Samenvatting Microeconomics

Micro economics summary

Week 1: supply and demand & week 2: economic policy
(chapter 2 and 3)

Market: specific product is bought and sold on a certain location and time.
- Four assumptions:
 Single market
 Products identical
 Same price & full information
 Many consumers and producers

Supply curve: QS = p + …




Demand curve: QD = … - p

If income rises:
- Demand curve shifts to the right if normal
good
- Demand curve shift to the left if inferior


Market equilibrium for Qs = QD
Where P* is price equilibrium & Q* is quantity equilibrium




For P > P* , excess supply
For P < p* , excess
demand


Price elastics
Of demand curve: ED = (∂QD / ∂PD )(P / QD)
 elastic if between -∞ and -1 & inelastic if between -1 and ∞
Of two functions: EKL = (∂QDK / ∂PL)(PL / QDK) , where QDK is demand curve of
K
 substitutes if positive & complement is negative
Of income: EI = (∂QD / ∂I)(I/QD)
 Inferior good is negative, normal good is positive & luxury if above 1

Policies that effect economic welfare (surplus)