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MIND MAP MICRO CHAP 3 TO 9
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Mind map Chapter 3 to 9
"CETERIS PARIBUS":
All external factors acting on a variable subject are assumed to remain unchanged/constant while testing its relationship with other variable subjects.
Key Concepts:
-Intervention
-Interdependence
-Equity
-Efficiency
-Choice
-Sustainability
-Economic wellbeing
SUPPLY
DEFINITION:
Quantity of goods and services firms are willing and able to supply at different prices in a given time period.
Market:
A market is a place where buyers and sellers can meet to facilitate the exchange or transaction of goods and services.
THE LAW OF SUPPLY:
As the price of a product rises, its supply will usually increase, ceteris paribus.
DEMAND
DEFINITION:
Quantity of goods and services consumers are willing and able to purchase at different prices in a given time period.
MARKET EQUILIBRIUM
PRICE ELASTICITY OF SUPPLY:
A change in one of the NPDD leads to a shift of the demand curve while a change in price leads to a movement along the demand curve curve.
THE LAW OF DEMAND:
As the price of a product falls, its demand will usually increase, ceteris paribus. The demand curve usually slopes downwards.
Non-price determinants of Supply
PRODUCER SURPLUS:
-Primary commodities tend to have inelastic supply as a change in price cannot lead to a proportionally large increase in quantity supplied.
-Manufactured goods tend to have a more elastic supply as it is easier to increase or decrease quantity supplied in response to a chage in price.
ALLOCATIVE EFFICIENCY:
CONSUMER SURPLUS:
ELASTICITY OF DEMAND
They key of Alsea’s profit is the acquisition of brands and the multiplication of its units; restaurants of this particular group are already positioned and the production process functions like a franchise. To maximize profit Alsea is opening more units in more countries.
Non-price determinants of Demand
PRICE ELASTICTY OF DEMAND:
INCOME ELASTICTY OF DEMAND:
INDIRECT TAXES:
SUBSIDIES:
WELFARE GAIN:
POSITIVE EXTERNALITY:
Government intervention in markets
MARKET FAILURE
PRICE CEILING:
PRICE FLOOR: