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MT1guide - Exam 1 Study Tips Make sure you have read the...

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Exam 1 Study Tips Make sure you have read the chapters (1, 2, 3). Work the check your understanding problems in each chapter. The answers are in the book. Review the Aplia assignments, especially the questions you got wrong. There is a study guide that goes with the book. It has many practice questions with answers. There are practice quizzes available for free on the text website: www.worthpublishers.com/krugmanwells Make flashcards so you can master the vocabulary. Topics to focus on: Resources are scarce, so choices must be made. All choices involve opportunity cost. What is opportunity cost? What are explicit and implicit costs? What does it mean to “think at the margin”? What is the cost benefit principle? The economy is based on specialization and exchange. Economic units specialize based on comparative advantage. How do we determine comparative advantage? How does this differ from absolute advantage? What is a production possibilities frontier? Why is the PPF sometimes a straight line and sometimes bowed out?
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