Exam 3 Study Guide: Review Exams 1 and 2
Exam 3 Study Guide: Review Exams 1 and 2 Econ 103
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This 3 page Study Guide was uploaded by Alexandra Jernigan on Sunday November 29, 2015. The Study Guide belongs to Econ 103 at George Mason University taught by Thomas Rustici in Summer 2015. Since its upload, it has received 1213 views. For similar materials see INTRODUCTION TO MICROECONOMICS in Economcs at George Mason University.
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Date Created: 11/29/15
Econ 103 Exam 3 Study Guide General Tips Go over the previous tests Study the questions you missed and only briefly go over the stuff you don t know Make sure you pay attention to what was not in previous tests as well This test will have more FRQs than multiple choice so be prepared to write and do more graphs Extra Credit Rustici s Anthology Monopoly Competition 2 essays Information Economics 5 essays Exam 1 Review these are some of the most frequently missed questions 1 The economic distinction between changes in demand or supply and changes in quantity demanded or quantity supplied arises because 2 Which of the following turns noneconomic goods into an economic good 3 Explain why some aspects of Classical Price Theory are wrong 4 Suppose the value scales for Tommy and Chuckie are given below Chuckie owns 3 apples and Tommy owns 3 oranges What is underlined is what they own Given this information which of the following is true Priority Tommy Chuckie fst first apple first orange 2nd first orange first apple 3rd second orange second orange 4th second apple second apple 5th third orange third apple A two acts of exchange are possible B Chuckie will be the first trader wanting to stop exchanging C When the trade stops Chuckie will own 2 oranges and 1 apple while Tommy will own 2 apples and 1 orange D The marginal utility of a second exchange for Chuckie is his second orange E Tommy values his first apple 5 times more than his third orange 5 How do you determine the limits of price formation in the Auction model Exam 2 Review 1 The elastic the supply and demand curves are the the quantity of output restriction caused by minimum and maximum price controls 2 What is the most important key word in the law of diminishing marginal returns Suppose workers in Mexico make 3hour and workers in the US make 12 hour Also assume workers in the US are 4 times more productive than Mexican Workers on average Which os the following would likely occur following free trade What can we infer about a positive elasticity number such as 7 Exam 1 Review Answers Correct Answers in Green reasons behind incorrect answers in Red 1 Changes in relative price are different from variables affecting relative price Prices of that product do not shift demand curves for that product Relative prices are on the y axis x axis is quantity Relative price is not the ONLY determinate of where supply and demand curves set in the x y space There are many factors that change supply and demand The first answer explains this the best The definition of an economic good is that the demand is greater than the quantity available which is also synonymous with scarcity A noneconomic good would be that which the demand is less than what is available so the product is free This is a simple definition and should not be applied literally on a demand supply graph All value of goods is subjective So defining ability to satisfy a need is not objectively definable Objectivism in value or intrinsic value This is wrong because all value is subjective Beauty is in the eye of the beholder Labor as the source of all value Labor is a factor of production not the source of value Market prices of goods were created from the goods historical cost of production This leads to an infinite regress of value The trade partners can only trade what they own for what they want Since their values for the 1st and 2nd trade are NOT equal a trade is possible Therefore after one trade Tommy trades his first orange for Chuckie s apple and Chuckie trades his first apple for Tommy s first orange A At the 3rd order both Tommy and Chuckie value their second orange equally therefore no further exchange is possible B Both people refuse to trade at the 3rd order and also the 4th C After the first and only trade Tommy now owns 1 apple from trade 2 oranges and Chuckie owns 1 orange from trade 2 apples You get this from the trades and the underlined apples and oranges D The marginal utility of a second exchange for Chuckie is his second orange This is true for both parties E There is no way to calculate this this is ordinal ranking and that does not calculate the values in between 5 You must determine where the maximum buying price is not lower than the minimum selling price At the point where the maximum buying price is lower than the minimum selling price no exchange is possible and therefore the exchange before this point is the limit Exam 2 1 The more elastic the supply and demand curves are the greater the quantity of output restriction caused by minimum and maximum price controls 2 the RATE of output growth with a fixed input and successive additions of a variable input at some point the rate of output growth begins to decline 3 First you must solve for the productivity per hour in both countries So 12hour divided by 4 3 and 3hour divided by 13 So one US worker is the equivalent of 4 Mexican workers None of the above will occur because wages are effected by other factors not relative wages in other countries 4 This good is a normal good positive
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