ECO 182 1st EditionExam # 1 Study Guide Lectures: 1 -10Chapters 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 haveno 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 & Producers2.Primary Resources 3.A system of property rights 4.Technologies by which inputs are combined to produce outputs5.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