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microecnomics by Mind Map: microecnomics

1. 1.1demand &supply

1.1. market

1.2. demand

1.2.1. law of demand

1.2.2. move along and shift

1.2.3. non-price determinants income inferior goods normal goods preference price of related goods subsititute compelment demographic changes

1.2.4. calculation

1.3. supply

1.3.1. law of supply

1.3.2. move along and shift

1.3.3. non-price determinants FOP technology price of related goods joint competitive expectations indirect tax subsidy #of firm in market

1.3.4. calculation

1.4. market equilibrium

1.4.1. excess supply

1.4.2. excess demand

1.4.3. new equilibrium

1.4.4. calculation

1.5. price mechanism

1.5.1. opportunity cost

1.5.2. signalling/incentive function

1.5.3. reallocation of resources

1.6. market efficiency

1.6.1. consumer surplus

1.6.2. producer surplus

1.6.3. allocative efficiency CS=PS/MB=MC

2. elasticity

2.1. PED

2.1.1. PED=(%ΔQ/%ΔP) P elsatice demand P inelastic demand P unit elastic demand perfectly elastic demand perfectly inelastic demand

2.1.2. determinants # and closeness of substitutes degree of necessity time proportion of income spent

2.1.3. calculation using two points PED varies along the straight line

2.2. XED

2.2.1. XED=(%ΔQx/%ΔPy) subsitute+ complementary - closeness |x| application of Biz

2.3. YED

2.3.1. YED=(%ΔQ/%ΔY) normal goods+ Elastic Inelastic inferior goods- Elastic Inelastic distinguish necessity Y inelastic luxury Y elastic application low YED for primary products high YED secondary products higher YED tertiary products

2.4. PES

2.4.1. PES=(%ΔQ/%ΔP) elastice inelastic unit elastic perfectly elastic perfectly inelastic

2.4.2. determinants FOP unused capacity ability to store stocks

2.4.3. low for primary commodities

2.4.4. high for manufactured products

3. government intervention

3.1. indirect tax

3.1.1. why impose

3.1.2. specificc&percentage

3.1.3. influence consumer producer government

3.1.4. tax incidence PED PES

3.1.5. caluculation price, quantity consumer expenditure producer revenue government revenue CS/PS

3.2. subsidy

3.2.1. why impose

3.2.2. influence consumer government producer

3.2.3. calculation price, quantity consumer expenditure producer revenue gov. revenue CS/PS

3.3. price control

3.3.1. price floor why impose eg.food/rent price control consequence shortages inefficient resource allocation welfare impacts black market non-price rationing mechanisms influence consumers producers government calculation shortage Δconsumer expenditure=Δfirm revenue gov. expenditure on surplus

3.3.2. price ceiling same as above

4. market failure

4.1. meaning

4.1.1. fail allocative effciency over-allocation under-allocation

4.2. types

4.2.1. externalities meaning MPB MSB MPC MSC MSB=MSC types +/-consumption ex +/-production ex solution

4.2.2. lack of public goods free rider problem

4.2.3. common resources sustainablity overused depleted degraded negative externality LDCs exploiation of land resources gov. response legislation carbon tax cap trade schemes technology fund limitation global nature lack of ownership require international cooperation

4.2.4. Asymmetric information

4.2.5. abuse of monopoly power welfare loss nationalization trade liberalization

5. market types

5.1. theory

5.1.1. profit

5.1.2. revenue

5.1.3. production and cost production distinguish SR&LR law of diminishing returns define calculation cost economic cost define distinguish SR&LR

5.1.4. goals

5.2. 4types

5.2.1. perfect competition

5.2.2. monopoly

5.2.3. monopolistic competition

5.2.4. oligopoly

5.3. price discrimination