Download Economics 1 Spring 2017 Unit 2 Study Guide Chapters 5, 8, 9, and 6

Economics 1 Spring 2017
Unit 2 Study Guide
Chapters 5, 8, 9, and 6
All page numbers and section headings are for the PDF download version of the textbook. Italicized
sections are independent reading sections and are not covered in the lecture, but will be on the test.
What I expect you to know for the test:
Chapter 5 – Introduction, pages 109-110.
- What the elasticity formula is and how to use it to calculate an elasticity: Slides 2-11 and Sections
1.0,1.1, pages 110-112.
- What the Elasticity number means when you find it: Slides 2-11 and Sections 1.0,1.1, pages 110-112.
- Price elasticities along a linear curve: Section 1.2 and pages 112-113.
- What having an Elastic demand means and what having an Inelastic demand means: Slide 12 and
Section 1.3, pages 113-116.
- The relationship between elasticity and total revenue: Slides 13-17 and Section 1.3, pages 113-116.
- What Perfectly Elastic and Perfectly Inelastic demand mean, and how to illustrate each with a
demand curve: Slides 18-21 and Section 1.4, pages 116-117.
- The Three Main Factors that determine how elastic the demand for a good is: Slides 22-28 and
Section 1.5, pages 117-118.
- Income Elasticity of Demand: Slides 32-34 and Sections 2.0.2.1, page 121.
- Cross Price Elasticity of Demand: Slides 35-37 and Section 2.2, pages 121-122.
- Price Elasticity of Supply: Slides 38-40 and Section 3.0, pages 124-125.
- Time and Elasticity of Supply: Slides 41-42 and Section 3.1, page 125.
- Elasticity and the War on Drugs, and Student Tuition Subsidies: Slides 43-57 and not in the book.
Chapter 8 – Introduction, page 195.
- Meaning of short-run and long-run in microeconomics: Slide 62 and Section 1.0, page 196.
- What is specialization of labor and its effect on worker productivity: Slides 63-67 and Section 1.1,
pages 196-200.
- What is diminishing marginal returns and its effect on worker productivity: Slides 68-71 and Section
1.1, pages 196-200.
- What the average-marginal rule is and what it implies for graphing marginal and average labor
productivity on the same graph (marginal above average-average goes up, marginal below average,
average goes down): Slides 72-77 and Section 1.1, pages 196-200.
- Meaning of fixed cost and variable cost, with examples: Slides 82-83 and Section 1.2, pages 200208.
- Relationship between productivity and cost: Slides 84-89 and Section 1.2, pages 200-208.
- How to graph marginal cost and average total cost on the same diagram: Slides 90-91 and Section
1.2, pages 200-208.
- The long-run: Slide 92 and Section 2.0, page 210.
- Why the long-run curve is made up of parts of the various short-run curves: Slide 93 and Section 2.2,
pages 212-214.
- Economies of scale, constant returns to scale, and diseconomies of scale: Slides 94-99 and Section
2.2, pages 212-214.
Chapter 9 – Introduction, page 221.
- 3 attributes or assumptions of Perfect Competition (exclude the information one): Slides 101-105 and
Sections 1.0,1.1, pages 222-223.
- Perfect Competition and the Real World: Section 1.2 and pages 223-224.
- How to draw the Demand Curve and Marginal Revenue Curve a perfectly competitive firm faces:
Slides 106-113 and Sections 2.0,2.1, pages 225-228.
- What level of output will make the firm the highest profit (MR=MC): Slides 114-121 and Sections
2.2,2.3, pages 228-230.
- How Price compared to Average Total Cost determines if the firm makes a profit or a loss: Slides
122-123 and Sections 2.3,2.4, pages 229-232.
- How to draw a diagram showing the output a perfectly competitive will produce and whether it is
making a profit or loss: Slides 124-129 and Sections 2.3,2.4, pages 229-232.
- When a firm losing money should shut down and when they should keep operating (P compared to
AVC): Slides 133-135 and Section 2.4, pages 230-232.
- That a firm’s supply curve is its marginal cost curve, at least above its shutdown price (which is
determined by AVC): Slides 136-142 and Section 2.5, pages 232-233.
- Definition of Economic and Accounting Profit: Slides 143-149 and Sections 3.0,3.1, pages 236-239.
- In the long-run, easy entry and exit means that profits will go to zero: Slides 150-152 and Section 3.1,
pages 236-239.
- The slope of the long-run supply curve is determined by what happens to cost of production (ATC) as
new firms enter the market (constant cost, increasing cost, and decreasing cost industries): Slides 153175 and Sections 3.1,3.2, pages 236-242.
Chapter 6 – Introduction, page 135.
- Maximizing happiness in a society and efficiency: Slides 177-179 and Sections 2.0,2.1, pgs. 146-148.
- The Market Economy and Efficiency: Slides 180-182 and Sections 2.0,2.1, pages 146-148.
- The Command Economy, Incentives, Information, and the Invisible Hand: Slides 183-189 and
Sections 2.0,2.1, pages 146-148.
- Efficiency and Equity: Section 2.3 and page 150.
- Market Failure: Slides 193-194 and Sections 3.0,3.1, pages 152-153.
- Externalities: Slides 195-199 and Section 3.3, pages 154-155.
- Public Goods: Slides 200-206 and Section 3.2, pages 153-154.
- Tragedy of the Commons: Slides 207-215 and Section 3.4, pages 155-157.
Sections not covered and not on the test.
Chapter 5: 3.2.
Chapter 8: 2.1.
Chapter 9: None.
Chapter 6: 1.1, 2.2.
Product
Corn
Soybeans
Wheat
Oats
Rough Rice
Month
15March
15March
15March
15March
15March
Price
387.2
990.4
533.0
278.4
10.525
Month
15May
15May
15May
15May
15May
Price
395.2
994.6
529.2
277.0
10.765
Source: Chicago Board of Trade - http://www.cmegroup.com/trading/agricultural, February 16, 2015