Econ 1st Exam Study Guide
Econ 1st Exam Study Guide Econ 231
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This 0 page Study Guide was uploaded by Braden Glennon on Saturday February 13, 2016. The Study Guide belongs to Econ 231 at Western Illinois University taught by Mrs. Kayla Mitchell in Winter 2016. Since its upload, it has received 82 views. For similar materials see Macroeconomics: Section 01 in Economcs at Western Illinois University.
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Date Created: 02/13/16
Economics Exam 1 Study Guide Chapters 13 Exam 1 Study Material Review old Quizzes Review handouts and in class worksheetsactivities most can be found on Western Online Read the chapters Go back over the homework questions Exam Setup 1 Matching of 20 vocab terms from chapters 13 20 points 2 30 Multiple choice questions from chapters 13 60 points 3 Shifting 10 Supply and Demand Curves like quiz 2 20 points Chapter 1 1 Who faces scarcity a including government and rich people b Bill gates faces scarcity of time 2 What are the four resources and can you give examples of each a 4 Resources Factors of production i 1 Any 2 2 categories of LAND a Renewable farm land sun wind etc b Nonrenewable coal oil nuclear etc ii 1 Measured by number of people available for work and quality of workers 2 Example Nurses farmers etc iii 1 Human made goods a 2 Ex Axes Hoes Hammers Factories Plants Of ce buildings warehouses anything that man made that helps produce but M 3 4 5 6 7 1 Creative ability of certain ability to take risks to seek pro ts selfmade men that creatively try things that haven39t been done before to make money it39s a resource because few people have the creativity and the will to take such a risk 2 Ex Steve Jobs Henry Ford Mark Cuban etc ls money capital a Know the difference between macro and micro economics main areas of each a Macroeconomics i quotlooking at forest rather than the treesquot ii Branch of economics that studies decision making of buyers and economy as a whole this class studies macroeconomics iii Examples National In ation American Economy etc Microeconomics i quotlooking at individual trees leaves and bark within the forestquot ii Studies decision making of individuals households Firm or levels of government economics of something like the Parks department Differences in association and causation one will hold over time a A cause and effect relationship must hold over time Why is important a quotall other things remain the samequot b Allows us to look at the relationship between two variables c Examples Prices change but purchases don39t b Be able to tell if a statement is a positive or normative statement a Econ Statements i Analyzing based on judgement and opinion ii quotWhat should be isquot iii iv Example quotyou shouldn39t wear fur coatsquot Econ Statement i Fact based Analysis ii Can be proven true or false iii quotIf this than thatquot b Chapter 1 Appendix 1 quot a goes up and to the right 2 An 3 An b Positive association between 2 variables if one goes up the other goes up a Negative Association between two variables if one goes up the other goes down b a No association between 2 variables b horizontal line on graph Chapter 2 1 2 3 4 What are the three Fundamental Economic Questions a i the focus has to be somewhere b i Will the process be capital intensive c i Society will decide who gets product like who wants it and who can afford it examples and what it is a Best alternative sacri ced for a chosen alternative i What you could have done ii Next best alternative iii Example You chose not to hang out with your friends to study for this Econ test the opportunity cost is the relaxation of being with your friends that you gave up for this test Understand Increasing Opportunity Cost when looking at a PPC and constant opportunity cost a Understand how the Product Possibilities Curve is drawn and how the more investment in one product sacri ces investment in the other and increases opportunity cost The a Finding Opportunity cost i On the graph opportunity cost is the vertical rise so Finding i An examination of the effects of additions to or subtractions from a current situation ii Should choose an option where marginal bene ts exceed costs iii Marginal cost on a PPC is the rise over the run From the example above the marginal costs ofA to B is 1500200750 Which points are ef cient attainable etc i Attainable points are any points on or inside the PPC curve line ii Ef cient points are any points on or outside of the PPC line iii Ef cient and Attainable points are points on the PPC line Where are points of specialization i Points of specialization are any point that is on both the PPC curve AND one of the axis39 x or y axis Why is the curve bowed out i To show the greatest output possible f What could shift the PPC inward or outward i lnward 1 If capital is destroyed or something effecting product is reduced than the Product Possibility is reduced and the curve is shifted left ii Outward 1 Thing like an advance in technology or more capital increases the amount of possibilities for production and shifts the PPC curve right PPC b C d e g Why would a country invest in capital goods and not consumer goods i Because more capital good equals more consumer goods Chapter 3 1 2 3 4 5 6 2 3 Know how to show a change in quantity demanded movement along the curve a What causes a change in quantity demanded i Change in price is the only thing that changes a quantity demand b How to show an increase and decrease i Increase shifts right and decrease shifts left with a quantity demand change the line does not shift but rather the points on that line Know how to show a change in demand shift the curve to the right or left a The 5 nonprice determinants for demand i lncome ii tastes and preferences iii The price of related goods iv Changes in expectations of future relative prices v Market size How to show a change in quantity supplied movement along the curve a Move point on supply curve right if dollar amount increases and left if it decreases How to show a change in supply shift the curves to the right or to the left a The 6 nonprice determinants for surplus i Prices of inputs used to produce lower prices shift right ii Technology Technological advances shift right iii Taxes Subsidies taxes behave as a cost shift left subsidies reduce costs shift right iv Price Expectations sellers withold products in expectation of higher pdces v Amount of businesses more businesses shift to the right Be able to tell the difference between a supply and demand curve a Supply moves up and to the right b Demand curve move down and to the right Be able to nd a shortagesurplusequilibrium on a graph and a chart a is represented by the top quadrant of the four quadrants made when the surplus and demand graphs cross is the bottom quadrant is the exact point of the two curves crossing b C
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