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ap_microeconomics [2024/04/11 00:55] – mrdoughap_microeconomics [2024/04/20 05:37] (current) – external edit 127.0.0.1
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     * Causes us to make choices     * Causes us to make choices
  
-  * Free goods: goods with no-cost:unlimited supply (e.g.: sunlight)+  * Free goods: goods with no-cost/unlimited supply (e.g.: sunlight)
  
   * Positive statement: factual statement   * Positive statement: factual statement
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         * Raw materials used to produce finished goods         * Raw materials used to produce finished goods
       * Labor (workers)       * Labor (workers)
-        * Human effort:work+        * Human effort/work
       * Capital (anything used to make anything else)       * Capital (anything used to make anything else)
         * finished goods used to produce other goods (machines, tools, factories, etc.)         * finished goods used to produce other goods (machines, tools, factories, etc.)
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   * Opportunity Cost: next-best alternative that you lost out on doing something else   * Opportunity Cost: next-best alternative that you lost out on doing something else
  
-  * Microeconomics: individuals:firms making decisions and how these interact+  * Microeconomics: individuals/firms making decisions and how these interact
     * e.g.: college vs job, car industry, etc     * e.g.: college vs job, car industry, etc
  
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   * Productive efficiency: lowest cost possible on PPC   * Productive efficiency: lowest cost possible on PPC
  
-  * Allocative efficiency: The economy allocates resources so that consumers are as well off as possible:producing what is demanded.+  * Allocative efficiency: The economy allocates resources so that consumers are as well off as possible/producing what is demanded.
  
   * Increasing Opportunity Costs: concave PPC   * Increasing Opportunity Costs: concave PPC
  
-  * Economic Growth: allows sustained rise in aggregate output:expansion of PPC outwards+  * Economic Growth: allows sustained rise in aggregate output/expansion of PPC outwards
     * Causes:     * Causes:
-      * increase:development in technology+      * increase/development in technology
       * Increase in resources       * Increase in resources
  
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     * Inverse is true: if price that something’s being sold at is low, producers want to produce less of it     * Inverse is true: if price that something’s being sold at is low, producers want to produce less of it
  
-  * Shifters of supply: price:availability of resources, number of sellers, technology, government actions (taxes, subsidies), prices of other related goods, expectations of future profit.+  * Shifters of supply: price/availability of resources, number of sellers, technology, government actions (taxes, subsidies), prices of other related goods, expectations of future profit.
  
 [[AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image2|{{AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image2.jpeg}}]]> 2.3 Price Elasticity of Demand [[AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image2|{{AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image2.jpeg}}]]> 2.3 Price Elasticity of Demand
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 [[AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image5|{{AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image5.jpeg}}]]> - responsiveness of quantity supplied to price changes Determinants of price elasticity of supply: Time and price of alternative inputs “market-period” **→** firms care unable to respond to price change **→** inelastic short-run **→** firms can only increase production with existing factories **→** elastic - long-run **→** firms can expand or reduce factory capacity **→** highly elastic must be positive since higher prices=larger quantities supplied - e​​= 0 means you are perfectly $e_s$< 1 means you are relatively inelastic $e_s$= 1 means you are unit elastic $e_s$> 1 means you are relatively elastic $e_s$= ∞ means you are perfectly elastic 2.5 Other Elasticities  [[AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image5|{{AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image5.jpeg}}]]> - responsiveness of quantity supplied to price changes Determinants of price elasticity of supply: Time and price of alternative inputs “market-period” **→** firms care unable to respond to price change **→** inelastic short-run **→** firms can only increase production with existing factories **→** elastic - long-run **→** firms can expand or reduce factory capacity **→** highly elastic must be positive since higher prices=larger quantities supplied - e​​= 0 means you are perfectly $e_s$< 1 means you are relatively inelastic $e_s$= 1 means you are unit elastic $e_s$> 1 means you are relatively elastic $e_s$= ∞ means you are perfectly elastic 2.5 Other Elasticities 
  
-  * Quantity of a good demanded:supplied is not just dependent on price, so other elasticities can be measured for other factors beyond price as well+  * Quantity of a good demanded/supplied is not just dependent on price, so other elasticities can be measured for other factors beyond price as well
  
 [[AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image6|{{AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image6.jpeg}}]]  * Measures how much the demand of a certain good can be affected by price of a related good (when the goods are complements or substitutes) [[AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image6|{{AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image6.jpeg}}]]  * Measures how much the demand of a certain good can be affected by price of a related good (when the goods are complements or substitutes)
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   * Quota: quantity control saying only x amount can be bought or sold   * Quota: quantity control saying only x amount can be bought or sold
  
-  * License: gives owner right to supply good:service+  * License: gives owner right to supply good/service
  
   * Demand price: price at which given quantity is demanded   * Demand price: price at which given quantity is demanded
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   * Transactions   * Transactions
-    * Transactions of good:service+    * Transactions of good/service
     * Transaction of license     * Transaction of license
  
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   - Allocative Efficiency: they produce the optimal quantity that the society wants (P=MC).   - Allocative Efficiency: they produce the optimal quantity that the society wants (P=MC).
  
