5 Steps to a 5 AP Microeconomics, 2014-2015 Edition

In general, the more vertical a good’s demand curve (D 0 ), the more inelastic the demand for that good. The more horizontal a ...

expensive good. We expect price elasticity to increase as more time passes after the ini- tial increase in the price. Example: I ...

In Figures 7.4 and 7.5, we can graphically illustrate the connection between the demand curve, elasticity, and total revenue. 80 ...

consumption of fast-food meals is quite income elastic. A relatively small percentage increase in income causes a large—in fact, ...

Price Elasticity of Supply Now that we have addressed the sensitivity of consumer consumption of good X, let us dis- cuss elasti ...

7.2 Microeconomic Policy and Applications of Elasticity Main Topics:Excise Taxes, The Role the Supply Curve Plays in the Impact ...

of Tshifts the supply curve upward by T, but with a perfectly elastic demand curve, the equilibrium price of cigarettes does not ...

Since cigarette demand is usually inelastic, significant improvements in the health of consumers is probably not the primary out ...

A perfectly inelastic, or vertical, supply curve illustrates the special case where any change in the price creates absolutely n ...

Conversely, as the price elasticity of demand rises and the price elasticity of supply falls, the producer’s share of a per uni ...

in a downward vertical shift in the supply curve for good X. Be careful here! This is not a “decrease in supply”!Since subsidies ...

is an overallocation of resources to milk production. Quite simply, the policy produces a situation where “too much” milk is pro ...

situation where the MB >MC, and we see an underallocation of resources in the rental apartment market. This policy, intended ...

Elasticity, Microeconomic Policy, and Consumer Theory ‹ 91 Example: The hypothetical domestic supply and demand for steel is pic ...

Quotas Quotas work in much the same way as a tariff. An import quotais a maximum amount of a good that can be imported into the ...

Elasticity, Microeconomic Policy, and Consumer Theory ‹ 93 7.4 Consumer Choice Main Topics: Utility; Unconstrained Consumer Choi ...

Unconstrained Consumer Choice So how much coffee should our desk jockey consume in a typical morning? Assuming that he does not ...

Constrained Utility Maximization Now we require Joe to pay a price Pcfor additional cups of coffee. With a fixed daily income an ...

Constrained Utility Maximization, Two Goods Economists see a consumer, constrained by income and prices, as living within a budg ...

three scones (MU =20) for a total utility of 84 (10 + 30 + 24 + 20). But this combination would only spend a total of $14, and s ...