CHECKLIST FOR MIDTERM I
For Midterm I, you are expected be able to do the following.
Identify and explain the basic economic problem and its three main components:
scarcity, choice, opportunity cost;
Determine the opportunity cost of a choice (eg attending postsecondary education,
attending a concert);
Represent the economic problem and its three main components using the production
possibility model;
Identify the meaning of the production possibility frontier (PPF);
Identify the significance of and the reasons for the PPF's slope (negative) and
shape (bowed outward);
Measure opportunity cost in the production possibility model;
Distinguish efficient, inefficient, feasible, and not infeasible production
combinations;
Derive and graph the PPF from data on production and productivity;
Explain how resources can be misallocated;
Identify efficient ways of using resources;
Use a production possibilities diagram to illustrate changes in economic situations
(eg change in quantity of resources, shift of resources from one industry to
another, change in employment of resources, change in the amount of resources,
change in technology);
Distinguish comparative advantage from absolute advantage;
Determine whether a nation has an absolute advantage in a product;
Determine whether a nation has a comparative advantage in a product;
Explain how nations can gain through specialization and trade;
Identify the relevancy of the international rate of exchange to gains from trade;
Distinguish complete specialization from partial specialization;
Prove the existence of gains from specialization and trade;
Identify and explain the four key roles of economists;
Distinguish positive analysis from normative analysis;
Distinguish positive statements from normative statements.
Chapter 2 Appendix:
Distinguish graphs that show a functional relationship from ones that show
numerical data;
Distinguish independent variables from dependent variables;
Use tables, graphs, and equations to show relationships between variables;
Distinguish positive relationships from negative relationships;
Distinguish linear relationships from nonlinear relationships;
Measure the slope of a line;
Measure the slope of a nonlinear relationship;
Distinguish between positive, negative, zero, and infinite slope;
Distinguish third variables from nonthird variables;
Distinguish movements along a line or curve from shifts.
Chapter 3:
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 Winter '09
 WHITAKER
 Economics, Inflation, Opportunity Cost, gross domestic product

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