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[ECO100Y1] - Midterm Exam Guide - Ultimate 15 pages long Study Guide!Premium

by
15 pages200 viewsFall 2016

Department
Economics
Course Code
ECO100Y1
Professor
Paola Salardi
Study Guide
Midterm

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UTSG
ECO100Y1
MIDTERM EXAM
STUDY GUIDE
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Economics 100
Lecture 1
Text required: Mankiw (2014) Principles of Microeconomics, Nelson 6th edition.
Midterm: October 28th worth 12%
End of term exam: December 6th worth 24%
Average grade in course: C+
What is Economics all about?
Economics: how individuals/households make decisions and manage scarce
resources.
Scarcity: the limited nature of society’s recourses.
Principles of Economics
1. People face trade-offs
EFICIENCY vs. EQUALITY
oEfficiency: society gets the most from its scarce resources.
oEquality: prosperity is distributed uniformly among society’s
members.
2. The cost of something is what you give up to get it
Comparing the costs and benefits of alternative choices.
Opportunity cost: refers to a benefit that a person could have received,
but gave up, to take another course of action.
3. Rational people think at the margin
To make decisions by evaluation costs and benefits of marginal changes.
Opportunity Costs
Economics – principles of interactions among people
Trade can be mutually beneficial
Markets used to benefit and coordinate trade
Government can potentially improve market outcomes if there is market
failure.
Economics – principles of economics as a while
A country’s living depends on its ability to produce goods and services
Price rises when government prints too much
Society faces a trade off between inflation and unemployment.
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Economics 100
Lecture 2
Graphs and Drawings in Econ100
There are two main diagrams for the course
1. Circular Flow Diagram – way to visualize the economy. Shows the money ($)
flow between the household and the firm.
Occurs between two markets:
i. The market for goods and services
ii. The market for factors of productions (labor, land, and capital)
2. The production possibility Frontier (PPF) – shows a combination of output
that the economy can produce given the available factors of production and
technology.
Two goods produces
One factor of production
If the points are on the line then they are both possible and efficient.
If the points are below the line then they are possible but not efficient.
If the points are above the line then they are not possible and not
efficient.
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