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

CHAPTER

7 Elasticity, Microeconomic Policy, and Consumer Theory

IN THIS CHAPTER

Summary: It is critical to remember that behind the faceless supply and

demand curves are individuals making decisions. These decisions are made

with the rational decision maker’s best interests at the top of the agenda but

are influenced by many variables. This chapter begins by focusing on how

sensitive consumer decisions are to external forces and how policies might

affect the market and influence those choices. It concludes by analyzing the

theory behind how consumers make choices to maximize their happiness.

Key Ideas

JPrice Elasticity of Demand

JIncome Elasticity

JCross-Price Elasticity

JPrice Elasticity of Supply

JThe Impact of Taxes and Subsidies

JThe Impact of Price Controls

JTariffs and Quotas

JUtility Maximization

74 á

KEY IDEA

http://www.ebook3000.com