1. Law of Demand A decrease in the price of a good, all other things held constant, will cause an increase in the quantity demanded of the good. An increase in the price of a good, all other things held constant, will cause a decrease in the quantity demanded of the good.

2. Change in Quantity Demanded Quantity Price P0P0 Q0Q0 P1P1 Q1Q1 An increase in price causes a decrease in quantity demanded.

3. Change in Quantity Demanded Quantity Price P0P0 Q0Q0 P1P1 Q1Q1 A decrease in price causes an increase in quantity demanded.

4. Changes in Demand Change in Buyers’ Tastes Change in Buyers Incomes –Normal Goods –Inferior Goods Change in the Number of Buyers Change in the Price of Related Goods –Substitute Goods –Complementary Goods

5. Change in Demand Quantity Price P0P0 Q0Q0 Q1Q1 An increase in demand refers to a rightward shift in the market demand curve.

6. Change in Demand Quantity Price P0P0 Q1Q1 Q0Q0 A decrease in demand refers to a leftward shift in the market demand curve.

7. Law of Supply A decrease in the price of a good, all other things held constant, will cause a decrease in the quantity supplied of the good. An increase in the price of a good, all other things held constant, will cause an increase in the quantity supplied of the good.

8. Change in Quantity Supplied Quantity Price P1P1 Q1Q1 P0P0 Q0Q0 A decrease in price causes a decrease in quantity supplied.

9. Change in Quantity Supplied Quantity Price P0P0 Q0Q0 P1P1 Q1Q1 An increase in price causes an increase in quantity supplied.

10. Changes in Supply Change in Production Technology Change in Input Prices Change in the Number of Sellers

11. Change in Supply Quantity Price P0P0 Q1Q1 Q0Q0 An increase in supply refers to a rightward shift in the market supply curve.

12. Change in Supply Quantity Price P0P0 Q1Q1 Q0Q0 A decrease in supply refers to a leftward shift in the market supply curve.

13. Market Equilibrium Market equilibrium is determined at the intersection of the market demand curve and the market supply curve. The equilibrium price causes quantity demanded to be equal to quantity supplied.

14. Market Equilibrium Quantity Price P Q D S

15. Market Equilibrium Quantity Price P0P0 Q0Q0 D0D0 S0S0 Q1Q1 P1P1 D1D1 An increase in demand will cause the market equilibrium price and quantity to increase.

16. Market Equilibrium Quantity Price P1P1 Q1Q1 S0S0 Q0Q0 P0P0 D0D0 D1D1 A decrease in demand will cause the market equilibrium price and quantity to decrease.

17. Market Equilibrium Quantity Price P0P0 Q0Q0 D0D0 S0S0 Q1Q1 P1P1 An increase in supply will cause the market equilibrium price to decrease and quantity to increase. S1S1

18. Market Equilibrium Quantity Price P1P1 Q1Q1 D0D0 Q0Q0 P0P0 A decrease in supply will cause the market equilibrium price to increase and quantity to decrease. S1S1 S0S0

19. Concept of the Derivative The derivative of Y with respect to X is equal to the limit of the ratio  Y/  X as  X approaches zero.

20. Rules of Differentiation Constant Function Rule: The derivative of a constant, Y = f(X) = a, is zero for all values of a (the constant).

21. Rules of Differentiation Power Function Rule: The derivative of a power function, where a and b are constants, is defined as follows.

22. Rules of Differentiation Sum-and-Differences Rule: The derivative of the sum or difference of two functions U and V, is defined as follows.

23. Rules of Differentiation Product Rule: The derivative of the product of two functions U and V, is defined as follows.

24. Rules of Differentiation Quotient Rule: The derivative of the ratio of two functions U and V, is defined as follows.

25. Rules of Differentiation Chain Rule: The derivative of a function that is a function of X is defined as follows.

26. Optimization With Calculus Find X such that dY/dX = 0 Second derivative rules: If d 2 Y/dX 2 > 0, then X is a minimum. If d 2 Y/dX 2 < 0, then X is a maximum.