Top 10 Mistakes & Misunderstood Concepts in Microeconomics скачать в хорошем качестве

Top 10 Mistakes & Misunderstood Concepts in Microeconomics

1. The opportunity cost of an activity is the value of the next highest alternative forgone. 2. To an economist it is an error to say ‘when prices rise, demand falls’. An economist instead says, ‘when prices rise, quantity demanded falls’. 3. A common error is to say something like due to the positive effect on tastes and preferences and the increase in demand, we get an increase in supply to meet demand. Actually what happens is the increase in demand causes an increase in price which gives us a movement up the supply curve to a higher quantity supplied. But it’s better not even to mention this. 4. We cannot judge price elasticity of demand on the basis of the sign of the elasticity nor on the fact that the quantity demanded may or may not change. 5. A per-unit tax does not generally raise the equilibrium price by an amount equal to the tax. 6. Price controls, floors & ceilings, don’t set the price, only constrain it. 7. Externalities are not just about unintended consequences. Externalities are bystander effects. 8. A tariff means everyone pays the tariff price but not that everyone pays the tariff. Tariffs are taxes on imports. 9. A competitive firm will shut down when price is lower than average variable cost, not just when price is less than average total cost. 10. A Nash equilibrium is not about maximizing profit or winning or anything like that. It simply is an outcome where all players are currently best responding.