ACDC Econ Summary Video by Jacob Clifford

Introduction

• Purpose: Overview of key concepts in AP/college introductory microeconomics
• Audience: Students preparing for the AP test or final exam
• Resource Mention: Ultimate Review Pack with practice questions and videos
• Availability: Free video, but support encouraged through packet purchase

Basic Economic Concepts

Scarcity and Opportunity Cost

• Scarcity: Unlimited wants, limited resources
• Opportunity Costs: Cost of the next best alternative
• Production Possibility Curve (PPC):
  • Efficient: On the curve
  • Inefficient: Inside the curve
  • Impossible: Outside the curve
  • Shapes:
    • Straight line: Constant opportunity cost
    • Bowed out: Increasing opportunity cost
  • Shifts: More resources or technology

Comparative Advantage

• Concept: Specialize in goods with lower opportunity cost
• Absolute vs Comparative Advantage:
  • Absolute: Who produces more
  • Comparative: Lower opportunity cost
• Terms of Trade: Mutually beneficial exchange rates

Economic Systems

• Types: Free market (capitalism), command economy, mixed economy
• Circular Flow Model: Interaction of businesses, individuals, and government
• Vocab:
  • Transfer payments: Government welfare
  • Subsidies: Government support to businesses
  • Factor payments: Payments for resources

Supply and Demand

Basics

• Demand Curve: Downward sloping (Substitution, Income effect, Diminishing Marginal Utility)
• Supply Curve: Upward sloping
• Equilibrium: Intersection of supply and demand
• Shifts: Demand or supply changes

Elasticity

• Elasticity Types:
  • Price Elasticity of Demand: Sensitivity of quantity to price changes
  • Cross-Price Elasticity: Substitutes (+) vs Complements (-)
  • Income Elasticity: Normal (+) vs Inferior goods (-)
• Total Revenue Test: Relate price changes to revenue changes

Market Interventions

• Price Controls: Floors (above equilibrium) and Ceilings (below equilibrium)
• Deadweight Loss: Inefficiencies due to price controls
• International Trade: Effects of tariffs and world price changes
• Taxes: Impact on supply curves and tax incidence

Theory of the Firm

Cost Curves

• Short Run Costs: Fixed, Variable, and Total costs
• Cost Curves: Average and Marginal costs
• Long Run Costs: Economies, Constant, and Diseconomies of scale

Perfect Competition

• Characteristics: Many small firms, identical products, low barriers
• Graph: MR = MC for profit maximization
• Short Run vs Long Run: Profit, Loss, and Equilibrium
• Efficiency: Productive and Allocative

Other Market Structures

• Monopoly: Single firm, unique product, price maker
• Monopolistic Competition: Many firms, differentiated products
• Oligopoly: Few firms, strategic interactions

Resource Markets

Labor Markets

• Supply and Demand for Labor: Derived demand
• Minimum Wage: Impact as a price floor
• Marginal Revenue Product (MRP): Additional revenue from one more worker

Hiring Decision

• Graphs: Side-by-side market and firm graphs
• Monopsony: Single buyer in resource market

Least Cost Rule

• Concept: Optimal combination of resources

Market Failures

Public Goods

• Characteristics: Non-rivalry, Non-exclusion

Externalities

• Negative: Additional cost to others
• Positive: Additional benefits to others
• Deadweight Loss: Pointing towards socially optimal
• Government Intervention: Taxes and subsidies

Income Inequality

• Lorenz Curve: Income distribution
• Types of Taxes: Progressive, Regressive, Proportional

Conclusion

• Difficulty Levels: Ratings for each unit's complexity
• Encouragement: Success on tests and continued study

---

These notes provide a condensed overview of the key topics covered in the lecture, ideal for quick review before an exam or test. They capture the essential elements of introductory microeconomics as presented by Jacob Clifford.