Scarcity and choice → demand and supply → equilibrium and welfare → intervention and its limits.
Choice and allocation
Use opportunity cost and assumptions to explain choices. 1 · 2 · 3 · 4 · 5 · 6 · 7
Demand and responsiveness
Identify the cause of a change before choosing a shift or movement. 8 · 9
Supply and equilibrium
Combine demand and supply; use elasticities to explain the size of the response. 10 · 11 · 12
Welfare and prices
Connect equilibrium to surplus, rationing, signalling and incentives. 13 · 14
Failures and policy
Diagnose the failure, select the instrument and compare social benefits with costs. 15 · 16 · 17
Essential formulas and conditions
PED = %ΔQd / %ΔP; PES = %ΔQs / %ΔP.
YED = %ΔQd / %Δincome; XED = %ΔQd(A) / %ΔP(B).
MSC = MPC + marginal external cost; MSB = MPB + marginal external benefit.
Triangle area = ½ × base × height; tax revenue = unit tax × quantity after tax.
Key diagrams
PPF p. 11 | Equilibrium shift p. 55 | Surplus comparison p. 61 | Externality p. 72 | Tax wedge p. 82
Read a diagram: identify the cause → trace the change → read the result → state the condition that could change it.
Notation: P = price; Q = quantity; D = demand; S = supply; E = equilibrium. Subscripts identify positions within each figure. Arrows between curves show shifts; arrows along a curve show movements.
Revision route: formula index p. 96 · diagram index p. 98 · key distinctions p. 99