:

Distinguish between quantity demanded/supplied and demand/supply, and explain what determines demand/supply

Explain how demand and supply determine price and quantity in a market and explain the effects of changes in demand and supply

Define, explain the factors that influence, and calculate the price elasticity of demand.

Define, explain the factors that influence, and calculate the price elasticity of supply.
 Calculate and graph a budget line that shows the limits to a person’s consumption possibilities.
 Explain the marginal utility theory and use it to derive a consumer’s demand curve.

Use marginal utility theory to explain the paradox of value: why water is vital but cheap while diamonds are relatively useless but expensive.
 Calculate and graph a budget line that shows the limits to a person’s consumption possibilities.
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
Explain the marginal utility theory and use it to derive a consumer’s demand curve.

Use marginal utility theory to explain the paradox of value: why water is vital but cheap while diamonds are relatively useless but expensive.
 Explain how economists measure a firm’s cost of production and profit.

Explain the relationship between a firm’s output and costs in the short run.
 Derive and explain a firm’s long-run average cost curve.
 Explain a perfectly competitive firm’s profit-maximizing choices and derive its supply curve.

Explain how output, price, and profit are determined in the short run.

Explain how output, price, and profit are determined in the long run.

Explain how monopoly arises and distinguish between single-price monopoly and price-discriminating monopoly.

Explain how a single-price monopoly determines its output and price .

Compare the performance of a single-price monopoly with that of perfect competition.

Describe and identify monopolistic competition.

Explain how a firm in monopolistic competition determines its output and price in the short run and the long run.

Describe and identify oligopoly and explain how it arises.

Explain the range of possible price and quantity outcomes and describe the dilemma faced by firms in oligopoly.

Use game theory to explain how price and output are determined in oligopoly.

Define GDP and GDP deflator

Distinguish between nominal GDP and real GDP

Define the unemployment rate and other labor market indicator

Describe the sources and types of unemployment, full employment and explain the link between unemployment and real GDP

Define CPI and explain the limitation of CPI as a measure of the cost of living
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
Define and explain the relationships among capital, investment, wealth, and saving.

Explain how investment and saving decisions are made and how these decisions interact in financial markets to determine the real interest rate.

Explain how government influences the real interest rate, investment, and saving.

Define money and describe its functions.

Describe the monetary system and explain the functions of banks and other monetary institutions.

Describe the functions of the Federal Reserve System.

Explain how banks create money by making loans.

Explain how the Fed controls the quantity of money.

Distinguish between autonomous expenditure and induced expenditure and explain how real GDP influences expenditure plans.

Explain how real GDP adjusts to achieve equilibrium expenditure.

Describe and explain the expenditure multiplier.

Derive the AD curve from equilibrium expenditure.

Describe the federal budget process and explain the effects of fiscal policy.

Describe the federal budget process and explain the effects of fiscal policy.

Describe the short-run policy tradeoff between inflation and unemployment.

Distinguish between the short-run and long-run Phillips curves and describe the shifting tradeoff between inflation and unemployment.

Explain how the Fed can influence the expected inflation rate and how expected inflation influences the short-run tradeoff.

Discuss whether fiscal policy or monetary policy is the better stabilization tool.
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Multiple Choice:
Suppose you have a graph of a linear relationship between price and quantity of ice cream purchased, which shows that as the price increases, the quantity of ice cream purchased decreases. All else the same, if people’s income increases and people thereby purchase more ice cream for any given price, then this change
A.
has no effect on the linear relationship between the price and the quantity of ice cream purchased.
B.
will shift the line showing the linear relationship rightward.
C.
will shift the line showing the linear relationship leftward.
D.
will make the slope of the line change and become non-linear.
Essay Question:
What is scarcity and why do economists say that all societies face scarcity?
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