E201
Exam 1 Review
Economics is the study of
Define opportunity cost and provide an
example
Define incentive and provide an example
Marginal Cost and Marginal Benefit
Production Possibilities Curve
• What does it represent
• What is the area inside and outside the curve
Demand and Supply Curves
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2 types of movements
What causes movements along curves
What causes shifts of demand curves
What causes shifts of supply curves
Which way do they move and how are equilibrium P&Q
impacted
• Identify equilibrium P & Q on graph and in table
Importance of Private Property
Elasticity (Demand and Supply)
• Elastic – relatively larger changes in quantity in relation
to price changes
• Inelastic – relatively smaller changes in quantity in
relation to price changes
• What factors determine elasticity
• How to calculate
Comparable Advantage
• What determines it
• What is it used to determine
Specialization
• What is it and why is it important
Calculating and Identifying Producer
Surplus, Consumer Surplus, Total benefit of
trade
• For individuals and markets
• Identify how they change due to Price Ceilings, Floors
(which requires knowing how price ceilings and floors
impact quantity supplied and quantity demanded,
whether that is a surplus or shortage)
How resource and product markets interact
• How are resource markets impacted by changes in
product markets
Black markets
• What are characteristics Interpreting graphs of excise
tax impact
Black markets
• What are characteristics
Black markets
• What are characteristics
Interpreting graphs of excise tax impact
Determining who actually pays excise taxes
(identify graphically and explanation)
Know and interpret Laffer curve