Microeconomics Midterm 1

Microeconomics Midterm 1 - Microeconomics Midterm February...

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Microeconomics Midterm February 27, 2008: 8:00-10:00 P.M. MacBride Hall Auditorium Chapters 1-6 + Chapter 1 appendix math 25 Multiple Choice Questions – (Aplia) 2 or 3 Problem Solving Questions – (Problem Sets) Textbook – Summary, Key Terms, Important Terms and Concepts, Chapter Review Sample Exam, Basic Exercises, Self-Tests Lecture Notes No Calculator – Review Long Division with Decimals Chapter 1 – What is Economics
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Opportunity Cost: The value of the next best alternative that must be given up because of that decision. (Ex: working instead of going to school) Laws of Supply and Demand: In a free market, the forces of supply and demand generally push the price toward the level at which quantity supplied and quantity demanded are equal. Comparative Advantage: One has comparative advantage over another in the production of a particular good relative to other goods if it produces that good more efficiently than compared to the other. Comparative advantage leads to specialization. (Ex: Bill Gates hires someone to do his accounting even though he may be a better accountant) Voluntary and free exchange improves welfare for both parties. (Ex: Nike sweatshops allowing children to work for a very little wage) Marginal Thinking: A method in calculating optimal choices – the choices that best promote the decision maker’s objective. (Ex: Offering a lower rate to standby passengers on an airplane when it is not full) Externalities: Social costs that affect parties external to the economic transactions that cause them. (Ex: Electric utilities that generate power for Midwestern states also produce pollution that kills freshwater fish in upstate New York) Efficiency vs. Equity Economic Models – Abstraction: Ignoring unimportant detail and focus only on essential points. Chapter 2 – The United States Economy Outputs: Goods and services that consumers and others want to aquire.
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Inputs: Labor, machinery, buildings, and natural resources used to make outputs. Labor Force: Greater employment of women.
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Microeconomics Midterm 1 - Microeconomics Midterm February...

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