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. S G D P G Q
Opportunity Cost :
the value of Costs :
expenses a firm
Mct=s→
pt
Q in
the next best alternative incurs from engaging in its McT=s←
Pt QtAbsolute Advantage
:
fewer resources business activities D →
P T Q 4
D ←
p 1 Q 1
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 : ratio of goods at tional revenue a firm receives income , prices of subs
Which countries agree to trade at from selling one more unit 4 complements ,
tastes 1
Production Possibilities Frontier :
Marginal Cost : ( MC ) the preferences , expectations
( PPF ) a
graphical representation of the 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 Of a tons ,
# of sellers
Consumption Possibilities Frontier : firm to set its own price p
( C PF ) :
graphical depiction of what Producer surplus : ( Ps ) differ .
'
E
price to Max
-
profit :
a
country can consume given its end between price received -
$66-
productivity ,
constraints ,
da trading E the cost of 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 that is inversely related to the •
individual Firm in
Perfect Competition
the result Of human action but quantity demanded ( PT Qtr ) c individual firm 's supply )
B = 5 p 1 1 1 1 1 1 1 H 1 1 1 1
not human design Law of Supply :
Prices Galan -
.
. =3
, ;;
.ly#..y.EIiYb?3IFr?
Demand : the relationship between titles supplied are directly QHOO " = '
a. ÷
.
a
EEM"
the price of a good or services related ( PTQT ) bk
(
Pqmerwagrgtaottsqwmweasitintion
the quantity demanded Perfectly Competitive Equili
-
100
•
S = MC
Inferior Goods : as income increases ,
brium :
occurs at a price where sellers .
demand decreases QD is equal to Qs
•
a
p
100 SOO 900
Normal Good : as income increases ,
Dead weight Loss : LDWL ) the 20
s=Mc
=
demand increases reduction in total surplus from I
= Ims
Substitute Goods :
an increase Market inefficiencies
12=11111
•%;y••
Iii ( ill
PE
-
-
nrr( decrease ) in the price Of One
8=1111
iii.111111
good causes an increase ( decrease ) Winners from Int
'
l Trade : =
shortage•
Consumers / producers from I I I D
In the price of the other good i i 1 i i 1 1 1 11 Q
increased variety
4001^600
Complimentary Goods : an increase QD=Qs
( decrease ) in the price of one
•
firms 1 Workers in export
p
mc=s
good causes a decrease ( increase )
intensive industries
in the demand for the other good
°
lower prices
'
§*tpI
" ' '
.
Consumer Surplus :
( Cs ) differ .
Losers from Int
'
1
Trade :
a
end between consumers
'
•
firms 1 workers in import
willingness to
pay ( wtp ){ the
intensive industries s s→ s←
price ( P ) of the good or service
°
increased expenditures D P Q Pf QP PTQt
Revenue :
income a firm
On displaced Workers
D → pp QT p ? Qp Pga ?
receives for engaging in its
CPSGIPWIPMEP ts= ( s + Ps D ←
Pt
QtPTQ ? P ?Qt
business activities