ECON 201 Study Guide - Mixed Economy, Monopolistic Competition, Inferior Good
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ECON 201 Full Course Notes
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Econ 201 notes: concave: increase in opportunity cost, convex: decrease in opportunity cost. Larger economies have larger ppf and more outwards: command economy price is controlled by the government. Invisible hand: free market: mixed economy is both, excess supply is on top of the supply and demand curve, excess demand is on the bottom of the supply and demand curve. Inferior good: higher income use less: normal income: higher income higher demand, price ceiling is the maximum you can charge, price floor is the minimum you can charge, quota: reduces supply (vertical line), smaller q, higher p. If a good has a substitute it will be more elastic. Inferior good has a negative elasticity of demand: higher price elasticity means its more inelastic, total economic surplus is on the left, the more elastic the supply is the smaller the dead weight loss and more revenue. If compliment price goes down, the other goods price goes up and q goes up.