COMPLETE TEST BANK:
BY DAVID BESANKO, RONALD BRAEUTIGAM:
MICROECONOMICS FOURTH (4TH) EDITION LATEST UPDATE.
, lOMoAR cPSD| 1887927
SUMMARY
MICROECONOM
ICS
DAVID BESANKO & RONALD
BRAEUTIGAM4TH EDITION
,lOMoAR cPSD| 1887927
, lOMoAR cPSD| 1887927
CONTENTS
1. ANALYSING ECONOMIC PROBLEMS ............................................................................ 12
1.1. WHY STUDY MICROECONOMICS? .................................................................... 12
1.2. THREE KEY ANALYTICAL TOOLS........................................................................... 13
1.2.1. CONSTRAINED OPTIMISATION ...................................................................... 13
MARGINAL REASONING.......................................................................................... 14
1.2.2. EQUILIBRIUM ANALYSIS ............................................................................... 15
1.2.3. COMPARATIVE STATICS ................................................................................ 15
1.3. POSITIVE AND NORMATIVE ANALYSIS ................................................................. 15
2. DEMAND AND SUPPLY ANALYSIS ............................................................................... 16
2.1. DEMAND, SUPPLY AND MARKET EQUILIBRIUM ...................................................... 16
2.1.1. DEMAND CURVES ......................................................................................... 16
2.1.2. SUPPLY CURVES ........................................................................................... 18
2.1.3. MARKET EQUILIBRIUM .................................................................................. 19
2.1.4. SHIFTS IN SUPPLY AND DEMAND ................................................................... 20
SHIFTS IN EITHER SUPPLY OR DEMAND .................................................................. 20
SHIFTS IN BOTH SUPPLY AND DEMAND ................................................................... 22
2.2. PRICE ELASTICITY OF DEMAND ....................................................................... 22
CLASSIFICATION OF PRICE ELASTICITIES OF DEMAND............................................. 23
2.2.1. ELASTICITIES ALONG SPECIFIC DEMAND CURVES ........................................... 24
LINEAR DEMAND CURVES....................................................................................... 24
CONSTANT ELASTICITY DEMAND CURVES ............................................................... 26
2.2.2. PRICE ELASTICITY OF DEMAND AND TOTAL REVENUE ..................................... 26
2.2.3. DETERMINANTS OF THE PRICE ELASTICITY OF DEMAND ................................. 26
2.2.4. MARKET-LEVEL VERSUS BRAND-LEVEL PRICE ELASTICITIES OF DEMAND ......... 27
2.3. OTHER ELASTICITIES ......................................................................................... 27
2.3.1. INCOME ELASTICITY OF DEMAND .................................................................. 27
2.3.2. CROSS-PRICE ELASTICITY OF DEMAND .......................................................... 27
2.3.3. PRICE ELASTICITY OF SUPPLY ................................................................... 28
2.4. ELASTICITY IN THE LONG RUN VERSUS ELASTICITY IN THE SHORT RUN ................ 28
2.4.1. GREATER ELASTICITY IN THE LONG RUN THAN IN THE SHORT RUN ................. 29
2.4.2. GREATER ELASTICITY IN THE SHORT RUN THAN IN THE LONG RUN ................. 31
2.5. BACK OF THE ENVELOPE CALCULATIONS .............................................................. 31
2.5.1. FITTING LINEAR DEMAND CURVES USING QUANTITY, PRICE AND ELASTICITY INFORMATION
31
2.5.2. INDENTIFYING SUPPLY AND DEMAND CURVES ON THE BACK OF AN ENVELOPE. 32
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