ECON 2002.01 Study Guide - Midterm Guide: Ceteris Paribus, Fop, Demand Curve

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Published on 26 Oct 2016
School
Ohio State University
Department
Economics
Course
ECON 2002.01
Professor
Study Guide for Macro Midterm 1 AU16
Chapter 1 Terms
Economics: study of choices people make
Scarcity: make us make choices;
Rationality assumption: assumptions about people, they are pursuing own self-interest
Fundamental questions: What to produce; how to produce; whom are they for? Regardless of
type of economy
Opportunity cost: value of next best alternative; economic way of thinking; trade-offs
Marginal analysis: focus on small changes, a little bit more, little bit less
Scientific method: hypothesis to theory/law
Positive vs. normative: normative = opinion; positive = fact
Command vs. market: market = capitalist; command = communist social
Efficiency vs. equity: market gets more efficient, does fairness come into play; equity = fair
Efficiency: MB = MC of last unit
Chapter 2 Terms
Competition
Market: buyers and sellers make decisions
Specialization: economy is producing what they have comp adv. in
Invisible hand
Budget line
Factors of production: land, labor, capital, entrepreneurship
Entrepreneurship: person who organizes fop for production
Production possibilities curve: representation of alternative combos of g&s an economy can
produce
Law of increasing opportunity costs: some resources are better suited for one task than another
Economic growth: increase in resources; produce more; graph shift out
Comparative advantage: producing a good at a lower opp cost than others
Absolute advantage: producing more of a product
Circular flow model
Problems: production possibilities problems
Calculating opportunity cost
|slope of CPC| = marg opp cost of good on X in terms of Y
- Know about PPC, calculate ppc; downward sloping; law of increasing opp costs
- Slope = opp cost of x in terms of y
Chapter 3
Demand: quantity consumers want
Demand schedule: table shows QD
Law of demand: most products, P ^ QD v; P v QD ^
Demand curve: graph of schedule
Determinants of demand: prices of related,
Income, preferences, demographic, buyer expectations
Normal vs. inferior: normal ^ Y ^, inferior V Y^
Substitute vs. complement: comp A^B^; sub A^Bv
Change in D vs. QD: D is a shift, price is QD
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Document Summary

Study guide for macro midterm 1 au16. Rationality assumption: assumptions about people, they are pursuing own self-interest. Opportunity cost: value of next best alternative; economic way of thinking; trade-offs. Marginal analysis: focus on small changes, a little bit more, little bit less. Positive vs. normative: normative = opinion; positive = fact. Command vs. market: market = capitalist; command = communist social. Efficiency vs. equity: market gets more efficient, does fairness come into play; equity = fair. Specialization: economy is producing what they have comp adv. in. Production possibilities curve: representation of alternative combos of g&s an economy can produce. Law of increasing opportunity costs: some resources are better suited for one task than another. Economic growth: increase in resources; produce more; graph shift out. Comparative advantage: producing a good at a lower opp cost than others. Know about ppc, calculate ppc; downward sloping; law of increasing opp costs. Slope = opp cost of x in terms of y.

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