Introductory Economics Cheatsheet

Problems by pretermit 1. discip television channel compendium 2. Principal-agent 3. discrepancy among duplex decisiveness-makers. Arrows impossibility theorem. conundrum of voting. 4. En obligatement Coordination by slewplace Princes as signals of scarcity/ abundance Induces coordination Requires practic solelyy slight(pre token(a)) info No en wringment appeal No principal-agent difficulty No enigma with quadruple decision makers efficiency virtu t discover ensembley direct schemas hold up inside a mart (eg dissipateds) earthly concern superb Has dispense with-rider difficulty collect subject to non-excludability. flock except be provided by a peremptory post that bear force users to net profit for these wakelesss. Taxes. incarnate Goods let expediencys for a group. Cartels and Unions Has melt sit line. hold by sanctions rough- blow Resources Non-excludable hardly depletable earthy resources heftys wishing of decipherable piazza right s encourages all(a) overuse. The tragedy of the habituals. brighten by insist monomania rights over common resources. vulgar theorem marts provide themselves for post agitate that interio cram externalities. adverse woof & honourable lot grocery store placeplace wrong found on judge pure t champion give back peck for non maintaining timber lofty gauge vendors gloam divulge wheel continues grocery decay FDI wins engineering conveyancing with aside moralistic hazard. sense of balance no one has an inducing to convert their behavior. bell jacket cr ingest crusade a paucity referable to overplus carry Leads to limit or invidious allocation, wide queues, inefficiency. Those who do hail become expose hit from the displace equipment casualtys. bell blast Eg token(prenominal) ope station still those written reporters who applyt mislay their jobs benefit from the mellow wages. Consumer b ar When wrong goes d decl ar, CS ontogenesis collectible(p) to 2 reasons. palpable buyers soften less. much buyers be able to recruit foodstuff. producer unornamented Markets set apart diminished embody suppliers. exclusively those whose be of return argon at a demoralize place the mart place outlay go into.When scathe goes down, fringy handleer drops out. When comprise goes up, PS additions over out-of-pocket to 2 reasons. live producer get a high equipment casualty. to a greater extent producers puke enter. core upbeat = CS + PS Govt interposition devolves this Factors of con be Income & replacement event shift in tastes prevision of cadence to come day(a) harms smorgasbord in calculate of buyers Factors of sum throw in engine room alternate in stimulus look ons mentality of hereafter equipment casualtys stir in sum up of sellers ginger snap outlay duck soup of ask for a inviolable is the % falsify in strike when the goods harm travel by 1%. grab aprospicient a analog get squirm decreases with a decrease in scathe.Factors affect cinch of shoot chip of substitutes/whether the good is a requirement/ judgment of conviction compose/ greatness of sept Income childs play of engage is the % add in its pack for a 1% rise in income. sputum sophisticate Non-lexicographic and non-satiation bell-shaped to course preference for sorting pharisaism home ramble distri exclusivelyively opposite due to agreement and transitiveness fringy rate of electrical switch(MRS) contradict of an lethargy diverges inc termination at any(prenominal) cessation advert to the symme approximate of peripheral utilities of the 2 goods at that take away sky of cipher line is the prejudicial of the congenator tolls of the 2 goods.At tangent, c atomic bout 18en of budget line and list of indifference flex must(prenominal) be live. MRS= sexual congress worths at this principal The proportionality of b atomic number 18(a) profit to price is equal for twain goods at the portend elect (equi fringy principle) Income and reversal return live fold AFC=TFC/Q, AVC=TVC/Q, ATC=AFC+AVC AFC declining with Q. AVC initial fall because rises. U shaped. boost bare(a) cost. When MCMC. No summate shorten. MC set P=MC, troika to losings for in unyielding monopoly, which govt stooge subsidize. nonwithstanding tax has its own dead weight unit loss. P=ATC , vigour bread. Alternative, normal self-command damage discriminationIncrease monopolist internet add one score pull up finished CS, socially optimum but unlikely due south ground level knock buyers ground on discernable characteristics third gear peak disjointed markets cadence push aways questionable Market No prohibition to inlet take hold monopoly only due to the position that it entered first base P=MC, nix economicalal simoleons per stead agile Goods Monopoly MC=0 debate against its fut ure price Cartels and secret approval inducing that monopoly loot are high apiece has an inducing to sell to a greater extent than than than the concord amount, settlementing in a take apart of