Econ 202 1st Edition Exam 1 Study Guide Lectures 1 6 Lecture 1 January 22 Define the following terms Economics Scarcity Opportunity Cost Marginal Cost Marginal Benefit Rationality Incentives What s the major difference between microeconomics and macroeconomics List and give examples of the first seven principles of the Principles of Economics Principles 1 4 from the Principles of Economics demonstrate how people make decisions while principles 5 7 demonstrate How might marginal costs and benefits determine our incentives Lecture 2 January 27 Important terms to remember Markets Market economy Efficiency Equality Monopoly What are some characterstics of a perfect market What rule do prices play in our economy economic choices What does thinking like an economist mean In what ways is economics a science What are the three important steps to creating a good economic analysis When making a model what should you consider And why Explain and give examples of the two reason that may cause a market failure Lecture 3 January 29 Define the following Production Possibilities Frontier PPF efficient Draw an illustration of the circular flow model and define it When considering to increase or decrease production of a product what should we consider How do we calculate opportunity cost Then try the following problem 1 Rachel s opportunity cost of making a burrito is a 10 pizzas b 2 pizzas c 1 pizza d One half of a pizza 2 The opportunity cost of moving from 1000 bottles of Power Thirst to 1050 bottles of Power Thirst a equals of an MP3 player per bottle b equals 2 MP3 players per bottle c equals 50 bottles of Power Thirst d cannot be determined because such a change is not possible Draw and explain a PPF for an economy that produces milk and cookies What would happen if a disease kills the cows Lecture 4 February 3 Terms to remember Absolute advantage Comparative advantage How to calculate absolute advantage and comparative advantage from graphs tables and slopes Try solving the following problem The table considers the situation in which two countries can produce beef and soy beans The numbers in the table identify how many hours it takes each country to produce one pound of beef or one pound of soy beans Thus for example it takes Country A 2 hours to produce a pound of beef 1 Which of the following statements is true about the countries absolute advantages a Neither country has an absolute advantage in producing a commodity b Country A has an absolute advantage in producing Soy Beans and Country B has an absolute advantage in producing Beef c Country A has an absolute advantage in producing Beef and Country B has an absolute advantage in producing Soy Beans d Country A has an absolute advantage in producing both commodities Lecture 5 February 5 Terms to know Competitive market Monopoly in market supply and demand Oligopoly Substitute Complements Law of Demand Normal good Inferior good What 4 important factors that affect demand and how do they affect demand List and explain some characteristics of a perfect competitive market Lecture 6 February 10 What is a demand schedule When doing a demand schedule what is the most important step and the most important assumption What is the difference between the vertical and the horizontal interpretation of a curve What happens to the demand curve if the income increases What happens when it decrease What does it mean when a demand curve is steep What happens to the demand curve if the prices changes How about if other factors changed Answers to the Mutipule choice questions 1 B 2 A 3 C