Notes

 Cross price elasticitysubstitute goods
 Price elasticity of demand %Q/%P
 *Demand change not equals to quantity of demand change
 Eqm price and quantity sum of all surplus is maximized(no unexploited gains)(no wasteful trades)(highest willingness to pay and lowest costs from supply)
 Revenue P x Q
 When price changes*DEMAND QUANTITY CHANGE BUT NOT DEMAND CHANGE
 More demand price fall substitute effect comes out
 The fundamental determinant of the elasticity of supply is how quickly per-unit costs increase with a given increase in production.
 Increase in wagesincrease in cost of producing
 When there is taxprice paid by customers increases,seller decreases, consumer surplus and producer surplus decreases, eqm quantity decreases
 No opportunity cost when a point inside the PPC move to the PPC
 Increase in general incomedemand curve shifts right
 Reduction in PS + CS Tax revenue + deadweight loss
 0-1inelastic 0 perfectly inelastic >1elastic 1unit elastic(total revenue wont change)
 Can make use subtraction of curve equation=tax wedge find new eqm quantity (CALCULATE ALL THINGS ABOUT TAX!!!!!!!!!!!)
 Deadweight loss(tax x change in quantity) x 1/2
 Subsidyequationnot whole equation plus subsidy, instead only price self plus subsidy
 Subsidize producerPS-PD=SUBSIDY

 Revenue earned by tax new eqm quantity x tax price
 Price pay by buyers-price received by sellers=tax wedge
 Price received by sellers-price pay by buyers=subsidy wedge
 Deadweight loss and elasticity *demand more elasticmore quantitylarger DL
 Profit maximizing point(determining how many quantity needa produce) find marginal benefit and marginal cost  until cost>benefit stop
 Elasticity at a point1/slope x p/q
 Mid-pt of demand curve always unit elastic, upper partelastic, lower partinelastic
 Tax revenue amount of tax x quantity (when curve is inelasticquantity will be unchanged)
 Producer surplus=0supply curve = market price
 Total economic surplus need to minus subsidy cost
 Tax imposedequation of demand curve changed
 Tax burden=price need to pay-
 Sellers prefer higher eqm price
 Demand increasesprice higherquantity higher
 Price of complement fallsdemand increases