AP Microeconomics Final Review Part 2: Sections 9 and 10 Elasticity Concepts

Substitution Effect: _____________________________________________________________________

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Income Effect: _________________________________________________________________________

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Elasticity Formulas

Name Formula Possible Numerical values

Price elasticity of

demand

Midpoint Method

Cross Price Elasticity

Income Elasticity

AP Microeconomics Final Review Part 2: Sections 9 and 10 Graph out and label all parts

Perfectly Inelastic Demand

Perfectly Elastic Demand

AP Microeconomics Final Review Part 2: Sections 9 and 10

Perfectly Inelastic Supply

Perfectly Elastic Supply

AP Microeconomics Final Review Part 2: Sections 9 and 10

Consumer Surplus

Individual Consumer Surplus

AP Microeconomics Final Review Part 2: Sections 9 and 10

Producer Surplus

Individual Producer Surplus

AP Microeconomics Final Review Part 2: Sections 9 and 10

Total Surplus

Tax Revenue from an Excise Tax

AP Microeconomics Final Review Part 2: Sections 9 and 10

Tax Reducing Consumer and Producer Surplus

Deadweight Loss

AP Microeconomics Final Review Part 2: Sections 9 and 10

Total Utility

Marginal Utility

AP Microeconomics Final Review Part 2: Sections 9 and 10

The Budget Line

Optimal Consumption Bundle

AP Microeconomics Final Review Part 2: Sections 9 and 10 Define each of the Following

Explicit Costs: _________________________________________________________________________

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Implicit Costs: _________________________________________________________________________

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Complete the following chart

Case 1 Case 2

Revenue

$100,000 $100,000

Explicit Cost

-$60,000 -$60,000

Depreciation

-$5,000 -$5,000

Accounting Profit

1. 2.

Implicit Costs of Business

(Implicit Cost of Capital) Income which could have been earned on capital used in the best way

-$3,000 (Sell equipment for $5o,ooo and earn $3,000 on interest)

-$3,000 (Sell equipment for $5o,ooo and earn $3,000 on interest)

Income which could have been earned as a barista in someone’s else’s shop

-$34,000 (Could have earned $34,000 working for someone else)

-$30,000 (Could have earned $30,000 working for someone else)

Economic Profit

3. 4.

AP Microeconomics Final Review Part 2: Sections 9 and 10 Graph out and label all parts

The Firm’s Profit-Maximizing Quantity of Output

Production Function

AP Microeconomics Final Review Part 2: Sections 9 and 10

Marginal Cost, Average Total Costs, Average Variable Costs, Average Fixed Costs

Economy of Scale

AP Microeconomics Final Review Part 2: Sections 9 and 10

Short –run and Long-Run Economies of Scale

AP Microeconomics Final Review Part 2: Sections 9 and 10

COMPARISON OF MARKET STRUCTURES

PERFECT ECONOMY

MONOPOLISTIC COMPETITION

OLIGOPOLY MONOPOLY

Number of Firms

Variety of Goods

Control over Prices

Barriers to Entry

Examples