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AP Microeconomics Final Review Part 2: Sections 9 and 10 Elasticity Concepts
Substitution Effect: _____________________________________________________________________
_____________________________________________________________________________________
Income Effect: _________________________________________________________________________
_____________________________________________________________________________________
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: _________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
Implicit Costs: _________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
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