how to Solve these problems3. The incidence of taxationCHAPTER 41. Total and Marginal utility 2. The optimum level of consumption: the one-commodity version consumer surplus (total and marginal) marginal consumer surplus: MU P total consumer surplus: TU TE maximising consumer surplus: P = MU3. Optimum combination of goods the equi-marginal principle MUA/MUB = PA/PB4. Indifference curves and MRS5. The budget line and its change6. The optimum consumption point7. the incomeconsumption curve8. the priceconsumption curve9. Deriving the individuals demand curveCHAPTER 51. The Short-run Theory of Productionl TP AP AND MPNumber ofWorkers (L)TPPAP(=TP/L)MP(=DTP/DL)1333210573248144369125408464272742608405-22. Short-run Costs explicit costs implicit costs STC=TFC+TVC SAC=AFC+AVC MC=STC/Q=TVC/Q3. The Long-run Theory of Production All factors variable in long run The scale of production: constant returns to scale increasing returns to scale decreasing returns to scale Economies of scale specialisation & division of labour indivisibilities container principle greater efficiency of large machines by-products multi-stage production organisational & administrative economies financial economies economies of scope5. IsoquantIsocost Analysis Isoquants and MRTS Isocosts Least-cost combination of factors for a given output Highest output for a given cost of production6. Long-run CostsRelationship between long-run and short-run average costs7. Revenue TR AR MRl Revenue curves when firms are price takers l Revenue curves when price varies with output 8. Profit Maximisation MR=MCCHAPTER 61. Alternative Market Structures2. Perfect Competitionl Assumptionsl Character of TR,AR,MRl Short-run equilibrium of the firm:P=MCl PAVCl short-run supply curve of firml Long-run equilibrium of the firm: All supernormal profits competed away: All lost awayl Advantage and disadvantage3. Monopolyl Natural monopolyl The monopolists demand curvedownward slopingMR below ARl Equilibrium price and outputl Perfect competition and monopolyCHAPTER 71. Monopolistic CompetitionEquilibrium conditions be equal to perfect competition2. Oligopolyl cartelsll price leadership3. Price Discrimination First degree Second degree Third degreeCHAPTER 91. supply curve of labour2. demand curve of labourCHAPTER 111. Defining social efficiency Pareto improvements Pareto optimality MSB = MSC2. Th