revfinal2006part1c - Review for Final Part 1 chapter 1-5...

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Review for Final Part 1, chapter 1-5 Exam is Monday May 8, 5 pm. in our regular room Or you may take it early, Friday, May 5, 8 a.m. Comer 311. Please send me an email if you think you might take it on May 5 so I will have enough exams.
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Final is comprehensive Material is covered fairly evenly from all four units. Many multiple choice questions are similar to, but usually not identical to, the ones you've seen. Problems will look like ones you've seen before on paper homework or exams, but with different numbers.
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Format of Final? 35 multiple choice questions, worth 2 points each. (70 points) 30 points of short problems. You don't need a Scantron. You do need a calculator.
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Review, Part 1 PPF Economic Role of Government Types of Economies Markets Supply, Demand, Price Determination Elasticity and Total Revenue
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What is economics? Economics is a social science. Social sciences deal with people and the institutions they create. Economics deals with how people make decisions to allocate resources to achieve their goals.
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Scarcity and Efficiency Scarcity . Resources are (usually) finite. All “ economic goods ” are limited in supply, which economists call “scarce.” In a market economy, “scarce” or limited items have prices associated with them. The notion of “unlimited” wants is not true for everyone, but even at our current level of prosperity, we do not produce enough for everyone to think they have “enough.”
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Economic Efficiency The economy is producing “efficiently” when it cannot increase the economic welfare of anyone without making at least one person worse off.
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Equity Equity involves the distribution of wealth within a society. In perfect equity, everyone has equal shares.
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Microeconomics . . . is the branch of economics that deals with the behavior of individual entities, such as consumers, firms, households, or markets. A major focus of microeconomics is price determination.
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The other branch of Economics . . . is macroeconomics, which is concerned with overall performance of the economy, e.g. inflation, unemployment, growth.
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Common Logical Fallacies “Post hoc” fallacy occurs when people assume that because one event follows another, the first event caused the second. The “fallacy of composition” occurs when we assume that what holds true for part of a system also holds true for the whole.
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Positive and Normative Economics Positive Economics deals with questions that can be analyzed objectively, e.g. “What is the impact of raising taxes?” Normative Economics involves ethical precepts and norms of fairness, e.g. “Should the poor be required to work to receive government assistance?”
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Types of Economies Command Economy : government makes all important decisions about production and distribution.
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