Study guide for exam no.1

Study guide for exam no.1 - Professor Amuedo-Dorantes,...

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Professor Amuedo-Dorantes, Economics 102 1 Review for First Exam Chapter 2: How do economists work? Understand that economists work as scientists and as policy-makers. In their work as scientists, economists rely on models, which are simplifications of economic reality. There are two types of models: o The Circular Flow model of the economy. o The Production Possibility Frontier (PPF) model. This last model informs about: Production points that are attainable, unattainable, efficient, or inefficient, Trade-offs Opportunity costs Economic growth What are normative as opposed to positive statements? Microeconomics vs. Macroeconomics: definition. Chapter 3: How can countries/individuals benefit from specialization and trade? Know what the Principles of Absolute Advantage and Comparative Advantage state. Know how to compute opportunity costs. Know how to determine who has a comparative and an absolute advantage at producing something. Know how to determine the terms of trade for a particular exchange.
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This note was uploaded on 12/16/2010 for the course ECON 102 taught by Professor Clague during the Fall '08 term at San Diego State.

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Study guide for exam no.1 - Professor Amuedo-Dorantes,...

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