Review for ECO 165

Test #1

Students are expected to read & understand their book & class notes. Students should also review the relevant questions contained on the comprehensive finals from the spring & fall of 1997. Here is a checklist containing most of the topics you should have mastered:

  • Economics defined; macro vs. micro
  • Models & abstraction
  • Scarcity & choice
  • Opportunity costs
  • Marginal analysis & economic decision making
  • What are fixed costs? Why are they irrelevant to decision making?
  • Factors of production
  • Three Economic questions
  • Efficiency criteria
  • Allocative mechanisms
  • Circular Flow Diagram
  • Factor market and Goods market
  • Roles of Government, Households & Businesses in the economy
  • Consumer & Producer Surplus
  • Market Failures (Monopoly, Public Goods, Externalities)

 

  • PPF
    • assumptions
    • On, inside, & outside the PPF
    • Effect of scarcity
    • Effect of specialized resources
    • Meaning of the absolute value of the slope
    • What causes it to shift
    • Trade-off between current and future consumption (producing consumer goods or capital goods)
  • Demand: definition & law of
    • Quantity demanded
    • Shifters
    • Substitutes vs. complements
    • Normal vs. inferior goods
    • Income & substitution effects
  • Supply: definition & law of
    • Quantity supplied
    • Shifters
  • Equilibrium
    • Surpluses, shortages & how they are eliminated.
    • Disequilibrium; price floors & ceilings
    • Changes in equilibrium; shifting both curves at once

 Elasticity

  • Price Elasticity of Demand
    • Definitions
    • Calculations (using mid-point formula)
    • Graphs
    • Total Revenue
    • Determinants
    • Price Elasticity of Supply
  • Cross-Price Elasticity
  • Income Elasticity