Key Concepts in Microeconomics: A Comprehensive Review

Posted on Jan 9, 2025 in Economy

Key Concepts in Microeconomics

Indifference curves must necessarily have a negative slope: Any point in space to its right includes a greater quantity of at least one of the goods.
If you give the first 10 purchased units of good 2, the maximum amount of good 2 to which you have access is: (y/p2) + 10.

In perfect competition, a company is in short-term equilibrium if the marginal value product equals the price factor, assuming the factor is variable.
For an industry in perfect competition in the presence of a sales tax: The tax burden borne by consumers will be greater the greater the elasticity of supply.
The curve of marginal revenue product as a demand factor under perfect competition does not exist.

The theorem of excess capacity of monopolistic competition concerns the degree of utilization of fixed factors in the long-run equilibrium.
Monopolistic competition is characterized by the following assumptions:
1. Many consumers and businesses
2. The product is differentiated
3. Agents have perfect information
4. No state intervention
Note: The statement “False freedom does not exist input/output” is incorrect.

If the average costs of both companies, all facilities, and potential entrants in an oligopoly were equal and constant: The price limit that prevents entry must equal average cost, resulting in zero profits.

Total income is maximized when:
- The marginal revenue is zero.
- The elasticity of demand is equal to minus one.
- When ?I / ?x = (?x / ?p) x + f(x) = 0.
Business model to maximize production volume and profit, in equilibrium.
Incorrect statements regarding the price mark-up scheme:
- It covers the total costs.
- Firms set operating in an optimum production capacity.
- It becomes equal to CMV + MNB.
Under mark-up, the profit will be positive if and only if the gross profit margin is greater than the average fixed cost.
If fixed costs are zero, the average variable costs and average total costs will be equal.

To satisfy the efficiency conditions, joint production sharing must provide that the economy is assigned (distributed) and producing efficiently.
Given the production function X = Y₁^0.7 Y₂^0.5, if factors were to be paid according to their marginal products, the surplus would be positive but cannot be quantified without further data.
Long-term, with respect to the role of production and the limits of managerial skills, a partnership exhibits decreasing returns to scale.

Incorrect statement regarding the budget constraint:
- If you double the prices of both assets and income, the budget constraint shifts to the right and up.
Correct statements regarding the budget constraint:
- A rise in 10% of all prices will shift the budget constraint parallel to the original.
- If you double the price of two goods, with income unchanged, the balance line moves to the left and down, but the slope is unchanged.
- A rise in income, with constant relative prices, shifts the balance line to the right without altering its slope.

One of the following quantities does not directly affect the labor market supply: The level of employment.
Factors that do affect the labor market supply: Preferences for leisure, the age structure of the population, and minimum wage legislation.

In the context of the law of diminishing returns, the technical optimum coincides with the maximum average yield and the marginal return.

The elasticity of the supply function “ceteris paribus” will be between 0 and +? if the linear function has a positive slope.

In a model of pure exchange, if the economy is in a Pareto-optimal situation, an individual may improve their situation, but only by making others worse off.
Property or services exchanged in a General Equilibrium Model are characterized by their physical properties, where they are available, and the uncertainty that affects them.