No Bull Economics Lessons

Macroeconomics & Microeconomics Concepts You Must Know

Essential Questions

How is total revenue related to price elasticity of demand?

Posted on April 14, 2014 at 8:20 PM Comments comments (0)

The total revenue test is a great way to estimate whether a good's demand is price elastic or inelastic. You need to see how the price changes relative to total revenue (price x quantity).


If price and total revenue move in opposite directions, consumers are responsive to changes in price and demand is price elastic (Ed>1). If price and total revenue move in the same direction, consumers are not very responsive to the change in price and demand is price inleastic (Ed<1). If total revenue is constant when the price changes, then demand is unit elastic (Ed=1).


AP Microeconomics Unit 1 Basic Economic Concepts

What are the effects of a price ceiling?

Posted on April 14, 2014 at 6:50 PM Comments comments (0)

A price ceiling is a price control set by the government. A ceiling is a legal maximum price that must be below the free market equilibrium. The government's intent is to help consumers with low incomes. An effective price ceiling leads to a shortage of goods (quantity demanded is greater than the quantity supplied). It causes a misallocation of economic resources and deadweight loss (inefficiency). In the long run, the shortage worsens as producers exit the industry. Sometimes illegal markets (black markets) will develop to attempt to satisfy the high quantities demanded.


The No Bull Review video below discusses the effects of price ceilings and shows the areas of deadweight loss, consumer surplus, and producer surplus.

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AP Macroeconomics / Microeconomics Unit 1 Basic Economic Concepts

What is consumer surplus?

Posted on April 14, 2014 at 5:45 PM Comments comments (0)

A consumer surplus exists when the market price that a consumer pays for a product is less than what he or she is willing to pay. Suppose you are willing to pay $15 for a movie ticket and you end up paying $10. You have a consumer surplus of $5. In a supply and demand graph, the area of market consumer surplus is above the equilibrium price and under the demand curve.


This No Bull Review video explains how to find consumer surplus on a graph

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AP Microeconomics Unit 1 Basic Economic Concepts 

What are the shift factors of supply?

Posted on April 14, 2014 at 5:10 PM Comments comments (0)

A change in any of the following will cause the supply curve to shift to the right or to the left:


1. Resource prices

2. Alternative output price changes

3. Technology and productivity

4. Number of sellers

5. Expectations of future prices

6. Subsidies to producers

7. Taxes on production


See the No Bull Review video for more information on these shift factors of supply

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AP Macroeconomics / AP Microeconomics Unit 1 Basic Economic Concepts

What are the shift factors of demand?

Posted on April 14, 2014 at 5:00 PM Comments comments (0)

The demand curve will shift if there is a change in the determinants of demand. Here are the shift factors of demand:


1. Tastes and preferences

2. Income of buyers

3. Number of buyers

4. Expectations of prices in the future

5. Substitute good prices

6. Complementary good price


Watch the No Bull Review video below for more information on shifting demand:

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AP Macroeconomics / AP Microecnomics Unit 1 Basic Economic Concepts