ECO 182 1st Edition Exam 1 Study Guide Lectures 1 10 Chapters 1 2 3 as well as the first 48 pages of Chapter 6 Chapter 1 Marginal Totals Averages Marginal Extra The total average of some quantity is the sum of the marginals of that quantity The average of some quantity is the arithmetic mean of the marginals of that quantity Know how to compute marginal product of labor average product of labor Lengthy examples of this can be found in the chapter 1 note set found on UB Learns Chapter 2 Scarcity Opportunity Cost Specialization Trade Scarcity a commodity is scarce if at a price of zero the total quantity demanded if greater than the total quantity supplied If a commodity is scarce its value is POSITIVE if its not scarce than its value is 0 or NEGATIVE All resources are scarce because of this you have to rationally choose your use of a scarce resource But at the cost of giving up your next preferred choice this is OPPORTUNITY COST Economic Profit Accounting Profit Opportunity Cost A NEGATIVE economic profit means you have an alternative with a higher profit than the choice you selected A POSITIVE economic profit induces ENTRY A NEGATIVE economic profit induces EXIT Because resources are limited a persons production possibilities have limits Scarcity of resources creates opportunity costs of production A production possibility set is the collection of all someone s production possibilities A production possibility frontier is the limit or utmost possibilities for someone They have no possibilities past that line with the amount of resources they have Marginal Rate of Transformation the rate at which one good must be sacrificed in order to produce a single extra unit of another good Found by taking the slope of the line Chapter 3 Supply Demand 5 components of any Economy 1 Consumers Producers 2 Primary Resources 3 A system of property rights 4 Technologies by which inputs are combined to produce outputs 5 Institutions that facilitate trade Types of Economies Barter Exchange Command Economy Laissez faire Mixed public and private sector Chapter 6 Applying Supply Demand Analysis only the first 48 slides on EXCISE TAXES Tax rate t Price faced by buyers pb Price faced by sellers ps pb ps t At equilibrium the quantity demanded at price pb must quantity supplied at price ps Hands on examples are available on the note slides