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USC / Economics / ECON 224 / econ 224 exam 1

econ 224 exam 1

econ 224 exam 1

Description

School: University of South Carolina
Department: Economics
Course: Introduction to Economics
Professor: Stephen slice
Term: Spring 2017
Tags:
Cost: 50
Name: Exam 1
Description: The exam study guide tailored to our first exam.
Uploaded: 02/06/2017
3 Pages 179 Views 1 Unlocks
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o Who consumes the products?




o How do we produce the products?




o What products do we produce?



REVIEW TOPICS FOR CHAPTERS 1 – 4 CHAPTER 1 Definitions of:  - Scarcity: the resources we use to produce goods and services are  limited - Economics: the study of the allocation of scare resources among  competing uses - Factors of production: the resources used to produce goods and  services o Labor: human effort including both physical and mental effort people use to pDon't forget about the age old question of mat 136
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Don't forget about the age old question of natural selection favors behaviors that enhance:
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roduce goods and services o Human capital: the knowledge and skills acquired by a  worker through education and experience and used to  produce goods and services o Land (natural resources): resources provided by nature  and used to produce goods and services o Capital: the stock of equipment, machines, structures and  infrastructure that is used to produce goods and services o Entrepreneurship: the effort used to coordinate the factors  of production to produce and sell products - Positive analysis: answers the question “ what is” or “what will  be” - Normative analysis: answers the question “what ought to be” - Three economic questions o What products do we produce? o How do we produce the products? o Who consumes the products? - Economic way of thinking o Using assumptions to simplify and focus on what matters o Isolating variables o Think at the margin – how will one variable effect the others o Rational people respond to incentives – act in own self  interests - Macroeconomics: the study of the nation’s economy as a whole - Microeconomics: study of choices made households, firms and  governmentCHAPTER 2 Understand concepts of: - Opportunity costs: what you sacrifice to get something o Production possibilities curve: curve that shows the  possible combinations of products that economy can produce  given that its productive resources are fully employed and  efficiently used  - Marginal benefit: the additional benefit resulting from a small  increase in activity - Marginal cost: the additional cost resulting from a small increase  in activity - Nominal value: face value of money - Real value: value of money in terms of what it can buy - Diminishing returns: output increases at a decreasing rate Production Possibilities Frontier (PPF) - What are attainable and unattainable combinations of  output? o Attainable output is along the curve and below. Unattainable  output is anywhere above the curve. - Where is production efficient and inefficient? o Production is efficient anywhere along the curve and  inefficient anywhere below the curve How does the PPF illustrate: - Trade-offs - Opportunity costs - Increasing opportunity costs - Scarcity Be able to calculate opportunity costs CHAPTER 3 Concepts of: - Demand: the amount of a product that consumers are willing and  able to buy at various prices- Law of demand: there is a negative relationship between price and quantity demanded - Supply: the amount of a product that firms are willing and able to  sell at various prices - Law of supply: there is a positive relationship between price and  quantity supplied - Demand schedule: a table that shows the relationship between  the price of a product and the quantity demanded - Supply schedule: a table that shows the relationship between the  price of a product and quantity supplied - Market demand: sum of the demands of all consumers - Market supply: sum of all the supply of all consumers - Change in quantity demanded: a change in the quantity  consumers are willing and able to buy when the price changes;  represented by movement along the curve - Change in demand: a shift of the demand curve caused by a  change in a variable other than the price of product - Change in quantity supplied: a change in the quantity firms are  willing and able to sell when the price changes; represented by  movement along the supply curve - Change in supply - Market equilibrium: quantity demanded equals the quantity  supplied at the market price - Surplus: excess supply - Shortage: excess demand CHAPTER 4 Concepts of: - Price elasticity of demand: percentage change in quantity  demanded / percentage change in price o Elastic:price elasticity of demand is greater than one so the  percentage change in quantity exceeds the percentage  change in price o Inelastic: the price elasticity of demand is less than one, so  the percentage change in quantity is less than the percentage change in price o Unitary elastic: the price elasticity of demand is one so the  percentage change in quantity equals the percentage change  in price

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