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Chapter 1
Chapter 2
Chapter 3
Chapter 4
Exam Rules
100

What is economics?

the study of how society manages its scarce resources

100

What are the two roles of economists?

1. Scientists

2. Policy advisors

100

What is comparative advantage?

the ability to produce a good at a lower opportunity cost than another producer (what we lose)

100

What is the difference between normal and inferior goods?

normal-a good for which an increase in income raises the quantity demanded 

inferior-a good for which, other things being equal, an increase in income leads to a decrease in demand 

100

What writing utensil should you bring?

#2 pencil

200

Homework due dates are an example of what economic principle?

Incentives

200

Who sells factors of production?

Households sell factors of production to firms.

200

Countries should ----- in goods that they have a ------- advantage in.

specialize, comparative

200

What is the difference between substitutes and complements?

substitutes-two goods for which an increase in the price of one leads to an increase in the demand for the other 

complements-two goods for which an increase in the price of one leads to a decrease in the demand for the other 

200

Are calculators permitted?

Yes but not phones or laptops.

300

How does efficiency and equality affect the "economic pie"?

Efficiency- makes pie bigger

Equality- equal slices of pie

300

When is the PPF bowed?

When the OC increases (is not constant).

300

The price of trade is...?

Between the countries' opportunity costs

300

What are the determinants of demand?

BITER

number of buyers, income, expectations, related goods

300

True or false? You may bring one notecard

False, the exam is closed note and closed book

400

What is an externality?

the impact actions of one person on the well-being of a bystander

400

What is the difference between positive and normative statements?

Positive- claims that attempt to describe the world as it is 

Normative- claims that attempt to prescribe how the world should be 

400

A country will typically imports goods that ...

other nations have a comparative advantage in.

400

What are the determinants of supply?

TINE

technology, imput prices, number of sellers, expectations

400

How early should you arrive?

10 minutes

500

List the 10 principles of economics.

  1. People Face Tradeoffs
  2. The Cost of Something is What You Give Up to Get It
  3. Rational People Think at the Margin
  4. People Respond to Incentives
  5. Trade Can Make Everyone Better Off
  6. Markets Are Usually a Good Way to Organize Economic Activity
  7. Governments Can Sometimes Improve Economic Outcomes
  8. The Standard of Living Depends on a Country's Production
  9. Prices Rise When the Government Prints Too Much Money
  10. Society Faces a Short-Run Tradeoff Between Inflation and Unemployment
500
What are the two reasons economists disagree?

1.different scientific judgments 

2.different values 

500

Is it possible to have an comparative advantage in every good? Why or why not?

No because there is always an OC. Time and resources are limited.

500

When does equilibrium, shortage, and surplus occur?

Equilibrium- QD=QS

Shortage- QD>QS

Surplus- QD<QS

500

How many points will be docked if you do not bring your ID?

20 points