Review Exam 1 spring 2008

Review Exam 1 spring 2008 - Review Exam 1 Chapter 2 What...

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Review Exam 1 Chapter 2 What role does scarcity play in economics? Understand what is meant by tradeoffs Understand how economics is a science and the importance of assumptions Understand the basics of the circular flow diagram Understand what the ppc shows and what concepts it illustrates. What is the normal shape of the ppc and why is it shaped the way it is? Distinguish between points inside ppc, points on and points outside ppc. What factors would cause a shift in the ppc both in and out? Macroeconomics vs. Microeconomics Positive vs. Normal economics and the art of economics Chapter 4 -Supply and Demand: Understand what is meant by a competitive market Understand relation between Price and Quantity Demanded and Quantity supplied. Understand the difference between a movement along the curve and a shift in the curves. Understand the difference between an individual curve and a market curve Know and understand the different factors that shift both demand and supply. Understand what is meant by equilibrium and why it is that the market always
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