University:
Michigan State University
Course:
EC 301 | Intermediate Microeconomics
Academic year:

2019
Views:

305

Pages:

2
Author:

ilikemyicons0y5

Formula sheet ∆Q ∆Q p %∆Q p ε= = Q = = −b ∆p ∆p Q %∆ p Q p a Constant elasticity demand curves: Q = b ,a ,b > 0, ε = - b p εX ∆Q ∆Q po % ∆Q = = Q = %∆p o ∆po ∆ po Q po ∆Q ∆Q ∆ % = Q = QY ξ= %∆Y ∆ Y ∆ Y Q Y ∆Q ∆Q ∆Q p % Q p η= = = b ∆p ∆ p Q = Q %∆p p Constant elasticity supply curves:Q =ap b ,a ,b > 0, η = b Ad valorem tax: pD = (1 + α)pS and pS = pD/(1 + α) Unit (specific) tax: pS = pD – τ η  ∆p =   ∆τ η − ε  MRS = ΔVerticala xisgood = − MU horizontal axisgood ΔHorizontalaxisgood MU verticalaxisgood MRT = − P horizontal axisgood Pverticalaxesgood Y = PA A+ PB B Optimal consumption rule: MRS = − MU horiztonal axisgood MUverticalaxisgood =− Phorizontal axisgood Pverticalaxisgood = MRT MPL = Δq/ΔL, MP K = Δq/ΔK APL = q/L, APK = q/K MRTS = ∆K MPL =− where L is on horizontal axis and K is on vertical axis ∆L MPK Cobb-Douglas production function: q = ALaKb MPL = aAPL MPK = bAPK 𝑎𝑎𝑎𝑎 MRTS = 𝑏𝑏𝑏𝑏 C = F + VC MC = ΔC/Δq = ΔVC/Δq AC = C/q AVC = VC/q AFC = F/q C = wL + rK Optimal production rule: –w/r = –ΔK/ΔL = –MP L/MPK = MRTS Economies of scope: (C(q1, 0) + C(0, q2) – C(q1, q2)) / C(q1, q2) > 0 Residual demand: Dr(p) = D(p) – So(p) and εi = nε – (n – 1)ηo Residual supply: Sr(p) = S(p) – Do(p) and η𝑟 η 𝑟 =𝜃 𝜃 − 1−𝜃𝜃 𝜃 𝜃 𝜀𝜀𝑜𝑜 P − MC 1 =− ε P Bond = gain from shirking (G) / probability of being caught shirking (θ) Lerner index: Efficiency wage: θ(w − w) ≥ G