econ303reviewfinalspring2009 (1)

econ303reviewfinalspring2009 (1) - Econ 303 Quiz 1 review...

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Econ 303 Quiz 1 review topics The invisible hand Specialization and the law of comparative advantage Georgia/Washington example First Laws of supply and demand San Francisco quake example: why reduced supply of houses caused no shortages, but increased demand after WWII did cause a shortage Gas line example—how price ceilings lead to shortages and black markets Minimum wages and labor surpluses Bread/wheat example, how price ceilings caused a shortage of wheat without causing a shortage of bread Algebra of supply and demand—how to find equilibrium P and Q CS and PS: sugar imports, palm springs water exports, price ceilings, min wage, milk price floor, and Indian cloth price floor Taxes: graph showing buyer’s price, seller’s price, and tax burdens Property tax example—why buyer’s price does not change New Zealand tariff example—big country gains and small country loses Harmless cash outflows caused by trade deficits Real bills view of inflation versus the quantity theory view Econ 303 quiz 2 review topics Outflows—harmless kind resulting from a trade deficit, and the bad kind, caused by a bank run Effects of maintaining convertibility, suspending, and devaluing Subsidies: show DWL and government expense using supply and demand curves Utility functions Indifference curves and budget constraints. 4 properties of indifference curves: neg slope, convex, don’t cross, and one thru every point Goods, bads, neuters—shapes of IC’s Slope of IC=MRS Slope of BC=Px/Py Equation of BC: PxX+PyY=I Finding an optimum mathematically: when MRS is given; when only utility function is given Lagrangian method of finding an optimum The income expansion path and the engel curve The price expansion path and the demand curve Why rationing lowers utility Why a cash gift is preferred to a subsidy Why an income tax is preferred to a sales tax Subsidy vs. voucher Income effect and substitution effect: normal vs inferior goods, Giffen goods
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econ303reviewfinalspring2009 (1) - Econ 303 Quiz 1 review...

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