Econ 152 Microeconomics Principles

Course Overview

• Econ 152 typically covers Microeconomics principles.
• Focus on individual behavior and market dynamics.

Key Concepts

1. Supply and Demand

   • Law of Demand: Inverse relationship between price and quantity demanded.
   • Law of Supply: Direct relationship between price and quantity supplied.
   • Market Equilibrium: Point where supply equals demand.

2. Elasticity

   • Price Elasticity of Demand: Measure of how quantity demanded changes with price changes.
   • Elastic vs. Inelastic Demand: Elastic (>1), Inelastic (<1), Unit Elastic (=1).
   • Income Elasticity and Cross-Price Elasticity: Measure of how demand responds to changes in income or prices of other goods.

3. Consumer Behavior

   • Utility Maximization: Consumers choose combinations of goods to maximize satisfaction.
   • Budget Constraints: Limits on consumer spending based on income and prices.

4. Production and Costs

   • Factors of Production: Inputs like labor, capital, land.
   • Short-run vs. Long-run Costs: Fixed vs. variable costs, economies of scale.

5. Market Structures

   • Perfect Competition: Many sellers, identical products, free entry and exit.
   • Monopoly: Single seller, unique product, high barriers to entry.
   • Oligopoly: Few sellers, interdependent pricing, potential for collusion.

6. Market Failures

   • Externalities: Costs or benefits that affect third parties (e.g., pollution).
   • Public Goods: Non-excludable and non-rivalrous goods (e.g., national defense).
   • Asymmetric Information: Situations where one party has more information than the other.

Important Models

• Consumer Choice Model: Analysis of consumer decision-making behavior.
• Production Possibility Frontier (PPF): Illustrates trade-offs between two goods.
• Cost Curves: Average cost (AC), marginal cost (MC), and their implications for production decisions.

Policy Implications

• Government Intervention: Taxes, subsidies, and regulations to correct market failures.
• Welfare Economics: Study of how economic policies affect social welfare.

Graphs and Diagrams

• Supply and Demand Curves: Visual representation of market equilibrium.
• Elasticity Curves: Illustrate different elasticity scenarios.
• Cost Curves: Show relationships between short-run and long-run costs.

Exam Preparation Tips

• Understand key terms and definitions.
• Practice drawing and interpreting graphs.
• Solve problems related to elasticity and cost calculations.
• Review case studies illustrating market structures and failures.

Course Overview

• Econ 152 emphasizes principles of Microeconomics.
• Explores individual behaviors and interactions within market dynamics.

Key Concepts

• Supply and Demand

  • Law of Demand: As prices decrease, the quantity demanded increases, creating an inverse relationship.
  • Law of Supply: Higher prices lead to a greater quantity supplied, indicating a direct relationship.
  • Market Equilibrium: Achieved when quantity supplied equals quantity demanded, determining market prices.

• Elasticity

  • Price Elasticity of Demand: Quantifies how changes in price affect the quantity demanded; crucial for understanding consumer behavior.
  • Elastic Demand: Occurs when the price elasticity coefficient is greater than 1, indicating a significant change in demand with price fluctuations.
  • Inelastic Demand: Characterized by a price elasticity coefficient of less than 1, suggesting minimal change in demand despite price changes.

Test your knowledge of microeconomic concepts covered in Econ 152. This quiz will focus on supply and demand, elasticity, and market equilibrium. Challenge yourself to understand individual behavior and market dynamics better.