-> Short-Run vs. Long-Run Production: Short-run: Fixed no. of firms Long-Run: with entry:exit (assuming no barriers to entry) +> Short-Run vs. Long-Run Production: Short-run: Fixed no. of firms Long-Run: with entry/exit (assuming no barriers to entry) 
  
   * Firms will make zero economic profit   * Firms will make zero economic profit
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     * Low barriers to enter and exit the market     * Low barriers to enter and exit the market
     * No advertisements     * No advertisements
-    * Firms are ‘Price Takers’, No control over price:market power+    * Firms are ‘Price Takers’, No control over price/market power
     * No economic profit in the long run (which is why we say you have normal profit when you have 0 profit)     * No economic profit in the long run (which is why we say you have normal profit when you have 0 profit)
  
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   * Demand curve is downward sloping (market power) but is more elastic than the monopoly demand curve.   * Demand curve is downward sloping (market power) but is more elastic than the monopoly demand curve.
  
-  * Profit maximization & produce:produce at loss:shut down rules apply the same way here as it does in other markets structures.+  * Profit maximization & produce/produce at loss/shut down rules apply the same way here as it does in other markets structures.
  
 [[AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image23|{{AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image23.jpeg}}]]4.4.2 Long Run [[AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image23|{{AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image23.jpeg}}]]4.4.2 Long Run
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   * The four factor payments are: Rent, wage, interest, and profit.   * The four factor payments are: Rent, wage, interest, and profit.
  
-  * Marginal revenue product (MRP): The additional revenue generated by an additional resource:worker (measured in dollars).+  * Marginal revenue product (MRP): The additional revenue generated by an additional resource/worker (measured in dollars).
  
-  * Marginal factor cost (MFC): The additional cost of an additional resource:worker.+  * Marginal factor cost (MFC): The additional cost of an additional resource/worker.
     * Also called marginal resource cost (MRC)     * Also called marginal resource cost (MRC)
     * Also called Wage     * Also called Wage
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   * What shifts the supply for labor?   * What shifts the supply for labor?
     * Number of qualified workers (immigration)     * Number of qualified workers (immigration)
-    * Government regulation:licensing+    * Government regulation/licensing
     * Cultural expectations     * Cultural expectations
  
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 5.3 Profit-Maximizing Behavior in Perfectly Competitive Factor Markets 5.3 Profit-Maximizing Behavior in Perfectly Competitive Factor Markets
  
-  * EXAMPLE: Let’s say a company that makes 84 bananzos has production costs for all 84 bananzos it produces. The MRP is the cost of producing one additional unit. Let’s say that the cost of producing 100 units is $200, and the total cost of producing 101 units is $204. The average cost of producing 100 units is $2 (total cost:total units). However, for MRP, the marginal cost for producing unit #101 is $4 %%((%%$204-$200)%%:(%%101-100))+  * EXAMPLE: Let’s say a company that makes 84 bananzos has production costs for all 84 bananzos it produces. The MRP is the cost of producing one additional unit. Let’s say that the cost of producing 100 units is $200, and the total cost of producing 101 units is $204. The average cost of producing 100 units is $2 (total cost/total units). However, for MRP, the marginal cost for producing unit #101 is $4 %%((%%$204-$200)%%:(%%101-100))
     * In layman's terms it is found by dividing the change in production cost by the change in quantity     * In layman's terms it is found by dividing the change in production cost by the change in quantity
-      * (new production cost - original production cost)%%:(%%new number of units - original number of units)+      * (new production cost - original production cost)%%/(%%new number of units - original number of units)
  
 >  > 
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 5.4 Monopsonistic Markets 5.4 Monopsonistic Markets
  
-[[AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image42|{{AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image42.jpeg}}]]> a) MFC=MRP @ $Q_L$= 100 units b) Wage Rate = $10 (you need to go down to the supply curve at the Q where MFC=MRP) c) i) 200 units (S= MRP) ii) 150 units (where Minimum Wage Price Floor = $S_L$)+[[AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image42|{{AP_Micro_Study_Guide_c7825824723445efa613f06eb9556e84:image42.jpeg}}]]{{:pasted:20240411-025848.png}}
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