Lessons 1 & 2 (Chapters 1 & 3) Economics Intro & Supply and Demand Main concepts to focus on while reading this chapter in your eText, viewing the embedded videos in your eText and the Lecture video on ICON. Chapter 1 (What is Economics) 1. What is Economics? Why is it important that we study it? What is the study of Economics about? What is the definition of Economics? What is an incentive? 2. What is scarcity? When/where do we encounter it? What is the definition of scarcity and what does it refer to? How is scarcity linked to Economics? Who is affected by scarcity? 3. What is Microeconomics and what questions does it address? What is Macroeconomics and what questions does it address? 4. What are the two big economic questions? Understand their details. What is globalization? From the “At Issue” section: What are the two different economic systems? What is a mixed economy? What is Adam Smith’s concept of invisible hand? 5. What are the six key ideas that define the economic way of thinking ? Know the details of each: a. Choices are tradeoffs b. Cost-benefit analysis (rational choice) c. Benefit d. Opportunity cost e. Marginal benefit and marginal cost f. Choices and incentives 6. Types of statements in Economics: How do we differentiate between positive statements and normative statements? Look at the examples in the lecture video and think about which statements there are positive and which are normative. 7. How do we address economic questions? What is an economic model? How is Economics used as a policy tool? 8. What are the potential jobs and earnings for an Economics major? What are the five skill requirements an ideal candidate needs to have for an Economics related job? (From the Appendix to Chapter 1) 9. Graphing data, types of graphs, graphs in economic models, calculating slopes (graphing relationships between two variables, between more than two variables) 10. Linear equations, slopes, interpretation of diagrams Chapter 3 (Supply and Demand) 11. What is a market? What are the different types of markets encountered (i.e. market for goods, services, inputs, etc)? What is a competitive market? What is the price of a good? What is the money price? What is the relative price? 12. What is the demand? What is quantity demanded? What is the law of demand? What are the income and substitution effects? 13. What are the two interpretations of demand – demand curve and demand schedule? What is the alternative way of looking at the demand curve (depending on the willingness and ability to pay of the consumers)? Understand Figure 3.1. 14. Understand changes in demand (i.e. shifts of the demand curve) and its factors VS. changes in quantity demanded (i.e. movements along the demand curve) and its (single) factor. Understand Table 3.1 and Figures 3.2 and 3.3. 15. What is the supply? What is quantity supplied? What is the law of supply? 16. What are the two interpretations of supply – supply curve and supply schedule? What is the alternative way of looking at the supply curve (minimum-supply-price, depending on marginal cost)? Understand Figure 3.4. 17. Understand changes in supply (i.e. shifts of the supply curve) and its factors VS. changes in quantity supplied (i.e. movements along the supply curve) and its (single) factor. Understand Table 3.2, Fig. 3.5 and 3.6. 18. What is equilibrium in the market? Definition and features. Understand Fig. 3.7. 19. Understand disequilibrium in the market (price adjustments): surplus or shortage 20. Putting it together: Determinants, mechanism and effects of all the possible shifts in supply and demand. Understand Figures 3.8, 3.9, 3.10 and 3.11.