ECN 221 Microeconomics
First Exam Review
Chapter 1 [7]
The study of Economics, Definitions
Scarcity, Trade-offs
Efficiency versus Equality
Opportunity Costs
Inflation and Unemployment
Chapter 2: [8]
Economics as Science – Scientific Method
Purpose of models
Rationale for assumptions
Circular Flow Model
Factors of Production
Capital
Chapter 3: [11]
Production Possibility Frontier, Problems
Opportunity Cost Measurements (e.g. like
the farmer-rancher)
Comparative Advantage
Specialization
Rationale for Trade
Chapter 4: [10]
Demand, Supply, Equilibrium
Competitive Markets, Monopoly
Deriving the Market Demand Curve
Individual Demand and Market Demand –
analysis of tabular schedules, graphs
Chapter 5: [8]
Price Elasticity of Demand
Elastic, Inelastic PED
Necessities versus Luxury Goods
(elasticities)
Formula for computing PED (basic)
Interpreting demand schedules (slopes)
Chapter 6: [6]
Price Ceilings, Price Floors – impact on D, S
Impact of Taxes on S, D, Elasticity
Graph problem
ceiling, floor, and equilibrium
surplus or shortage, binding, non-binding