Essay on Economics and Competitive Labor Market

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AP Microeconomics Review
1. Firm in Perfect Competition (Long-Run Equilibrium) 2. Monopoly Industry with comparison of price & output of a Perfectly Competitive Industry 3. Natural Monopoly with Fair-Return and Socially-Optimum Regulation 4. Negative Externality showing that too much is being produced at too low of a price 5. Positive externality showing that too little is being produced at too low of a price 6. Monopsony Labor Market with comparison of workers hired and wage rate in a p.c. labor mkt. 7. Production Possibilities Curve illustrating the concept of opportunity cost 8. MPL and APL (As long as the additional worker (MPL) is > than the average, APL is rising) 9. Perfectly Competitive Labor Market with Total Labor Costs in red and Non-labor Costs in yellow 10. TP (Total Product) with MP and AP curves below to show the stages of production, return rates,and relationship between MP and TP (As long as MP > 0, TP is increasing)

11. Illustration of an effective Price Floor creating a Surplus since Qs > Qd 12. Illustration of an effective Price Ceiling creating a Shortage since Qd > Qs 13. Market in equilibrium with Consumer surplus shaded in yellow 14. Illustration of Perfectly Inelastic supply or demand 15. Illustration of Elastic Demand 16. Illustration of Inelastic Demand

17. Illustration of Perfectly Elastic supply or demand 18. Illustration of a Long-Run Average Total Cost Curve (∑ ATC curves for various plant sizes) 19. TFC + TVC = TC
20. TFC / Q = AFC
21. TVC / Q = AVC
22. AFC + AVC = ATC
23. TC / Q = ATC
24. ∆ TC / ∆ Q = MC
25. TR / Q = AR or P
26. ∑ MP = TP (Output)
27. P x Q = TR
28. ∆ TR / ∆ Q = MR
29. ∆ TP / ∆ L = MPl
30. TP / L = APL
31. AR < AVC : Shutdown
32. % ∆ QD / % ∆ P = Ed (Elasticity of Demand) Coefficient
33. P = ATC : Fair-Return Regulation (0 Economic Profit or Normal Profit)
34. P = MC : Socially-Optimum Price Regulation (Allocative Efficiency)
35. P > MC : Underallocation of Resources
36. P < MC : Overallocation of Resources
37. MUA / PA = MUB / PB : Equimarginal Rule (Utility Maximization Rule)
38. MPA / PA = MPB / PB : Least-Cost Rule
39. MR = MC : Optimal Output Rule
40. MRP = MRC : Hiring Rule
41. MP x P = Marginal Revenue Product (MRP)
42. MRPA / PA = MRPB / PB = 1 : Profit-Maximization Rule
43. TR – TC = Profit
44. P > ATC : Economic Profit
45. P < ATC : Economic Loss
46. MR < 0 : Demand is inelastic (TR is declining)
47. MR > 0 : Demand is elastic (TR is rising)
48. MR = 0 : Demand is unit elastic (TR is at a maximum)
49. ∆ TR / ∆ Input = Marginal Revenue Product (MRP)
50. ∆ TC / ∆ Input = Marginal Resource Cost (MRC)
51. P = Min ATC : Productive Efficiency
52. ed < 1 : Demand is inelastic
53. ed > 1 : Demand is elastic
54. ed = 1 : Demand is unit elastic
55. ∆ Price = Movement Along the Curve
56. ∆ Non-Price Determinant = Shift of the Curve
57. P Increases, TR increases : Demand is inelastic
58. P increases, TR decreases : Demand is elastic
59. P decreases, TR decreases : Demand is inelastic
60. P decreases, TR increases : Demand is elastic
ADDITIONAL THINGS YOU SHOULD KNOW!
1. Ways for the government to correct positive externalities.
2. Ways for the government to correct negative externalities.
3. Justification for government regulation of a monopoly.
4. Definition of inferior goods.
5. Definition of normal goods.
6. Assumptions of the PPC (Production Possibilities Curve).
7. What would cause the PPC to shift inward and outward.
8. Adam Smith’s
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