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Micro Cheat Sheet

This document provides an introduction to key microeconomics concepts and formulas including: - Utility maximizing rule, percent change, elasticity, cross price elasticity, and income elasticity. - Consumer surplus, marginal product, marginal cost, total cost, average costs, total revenue, and profit. - Profit maximizing rule, least cost rule, marginal revenue product, and marginal factor cost. - Comparative advantage, elasticity, total revenue test, double shifts, price controls, costs, perfect competition, shut-down rule, monopolies, factor markets, government regulation, negative and positive externalities. - Essential graphs are also listed.

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Alisa Khizhnaya
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2K views6 pages

Micro Cheat Sheet

This document provides an introduction to key microeconomics concepts and formulas including: - Utility maximizing rule, percent change, elasticity, cross price elasticity, and income elasticity. - Consumer surplus, marginal product, marginal cost, total cost, average costs, total revenue, and profit. - Profit maximizing rule, least cost rule, marginal revenue product, and marginal factor cost. - Comparative advantage, elasticity, total revenue test, double shifts, price controls, costs, perfect competition, shut-down rule, monopolies, factor markets, government regulation, negative and positive externalities. - Essential graphs are also listed.

Uploaded by

Alisa Khizhnaya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Introduction to Microeconomics

Formulas

Utility Maximizing Rule:

Percent Change:

Elasticity Demand/Supply:

Cross-Price Elasticity:

Income elasticity:
Consumer surplus:

Marginal product:

Marginal cost:

Total cost:

Average Total Cost:

Average Variable Cost:

Average Fixed Cost:

Total Revenue:

Profit:

Profit Maximizing Rule:


Least Cost Rule:

Marginal Revenue Product:

Marginal Factor Cost:

Things to remember

Comparative advantage- A country makes a good at a lower opportunity cost than another country
Elasticity- When price elasticity of demand coefficient is greater than 1, the demand is elastic
When price elasticity of demand coefficient is less than 1, the demand is inelastic
When price elasticity of demand coefficient is zero, the demand is perfectly inelastic
When the cross-price elasticity is positive, the two goods are substitutes
When the income elasticity is positive, the product is a normal good
Total revenue test- When demand is inelastic, an increase in the price will increase the total revenue
Double shifts- When two curves shift at the same time, either price or quantity will be indeterminate
Price controls- To be biding, price ceilings go below equilibrium and price floors go above equilibrium
Costs- Use marginal cost to determine the quantity to produce. Use average total cost to calculate profit
Perfect competition- In the product market, marginal revenue is horizontal because firms are price
takers
Shut-down rule- Firms should shut down if the price falls below the average variable cost
Monopolies- Price is higher and output is lower than competitive markets causing deadweight loss
Factor markets- In competitive markets, marginal factor cost is horizontal because firms are wage takers
Government Regulation- A lump sum tax does not change quantity because it only affects the fixed cost
Negative externalities- Too much output is made because the MSC is greater than marginal private cost
Positive externalities- Too little output is made because the MSB is greater than marginal private benefit

Essential Graphs

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