A.

Lecture 1
1. deals with the allocation of scarce resources
2. Origin of the word economics?
3. deals with about What is
4. Deals with the questions What should be
5. studies behaviour of individual units
6. focus is on the whole/aggregate economy

B. Lecture 2
1. Four basic Economic Problems?
2. Systems of allocation?
3. most ancient and prevalent way to solve economic problems before 20 th
century
4. centrally-planned economies, government decides on goods to produce
5. completely unregulated
6. institution that determines the answers
7. tool useful for illustrating choices available to society and its constraints
all the possible combinations of the maximum amounts of two goods and
services that can be produced with a given amount of technology and
resources

C. Lecture 3 (part 1)
1. Is an institution that facilitates transactions between buyers and sellers
2. Refers to the amounts of a good and/or service that consumers are both
willing and able to purchase
3. States that the quantity demanded of a good and/or service is negatively
or inversely related to its own price, ceteris paribus
4. Assumptions about the PPF? (5)
5. The value of the best foregone alternative use of the resource
6. P => opportunity cost of good i.e., have to give up more of other
goods
7. P => reduces the purchasing power of consumers income
8. Amount of goods that money can buy
9. Demand Equation?
10.Refers to the amounts of a good and/or service that a firm or producer is
willing and able to offer for sale
11.States that quantity supplied is positively related to price, cet. par.
12.Supply Equation?
13.What is a change in Quantity Demanded?
14.What is a Change in Quantity Supplied

D. Lecture 3 (Part 2)
1. What is a Change in demand?
2. Factors that cause shifts in demand curve? (5)

3.
4.
5.
6.
7.

Income => increase in demand

Income => decrease in demand
What is a Change in Supply or shift in the supply curve?
Factors that cause shifts in the supply curve? (6)
Occurs when Qs=Qd

E. Lecture 3 (Part 3)
1. Imposed by the government for the benefit of producers
2. Imposed by the government for the benefit of consumers
3.

F. Lecture 3 (Part 4)
1. Measures the degree of responsiveness of quantity demanded to changes
in the own price of the good
2. computed for two points along a demand curve?
3. elasticity is measured for a single point?
4. % in Qd > % in the own P. Quantity demanded is relatively sensitive to
price change
5. % in Qd < % in the own P. Quantity demanded is relatively insensitive
to price change (e.g., -0.5, -0.8)
6. % in Qd = % in the own P. Quantity demanded matches proportional
change in P ( = 1)
7. A price change does not change quantity demanded
8. A small change in price causes changes in quantity demanded
9. Total Revenues?
10.Determinants of own price elasticity of demand? (6)
11.What is Income Elasticity ( Ei)?
12.Formula for Income Elasticity ( Ei)?
13.When is a good considered an inferior good?
14.When is a good considered a normal good?
15.When is a good considered a necessity?
16.When is a good considered a luxury?
17.What is Cross price elasticity of demand?
18.Formula for Cross price elasticity of demand?
19.When is a good considered a substitute good of another?
20.When is a good considered a complementary good of another?
21.What is Price elasticity of supply?
22.Formula for Price elasticity of supply?
23.Effects of government tax policies on consumption and production?
24.Tax per unit of the product?
25.Tax as percentage of the selling price?
26.If demand is more price elastic, the burden of the tax is likely to be
shouldered more by the _________

27.If demand is less price elastic, the burden of the tax is likely to be
shouldered more by the _________

Equations
1. Demand Equation

- Qd=a - bP
o
o

a= horizontal movement
-b= slope of the demand curve
in Qd for a one unit (peso) in P

2. Supply Equation

- Qs = c + dP
c= horizontal slope
d= slope of the supply curve
in Qs for one unit (peso) in peso
3. Elasticity
o
o

- = (Qd2 Qd1)/ (Qd1 + Qd2) (P2 P1)/

(P1 + P2)
4. Total Revenue (TR)

- P*Q
5. Income Elasticity ( Ei)
- Measures the responsiveness of quantity demanded to changes in income
- Formula:

o = (% in Qd)/ (% in income)
6. Cross price elasticity of demand
-

Measures the responsiveness of quantity demanded for one good to changes

in the price of another good
Formula (for two goods, X and Y):

o XY = (% in QdX)/ (% in Py)

6. Price elasticity of supply

- Measures the degree of responsiveness of quantity supplied to changes in the
own price of the good
- Formula:

o = (% in Qs)/ (% in P)