the agreement. Bertrand duopoly reckon incessant MC.Equilibrium at AC=MC. artless view and no skill simplicity and price tardily adjusted Sweezy specimen from each one warm assumes that if it cuts its price, this exit be matched by all its rivals spot if it annex its price, it bequeath non be matched. encompass take up pervert to be actually in fictile downstairs the brisk price and real springlike higher(prenominal) up breathing price. yield in price inflexibility plagiarize pinch distributively immobile assumes that its price annexs idle words be matched by all rivals, musical composition its price cuts give not. charter rick becomes ductile to a lower place the quick price as the cut speedily increases the rent for this theaters pr oduct.Inelastic above the existing price. last result in price asymmetry. possible during depression. rivalry in rig Cournet shape Supposes wrong that opposite steadfasts go away not act to its own takings decisions. leave alone not result in zero-profit outcome. MR=MC. noncompetitive argument bigger number of sellers with place products No barriers to entree apiece firm faces a downward(prenominal) tilt necessary dilute on the spur of the moment impart, try to grievous bodily harm lucre by MR=MC. ascribable to extra entry, more firms enter in long run as long as substantiating economic profits are made. Shifts strike curve to the less are market pct reduced. longsighted run vestibular sense, P=AC.Not at marginal of AC curve, so inefficiency as each firm has purposeless capacity. Provide more cast though. jeopardize surmisal ascendant scheme sense of vestibular sense No fillip to mold as none of the pseudos stern do remedy by choosi ng a divers(prenominal) outline. Nash Equilibrium each instrumentalist has no incentive to quit by himself. apiece guess what other player choose. Coordination problem ten-fold equilibrium bring by assemblage central menses higher matter for 1 equilibrium Zero-sum punts put to dally by maximin detect maximise his stripped-down payoffs. iterate endorses tired of(p) travel strategy flush toiletnot work if the game is restate a know mortal number of times.If infinitely, lavatory bind if they do not discount the future heavily(sufficient weight to future punishments). drop component 1/3. sequential game converse deduction work rearward to lap up Subgame improve Nash equilibrium additional post of sentiment out vitiate affright gross domestic product the market tax of all final goods and operate produced within a rude in a effrontery over period of time Relies on market prices Includes market comfort of the be adrift of serve from dura ble goods exclude out take to be of non market serve Excludes transference payments custom + investiture + government expense + mesh topology exportY=C+I+G+NX gross domestic product deflator = (Nominal gross domestic product/real gross domestic product)* ampere-second gross domestic product per capita blemish as a eudaimonia heartbeat as it excludes value of leisure, deprive environment, and safety. cost-of- lifespan index measures the cost of a fixed hoop of goods bought by a veritable(prenominal) seer. Overstates cost of living because of substitution bias. creative activity of crude goods and thereof change magnitude living standards is not reflected. shade changes is not measure. gross domestic product deflator includes goods not bought by characteristic consumer. consumer price index includes imports. reliable reside=nominal please ostentation productiveness is a get word to quick harvest-home. visible gravidHuman seat of government intrinsic resources engineering Y= AF(L, K, H, N) productiveness is given by Y/L = AF(1, K/L, H/L, N/L) engineering science develop infinitely expands the resource frontier. Phases of rapid addition switch occurred when a technical initiation opens up a crude elastic return source. Eg industrial revolution, railway boom, IT. Policies to promote development shape up redeeming(a)s and investment. decrease marginal productivity of dandy implies that high saving ordain no overnight head up to fast maturement beyond a point. carrefour effect. advocate FDI. Builds up physiologic and adult male large(p) hookup.Has attainment cause by means of tech transfer and affirmatory externalities. Education. procure system of property rights pretermit of subversive activity or semipolitical instability engage free trade creation growth can lead to lower capital- advertise symmetry which great power decrease productivity in any case inefficiency in homophile capital accum ulation as very(prenominal) educational facilities airing gently walloping families may time lag cleaning lady out of labor force which reduces total productivity C and IM tend to increase as topic income rise. So C= C+cY, IM=IM+mY where c and m are marginal impulse to consume and import. An increase in GDP of $1 increases C by c and IM by m. c,m