Midterm Reviewer in Micro Economics PDF

Midterm Reviewer in Micro Economics Week 7 and 8: Supply and Demand: Demand Curve: Downward sloping, shows quantity demanded at different prices. Supply Curve: Upward sloping, shows quantity supplied at different prices. Market Equilibrium: Equilibrium Point: Where supply an...

Midterm Reviewer in Micro Economics Week 7 and 8: Supply and Demand: Demand Curve: Downward sloping, shows quantity demanded at different prices. Supply Curve: Upward sloping, shows quantity supplied at different prices. Market Equilibrium: Equilibrium Point: Where supply and demand curves intersect. Equilibrium Price: Price at equilibrium point. Equilibrium Quantity: Quantity at equilibrium point. Shifts in Supply and Demand: Increase in Demand: Price and quantity increase. Increase in Supply: Price decreases, quantity increases. Types of Market Equilibrium: Stable: Market forces return to equilibrium after a disturbance. Unstable: Market moves further away from equilibrium after a disturbance. Dynamic: Continuous adjustment to changes. Partial: Focuses on a single market. General: Considers multiple interrelated markets. Government Intervention: Price Ceiling: Maximum price set by government.  Price Floor: Minimum price set by government. Week 9: Consumer Behavior: Decision-Making Process: Problem recognition, information search, evaluation of alternatives, purchase decision, post-purchase evaluation. Influencing Factors: Psychological, social, economic, and environmental factors. Demographics: Age, gender, income, education, and location. Trends and Patterns: Understanding consumer trends is crucial for businesses. Economic Implications: Demand: Consumer preferences drive demand for products. Pricing Strategies: Various pricing strategies are used to maximize revenue. Product Development: Understanding consumer needs leads to innovative products. Consumer Decision Making: Needs and Wants: Consumers prioritize basic needs and desires. Perceived Value: Consumers assess the value of a product. Brand Loyalty: Consumers may prefer specific brands. Social Influence: Recommendations from others influence decisions. Marketing and Advertising: Marketing can shape consumer perceptions. Price Sensitivity: Consumers may be price-conscious. Convenience: Convenience influences purchasing decisions. Quality and Performance: Consumers seek quality products. Trends and Fashion: Current trends can impact purchasing  decisions. Cultural and Social Factors: Cultural and social norms influence choices. Consumer Purchase Quantity: Budget Constraints: Limited income restricts purchasing power. Marginal Utility: Consumers consider the additional satisfaction from each unit. Price Sensitivity: Price changes affect purchase quantity. Substitution Effect: Consumers may switch to cheaper alternatives. Income Effect: Income changes impact purchasing power. Consumer Preferences: Individual preferences influence choices. Expectations: Future expectations affect current purchases. Consumption Patterns: Regular or occasional consumption patterns influence quantity. Rational Consumer Behavior: Utility Maximization: Consumers aim to maximize satisfaction from their purchases. Optimal Allocation: Consumers allocate their budget to maximize utility. Satisfaction over Time: Consumers consider long-term satisfaction. Week 10: Consumer Choice and Utility Key Concepts: Budget Constraint: The limit on the consumption bundles a consumer can afford, given their income and the prices of goods. Utility: The satisfaction or pleasure derived from consuming goods and services. Marginal Utility: The additional satisfaction gained from consuming  one more unit of a good. Income Effect: The change in consumption of a good due to a change in income, holding prices constant. Substitution Effect: The change in consumption of a good due to a change in its relative price, holding real income constant. Indifference Curve: A curve showing combinations of goods that yield the same level of satisfaction to a consumer. Consumer Surplus: The difference between the maximum price a consumer is willing to pay for a good and the actual price they pay. Tips for Maximizing Consumer Satisfaction: Prioritize Needs: Identify essential needs and allocate budget accordingly. Comparative Shopping: Research prices, quality, and features before purchasing. Utilize Technology: Use budgeting apps, price comparison websites, and reviews to make informed decisions. Understand Behavioral Biases: Be aware of cognitive biases like anchoring, loss aversion, and framing to avoid impulsive decisions. Take Advantage of Discounts and Loyalty Programs: Save money by using coupons, discounts, and loyalty rewards. Excellent summary of Week 11! To further enhance your understanding, here are some additional key points: Production Function: Short-run: At least one input is fixed. Long-run: All inputs are variable. Costs of Production:  Explicit Costs: Monetary costs (e.g., wages, rent). Implicit Costs: Opportunity costs (e.g., forgone income from alternative uses of resources). Economies of Scale: Internal Economies: Cost advantages within a firm (e.g., specialization, bulk buying). External Economies: Cost advantages from industry-wide factors (e.g., infrastructure, skilled labor). Diseconomies of Scale: Occurs when a firm becomes too large, leading to inefficiencies and increased costs. Short-Run and Long-Run Production Decisions: Short-run: Focus on adjusting variable inputs to maximize output given fixed inputs. Long-run: Adjust all inputs to achieve optimal scale and production levels. Profit Maximization: MR = MC Rule: The profit-maximizing output level occurs where marginal revenue equals marginal cost. Shutdown Rule: If price is below average variable cost, the firm should shut down in the short run. Break-Even Analysis: Helps determine the minimum sales volume needed to cover costs. Provides insights into pricing, cost control, and financial planning.