Download - Mr. Bernstein Micro Graphs Review May 2014
Mr. Bernstein Micro Graphs Review May 2014
AP Economics Mr. Bernstein Micro Graphs Review May 2014 AP
Economics Mr. Bernstein
The Production Possibilities Curve AP Economics Mr. Bernstein
Economic Growth Concave due to Law of increasing opportunity costs
AP Economics Mr. Bernstein
Circular Flow Diagram AP Economics Mr. Bernstein
Expanded Circular Flow Diagram AP Economics Mr. Bernstein
Demand Curves A Shift in Demand is different from movement along
the Demand Curve!! AP Economics Mr. Bernstein
Supply Curves A Shift in Supply is different from movement along
the Supply Curve!! AP Economics Mr. Bernstein
Equilibrium Price is the adjustment mechanism:falls when there is a
surplus, rises when there is a shortage AP Economics Mr.
Bernstein
Simultaneous Shifts of Supply and Demand Curves Example:Demand for
Justin Beiber tickets decreases and Supply decreases Equilibrium
Price is ambiguous but Quantity change decreases (awww) Know all
four possible combinations AP Economics Mr. Bernstein
Elasticity along the Demand Curve Consumers are less price
sensitive on inexpensive items TR begins to fall as prices rise and
Elasticity grows AP Economics Mr. Bernstein
Consumer Surplus and Producer Surplus CS is the difference between
what a consumer is willing to pay for a good or service and what
they actually have to pay PS is the difference between what a
producer must receive to sell a unit and the actual price they
receive AP Economics Mr. Bernstein
Deadweight Loss Example:The Effect of Taxes Excise tax causes lower
Q, efficiency loss Qt Q D Dead Weight Loss P Q S1 S CS T D D T PS
AP Economics Mr. Bernstein
Price Ceilings Price ceiling is below equilibrium, creates shortage
AP Economics Mr. Bernstein
Price Floor Price floor is above equilibrium; creates surplus AP
Economics Mr. Bernstein
Quotas (Quantity Controls) Examples:limits, licenses; creates price
wedge AP Economics Mr. Bernstein
Firms Cost Curves:Swoosh, Smirk and Smile The MC curve intersects
the U-shaped AC and AVC curves at their minimum points AP Economics
Mr. Bernstein
Perfectly Competitive Firm Produce at MR=MC Profit = MR ATC In this
case, zero economic profit This is long-run equilibrium Profit or
loss if P > or < ATC ATC Q* MC MR D.AR.P! $ Output AP
Economics Mr. Bernstein
The Short-Run Shut-Down Decision Shut down when P < AVC ATC
P=ATC Q* MC P=MR=d=AR $ Output AVC Shut-down Price AP Economics Mr.
Bernstein
Long Run Average Costs U-shaped LRATC is a series of U-shaped
SRATCs one for each level of fixed costs AP Economics Mr.
Bernstein
Adjustment toward Long-Run Equil (Perf Comp) AP Economics Mr.
Bernstein
Classic Monopoly Graph Q at MR=MC; lower Q and higher P than
Perfect Competition; long-run economic profit exists due to
barriers to entry AP Economics Mr. Bernstein
Monopoly Reduces Societal Welfare AP Economics Mr. Bernstein
Price Regulation Restores Consumer Surplus AP Economics Mr.
Bernstein
Monopolists will use Price Discrimination Without competition, they
take advantage of differing elasticities AP Economics Mr.
Bernstein
Game Theory Each player competes to maximize individual payoffs and
ignores the effects of his/her action on the payoffs received by
the rival But Oligopolies engage in tacit collusion, tit for tat AP
Economics Mr. Bernstein
Monopolistic Competition in the Long Run Adjusts to normal profit,
as in Perfect Competition P*=ATC, tangent to ATC (not at minimum)
AP Economics Mr. Bernstein
Factor Market:Labor Value of W* = MRPL; (MC = W) Market Labor
Demand Market Labor Supply Wage W* Q AP Economics Mr.
Bernstein
Imperfect Competition in the Labor Market Hire where MPRL = MFCL
Monopsony pays W* < MRPL Remember, whether Perfect or Imperfect
Markets, firms hire where MRPL = MFCL MFCL Labor Supply W* MRPL
Wage Quantity of Labor (workers) E* AP Economics Mr.
Bernstein
Equilibrium in the Market for Land and Capital Supply curve for
Land is very steep (inelastic) AP Economics Mr. Bernstein
Positive Externalities:MSB > MPB Market underproduces vs.
socially optimal outcome Deadweight loss Policy to eliminate:
Subsidy Price, MSB MPB MSB S Popt Qopt Qmkt Pmkt Subsidy Pcons Qty
AP Economics Mr. Bernstein
Negative Externalities:MSC > MPC Market overproduces vs.
socially optimal outcome Deadweight loss Policy to eliminate: Per
unit tax Lump-sum tax does not affect MC so does not affect Q
Price, MSC MPC D MSC Popt Qopt Qmkt Pmkt Tax Pfirm Electricity