Microeconomics Economics

Circular Flow of Economic Activity

Circular Flow of Economic Activity

Positive Relationship Demand & Supply Curves Inverse Relationship Positive Relationship

Change in Quantity Demanded The Law of Demand- Inverse Relationship between Price and Quantity Demanded Change in Quantity Demanded due to a change in Price Demand is the whole curve. Quantity Demanded is one point on the curve at a particular Price.

Change in Demand Change in Demand due to one of the Determinants of Demand (absent of a price change) Demand is the whole curve. Quantity Demanded is one point on the curve at a particular Price.

Change in Quantity Supplied The Law of Supply-Positive Relationship between Price and Quantity Supplied Change in Quantity Supplied due to a change in Price Supply is the whole curve. Quantity Supplied is one point of production on the curve at a particular Price.

Change in Supply Change in Supply due to one of the Determinants of Supply (absent of a price change) Supply is the whole curve. Quantity Supplied is one point of production on the curve at a particular Price.

Equilibrium Pe= Price Equilibrium or Market Clearing Price Qe= Quantity Equilibrium or Where Quantity Supplied is Equal to Quantity Demanded (Qs=Qd)

Demand and Supply Strips Change in Related Goods Income Change Consumer Expectations Tastes and Preferences Number of Consumers   Increase in Demand Decrease in Demand Increase in Price Decrease in Price Increase in Quantity Decrease in Quantity Change in the Cost of Productive Resources Government Regulations Number of Sellers Producer Expectations Technology Education Increase in Supply Decrease in Supply Increase in Price Decrease in Price Increase in Quantity Decrease in Quantity

Increase in Demand D1 is the new Demand Curve. Increase in Demand due to one of the determinants. New Equilibrium- Price increases (P1), Quantity increases (Q1).

Decrease in Demand D1 is the new Demand Curve. Decrease in Demand due to one of the determinants. New Equilibrium- Price decrease (P1), Quantity decreases (Q1).

Decrease in Supply D1 is the new Demand Curve. Decrease in Demand due to one of the determinants. New Equilibrium- Price decrease (P1), Quantity decreases (Q1).

Minimum Wage Laws in the States https://www.dol.gov/whd/minwage/america.htm

Price Floor= Surplus Disequilibrium Pf- Central Authority sets a Price Floor above the Equilibrium Price (Pe). Quantity Supplied (Qs) is greater than Quantity Demanded (Qd) causing a surplus. To Calculate a Surplus: Quantity Supplied minus Quantity Demanded

Nonbinding Price Floor Price Floor (Pf) set below Price Equilibrium (Pe). Does not prohibit price from reaching Pe.

Price Ceiling= Shortage Disequilibrium Pc- Central Authority sets a Price Ceiling below the Equilibrium Price (Pe). Quantity Supplied (Qs) is less than Quantity Demanded (Qd) causing a shortage. To Calculate a Shortage: Quantity Supplied minus Quantity Demanded

Nonbinding Price Ceiling Price Floor (Pf) set below Price Equilibrium (Pe). Does not prohibit price from reaching Pe.

Business Organizations Sole Proprietorship Partnership Both

Business Organizations Partnership Sole Proprietorship Both More Management Expertise-Specialization Decision Making Requires Consensus Multiple Owners: Shares Profit Greater Access to Financial Capital (Money) Quicker Decision Making One Owner: Retains All Profit Easiest and Least Expensive to Start Difficult to Raise Money Pride of Ownership Unlimited Liability Lower Taxes Limited Life

Business Organizations

Business Organizations

Market Structures Monopolistic Competition Perfect Competition Least Competitive Most Competitive Monopolistic Competition Perfect Competition Monopoly Oligopoly Examples: Utilities- Water & Electricity Automobiles Telecommunications Breakfast Cereals Airlines Restaurants Hotels Hair Salons Agriculture

Market Structures

Market Structures