question
price elasticity
answer
price = marginal cost function
question
income price elasticity
answer
shift demand function based on price of tax
question
how to find demand function
answer
equilibrium quantity • tax price
question
how to find engel curve
answer
[(new equil. price) + (tax price) - (old equil. price)] / 2
question
demand exceptions
answer
orig. CS - new CS
question
how to get supply function
answer
orig. PS - new PS
question
result of tax on consumer
answer
[(tax price)(old - new equil. quantity)] / 2
question
consumer surplus (aka consumer welfare) & producer surplus
answer
1. price taker (the producers don't dictate price)
2. Homogeneity (the products in market are relatively similar and even identical)
3.
question
tax revenue
answer
Revenue minus costs [R(q) - C(q)]
R(q) = price • quantity
question
tax burden
answer
when marginal revenue [MR(q)] is equal to marginal cost [MC(q)]
R'(q) = MR(q)
C'(q) = MC(q)
R'(q) = C'(q)
question
loss in consumer surplus
answer
the next unit you decide to produce is more expensive
(shown by convex MC function)
question
loss in producer surplus
answer
when price = average cost, revenues = costs
question
deadweight loss
answer
when price < average cost ----- revenues < costs
question
conditions of a perfectly competitive market
answer
lose fixed costs (-rk)
question
profits
answer
close if: p < average variable cost (AVC)
open if: p > average variable cost (AVC)
question
maximizing profits
answer
revenus - variable cost ≥ 0
question
increasing marginal cost
answer
...
question
breaking even
answer
need marginal cost function to be increase and less than revenue function
question
losing money (short run)
answer
when price > average cost
question
pay off of shutting down (in short run)
answer
the sum of consumer surplus and producer surplus
question
when to shut down or stay open (short run)
answer
reduction in total surplus
(occurs when tinkering with market forces)
(occurs when tinkering with market forces)
question
in order to stay open (short run)
answer
maximizing total surplus
created by perfect competition
created by perfect competition
question
minimizing profits (in order to minimize losses)
answer
marginal cost ≤ market price
question
terms of supply to achieve profit (short run)
answer
total tax - (tax burden on consumers)
question
when to produce in long run
answer
(new equil. quantity) • (tax price)
question
total surplus
answer
...
question
deadweight loss
answer
undefined
question
economic effciency
answer
undefined
question
Suppliers produce when
answer
undefined
question
tax burden on consumers
answer
undefined
question
tax burden on producers
answer
undefined
question
total tax (aka tax revenue)
answer
undefined
question
effect when consumers are taxed
answer
undefined
question
effect when producers are taxed
answer
undefined
question
consumer buy as long as
answer
undefined
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