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ECO 182 Principles of Microeconomics Study Guide Final Exam Spring2014Format: 30 Multiple Choice, 5 short answers; Chapters 1-11, 19Bring: pencil, basic calculator Short answer questions:Supply and demand application (like homework 2, exam 1)Elasticity of demand and supply: understand and interpret, factors affecting (exam 1)Indifference curves and consumer equilibrium (homework 4, exam 2)Perfect competition vs. monopoly (homework 5, exams 2, 3The supply of a resource and economic rent (chapter 11)1. The Economic Way of ThinkingWhat is scarcity? why is it the central economic problem? what is opportunity cost?oWhat is the relationship between scarcity, choice, and opportunity costs?What are the factors of production? Describe each of these categories.What does the production possibilities frontier show?ohow to interpret points on, inside or outside the PPFohow does the PPF demonstrate scarcity and tradeoffs?owhy is the PPF concave? (BOTH a negative and increasing slope)why are opportunity costs increasing?why aren’t resources easily substitutable between two uses?owhat causes the PPF to shift out over time?Distinguishing between normative and positive statements2. Demand and SupplyDemand--a model of buyer behaviorothe law of demandoother factors affecting demand:income (normal and inferior goods), prices of substitutes/complements, changes in preferences/tastes, expectations, population and demographic changeshow does each of these factors affect the demand curve?ochange in quantity demanded vs. a change in demandwhich shifts the demand curve? which is due to a change in the price of that good?Supply--a model of seller behaviorothe law of supplyoother factors affecting supply:costs of production, prices of complements/substitutes in production, expectations, number of suppliers, productivityhow does each of these factors affect the supply curve?ochange in quantity supplied vs. a change in supplywhich shifts the supply curve? which is due to a change in the price of that good?Equilibriumoquantity demanded= quantity supplied; why is this an equilibrium?ohow do shifts in the demand curve and/or supply curve affect equilibrium price and quantity?