Review1 - Macro Review Sheet for Exam 1 Fall 2006 1 Define...

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Macro Review Sheet for Exam 1: Fall 2006 1. Define Economics, Resources, Micro and Macro economics. 2. What does scarcity mean? Why it forces opportunity cost? Define opportunity cost. Be able to calculate opportunity cost. 3. Define economizing behavior. State the rule of economizing behavior. What is the purpose or objective of economizing behavior? What is marginal analysis? Be able to apply the rule of economizing behavior in examples like the ones given in the notes. 4. Law of diminishing marginal returns, law of rising opportunity cost or marginal cost: can you show these laws as curves? Be able to calculate MB and MC and show them in graph. 5. Difference between market economy, centrally planned economy, and mixed economy. What is the advantage of market economy? 6. Do all the questions and problems given in the Basic Concepts notes. 7. Define PPC. What determines whether PPC is linear or bowed out? Nature of opportunity cost and shape of PPC. Be able to calculate opportunity cost. Factors that shift PPC. Regions inside and outside PPC. Use PPC to explain why certain countries
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