Econ exam one study guide
Econ exam one study guide Econ 150-21
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This 2 page Study Guide was uploaded by Olivia Notetaker on Sunday February 14, 2016. The Study Guide belongs to Econ 150-21 at La Salle University taught by Dr. Mshomba in Fall 2016. Since its upload, it has received 60 views. For similar materials see Intro Macroeconomics in Economcs at La Salle University.
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Date Created: 02/14/16
Econ Exam One Study Guide Topics to know and be able to describe: - Macroeconomics vs Microeconomics - Nomative economics - Positive Economics - 4 types of resources - Production possibilities curve o Know definition and how to graph o Know how opportunity costs affect graph o What two things do you need for the curve to function? - What type of employee would you send to maximize production? o The person with the lowest opportunity cost; the person best suited - Know this concept: as we produce more and more, we have to lose more and more because they’re not all as good as the first o Ex: want one ton of wheat, so you use one acre of best land. You want another ton of wheat, but only bad land is left you need 3 acres to equal the one acre of best land to get the same result - Supply - Demand - Income effect and Substitution effect - Market demand - Changes in/determinants of demand - Demand and Supply curve definitions and how to graph them - Market supply - Determinants of supply - Competitive market - An increase in resources causes the curve to extend which direction? - Through trade, companies can consume outside their curve! - Fundamental questions and how to answer them - Characteristics of a market system o The system would fail without private property…we need it to have a market system o Why is competition good? - Adam Smith - Why is self-interest good/bad? - Circular flow diagram o What two things are missing? Trade and government - Know how to draw supply and demand curves/graphs - Law of demand and supply o And their relationships with price (direct or indirect) o Difference between change in demand/supply and change in quantity demanded/supplied - Normal/inferior goods - The production cost determines what? - If changes happen to the changes of supply/demand, how do they affect cost? - Equilibrium price and quantity o Know how to calculate and graph o What equals a shortage or surplus - Rationing function of prices - Price ceiling/floor o How does government deal with these o Tariffs - Black markets/rationing - If demand/supply increase/decrease/don’t change…how does that affect price and quantity o Know how to graph different scenarios - Consumer surplus and producer surplus o And their relationship with price (direct or indirect) o What areas of the graph they represent - Public good vs private good o Their characteristics - Quasi-public good - Free-riders - Positive and negative externalities - Market failures - What 2 conditions must hold if a competitive market is to produce efficient outcomes? - Productive and allocative efficiency - Total surplus - Efficiency losses - Cost-benefit analysis - Marginal Cost = Marginal Benefit rule - What is the government’s role with externalities? o Direct controls, taxes, subsidies and government provision - Government failure
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