SC ECON 221 - Exam 1 Study Guide (5 pages)

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Exam 1 Study Guide

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Exam 1 Study Guide


study guide for exam 1 over chapters 1,3, and 4

Study Guide
University Of South Carolina-Columbia
Econ 221 - Prin of Microeconomics

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ECON 221 1st Edition Exam 1 Study Guide Lectures 1 5 Lecture 1 August 26 Big Ideas o Incentives Matter Incentives rewards and penalties that motivate behavior o Good institutions align self interest when they respond to incentives aligns self interest with social interest Market economies have proven to be more successful compared to centrally planned economies Information gaps externalities Taxes rent control o Trade Offs are Everywhere Trade offs if you re doing something you re giving up not able to do something else Opportunity cost what you give up to obtain something o Thinking on the Margin Whether to do something or not which thing to do Marginal Changes incremental adjustments to an existing plan Marginal Costs and Marginal Benefits Revenue Lecture 2 August 28 Big Ideas o The Importance of Wealth and Economic Growth Wealth matters but what determines economic growth Productivity or the quantity of goods and services produced from each unit of labor input Public policies to boost productivity o Institutions Matter People respond to incentives when markets exist Property rights ensure that markets function properly Market economies need institutions to enforce property rights so individuals can own and control scarce resources o Final Big Ideas Macroeconomic lessons Appropriate Monetary and Fiscal Policies can smooth out normal booms and busts of the macro economy Can make recessions shorter and less deep Inflation occurs when the government prints too much money Central Banking is a hard job Economics is fun pays a lot Lecture 3 September 2 Chapter 3 Supply and Demand Markets and Competition o Market group of buyers and sellers of a particular good or service o Buyers Determine the demand for the product o Sellers Determine the supply of the product Demand o A demand curve is a function that shows the quantity demanded at different prices o Quantity demanded the quantity of a good that buyers are willing and able to buy at a particular price o Law of Demand

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