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Short summary Economics for Social Sciences (MAW) - UVT (Social Sicences)
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Summary with all the basics for the exam of Economics MAW (for social sciences). Info is derived from the lectures.
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Summary Economicsfor Social Sciences
Lectures
Lecture 1
The law of demand
Relationship between demand and price.
Shows how much people are willing to buy/ demand at different prices.
When a band rises in fame, their demand curve moves in total to the right.
Movement along the demand curve
A change in quantity demanded die to a change of price.
Shift of the demand curve
Change in quantity demanded at any given price (price is constant).
Increase in demand: to the right
Decrease in demand: to the left.
Causes in shift of demand curve:
- Changes in taste
- Changes in prices of related goods:
Substitutes: Price 1 rises, demand 2 increases.
Complements: Price 1 rises, demand 2 decreases.
- Changes in income:
Normal goods: Rise in income increases demand.
Inferior goods: Rise in income decreases demand.
- Changes in expectations.
Individual consumer surplus
The net gain to an individual buyer from the purchase of a good. It is equal to the difference
between the buyer’s willingness to pay and the price paid.
Total consumer surplus
The sum of the individual consumer surpluses of all buyers of a good.
A fall in price increases the consumer surplus.
The supply curve
, Relationship between quantity supplied and price.
Shows how much people are willing to sell/ supply at different prices.
Shift or a movement along.
Causes of a shift in supply curve:
- Changes in taste
- Changes in input prices:
Input: A good that is used to produce another good.
- Changes in technology
Turns input to output more efficiently.
- Changes in expectations
Expert stock price to rise: less supplied.
Individual producer surplus
The net gain to a seller from selling a good. It is equal to the difference between the price
received and the seller’s cost.
Total producer surplus
The sum of the individual producer surpluses of all the sellers of a good.
A rise in price increases producers surplus.
Market equilibrium
Price above: surplus
Price below: shortage.
In competitive markets, the maximum possible total surplus (= highest gain to society) is
achieved at the market equilibrium.
In the market equilibrium there is no way to make some people better off without making others
worse off: they are efficient.
There is no way to reallocate goods or change the quantity traded such that total surplus
increases.
Total surplus
Net gain to consumers and producers from trading in the
market. It is the sum of the CS and PS.
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