Graphs

• PPF-the line which divides the attainable from the unattainable

  
• Economic growth and contraction

  
• Law of demand states that the higher the price the lower quantity demanded. the lower the price the quantity demanded there will be

  
• If we change the conditions of demand the demand curve will shifts its position either upwards or downwards

  
• • Price inelastic- quantity demanded is not that responsive to a change in price
  • Price elastic- Quantity demanded is heavily responsive to a change in price

  
• Revenue- the money a firm receives from selling its output

  Revenue=price*quantity demanded

  
• Law of supply-as the price increases of a product the quantity supplied will also increase

  %change In supply/% change in demand

  
• Consumer surplus-difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually do pay

  
• Producer surplus- the difference between the total amount between what producers are willing and able to supply a good or service for and the price they actually receive

  Total economic welfare= consumer surplus+producer surplus

  
• Unit tax

  
• Unit tax demand inelastic- more burden on consumer

  Dead weight loss-a cost to the welfare of society created by market inefficiency which occurs when supply and demand ar out of equilibrium.

  
• Unit tax demand elastic- more burden upon the supplier than consumer

  
• Unit tax demand perfectly inelastic- the entire tax burden falls on the consumer

  
• Unit tax demand perfectly elastic- the entire tax burden will fall on the producers

  
• Unit tax supply perfectly elastic- the entire tax burden will fall on the consumer

  
• Ad Valorem tax- is a tax that imposes a tax on a good or service based on its value.

  
• Subsidy- money granted to firms by the government to reduce costs of production (Condition of supply) and encourage increase of output

  
• Subsidy demand elastic- producer revenue is larger however dead weight loss is also larger

  
• Subsidy demand inelastic- consumer savings is larger and deadweight loss is smaller however producer revenue is also smaller

  
• Minimum price/price floor- a fixed price enacted by the government usually set above the equilibrium market price and is illegal to charge below this

  
• Maximum Price/ price ceiling- A fixed price enacted by the government usually set below the equilibrium market price and is illegal to charge above this

  
• Positive externality in production- Marginal private cost> Marginal Social cost

  
• Negative externality in production- Marginal social cost > Marginal private cost

  
• Positive externality in consumption- Marginal social benefit> Marginal private benefit

  
• Negative externality in consumption- Marginal private benefit > marginal social benefit

  
• subsidy to solve positive externality in production

  
• Unit tax to solve negative externality in production

  
• Maximum price to solve positive externality in consumption

  
• Minimum price to solve negative externality in consumption

  
• Macroeconomic market full employment equilibrium

  
• Macroeconomic market above full employment equilibrium

  
• Macroeconomic market under full employment equilibrium

  
• Short run Philips curve

  • High inflation leads to low unemployment
  • High unemployment leads to low inflation

  
• Long run Phillips curve

  • In the long run there is no trade off between unemployment and inflation

  
• Average, fixed and variable costs

  
• Long run average cost curve

  
• Short run monopolistic competition

  
• Long run monopolistic competition

  
• Monopoly diagram

  
• Productive efficiency - MC=AC