Midterm Exam Study Guide Principles of Economics II ECON 201 Note Please bring your calculator However I do not allow you to use your cell phone as a calculator Instructor Dr Nara Mijid Chapter 4 Market Forces of Supply and Demand Defining a market and competition Law of demand difference between movements along a demand curve and shifts of a demand curve Understanding shifts of the demand curve 5 factors that shift the demand curve Substitute vs complement goods normal vs inferior goods Supply curve difference between movements along a supply curve and shifts of a supply curve Understanding shifts of the supply curve 5 factors that shift the supply curve Equilibrium Shortages and Surpluses and Changes in Supply and Demand Chapter 5 Elasticity and Its Application Defining and measuring the price elasticity of demand using midpoint formula Interpreting the price elasticity of demand Elastic inelastic unit elastic perfectly elastic and perfectly inelastic demand curves Four factors that determine the price elasticity of demand Application Total revenue and price elasticity of demand Defining measuring and interpreting the price elasticity of supply Elastic inelastic unit elastic perfectly elastic and perfectly inelastic supply curves Two factors that determine the price elasticity of supply Calculating and interpreting cross price elasticity of demand and income elasticity of demand Chapter 6 7 Government Policies and Efficiency of Markets Price control examples of price control and binding price ceilings and price floors Effect of price control on market outcomes Taxes the effects of taxes on market outcomes taxes on sellers vs taxes on buyers Elasticity tax incidence deadweight loss of taxation and tax revenue Willingness to pay individual Consumer Surplus CS and Total CS Calculating CS PS and Total Surplus TS evaluating market equilibrium and efficiency Chapter 10 11 Externalities Public Goods and Common Resources Defining externalities examples of positive and negative externalities Defining social cost social benefits external costs and external benefits The effect of externalities on market equilibrium Corrective taxes and subsidies Excludable and non excludable goods rival and non rival in consumption Defining characteristics of public goods and common resources Examples of public goods and common resources