SS12 CODES/KEY CONCEPTS & PRINCIPLES

P - Price
QD - Quantities demanded
QS - Quantities supplied
Po - Original Price
P1 - New Price
QDo - Original quantities demanded
QSo - Original quantities supplied
QD1 - New quantities demanded
QS1 - New quantities supplied
Eo - Original equilibrium
E1 - New equilibrium
MQ - Market quantities (QD/QS)
M1 - Month 1
M2 - Month 2
Y1 - Year 1
Y2 - Year 2
W1 - Week 1
W2 - Week 2
COLOR CODES:
Black - Axes, notations, symbols, codes
Blue - Demand curve
Red - Supply curve
R - Revenue
Ro - Original revenue
R1 - New revenue
MR - Marginal revenue
Pro o - Original profit
Pro 1 - New profit
PC - Production Costs
PCo - Original PC
PC1 - New PC
R = P x QD
Pro - Profit
P = R - PC
MC - Marginal cost/additional cost
AC - Average cost/unit cost
FC - Fixed cost
VC - Variable cost
PC = FC + AC
PC = Rent + Wages + Capital
Taxes = additional PC
Subsidies = additional Capital
AC-MC approach
MR-MC approach

P>AC pricing strategy (cost absorption)

Ceteris Paribus = other factors held constant
LSD - Law of Supply & Demand
Law of demand - negative relationship (inverse)
Law of supply - positive relationship (direct)
Determinants of demand - income, population, tastes & preferences, price
expectations, prices of related goods
Determinants of supply - technology, number of sellers, productions costs,
taxes & subsidies, prices of other goods
Change in demand vs. change in quantities demanded
Change in supply vs. change in quantities supplies
Movements of the DC/SC curves
Movements within/along the DC/SC curves
Possibilities: increase, decrease, constant
Shortage: D>S, P increases to achieve new equilibrium
Surplus: D<S, P drops to achieve new equilibrium
Impacts on Price: increase, decline, constant
Law of Diminishing Marginal Productivity - profit maximization principle
Law of Diminishing Marginal Utility - optimal satisfaction principle
Elasticity
Demand elasticity
Supply elasticity
TYPES of elasticity: Unitary, Inelastic, Elastic, Perfectly Elastic, Perfectly
Inelastic
Elasticity formula (SLOPE)
Factors of Production
Rules of Production
Profit Analysis
Opportunity Cost, scarcity, economic choice
Economics
Types of resources
Basic Economic Sectors
Macroeconomics
Microeconomics
Positive (pure, descriptive) vs. Normative (policy. prescriptive) economics
Malthusian theory
Ricardian theory: specialization, absolute advantage, comparative advantage
Capitalism vs socialism
Evils of capitalism
Positive side of capitalism: Multiplier Effect
Communism: command economy
Criteria for a sound economy: equity, abundance, full employment, sound tax
system, economic efficiency, economic growth, economic security, price
stability, balance of trade, etc