Know:

Supply and Demand

o Shifts
Competitive Equilibrium
Welfare
o CS and PS
Graph Analysis
Taxes and Subsidies
o Welfare Analysis
Price Floor and Ceilings
Revenue
o It is maximized if and only if the elasticity of demand is -1
Consumer Behavior
Preferences and Utility
Axioms
o Non-satiation
o Convexity
o Transitivity
o Completeness
Constrained Optimization
o Interior Solutions
If function is smooth and an interior solution, MRS is
equal to price ratio
o Corner Solutions
Substitution and Income Effects
Normal, Inferior and Giffen Goods
o Relation to gross substitutes or complements
Know special cases
o Cobb Douglas
o Perfect Substitutes
o Perfect Complements
o Quasi-linear
Income Expansion Path
Elasticity
o Flatter curves are elastic
o If supply and demand are elastic, the surpluses are small
If both inelastic, the surpluses are larger
o If demand curve is flat (elasticity is 0), theres no CS
If supply is flat, theres no PS
o If supply curve has infinite elasticity, then PS equals
revenue
MRS cannot be calculated for perfect substitutes and
complements