revt1 - Dr Duffy Microeconomics Exam 1 review CHAPTERS 1-3...

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Dr. Duffy Microeconomics Exam 1 review CHAPTERS 1-3 Frank and Bernanke
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Exam Format & Rules 35 multiple choice, 2 points each 30 points for short problems, similar to  homework problems  You do not need a Scantron You may use a calculator but Andrew or I must  check it first.  It can't have a memory function.  It  must be a simple calculator, not a scientific or  business calculator.   No cell phones on desks. We must be able to see your ears at all times. 
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Major Concepts Opportunity Costs Sunk Costs Marginal and Average Benefit Marginal and Average Cost Cost-Benefit Principle Scarcity Principle "Low Hanging Fruit" (e.g. increased opportunity costs to produce  more of a product) Comparative versus Absolute Advantage PPF Exchange  Supply and Demand Equilibrium, Surplus, Shortage
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Sunk Cost Problem Sunk Cost Problem: I purchased a computer in 2006 for $2,000 and it now has a retail value of $500. How much is the sunk cost? (Cost I can't recover.) Sunk cost = $2000-$500 = $1500.
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Jane has a voucher, good for one domestic airfare, that must be used by January 10, 2008. She could use the voucher to attend a friend's wedding in October, or save it to use to go home in December (a trip she must make.) She values attending the wedding at $800. Airfare to the wedding, if she buys it, is $400 and all other costs would equal $600. Her airfare home in December would cost $300. Should she attend the wedding? No.
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This note was uploaded on 11/15/2011 for the course AGEC 7100 taught by Professor Duffy,p during the Fall '08 term at Auburn University.

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revt1 - Dr Duffy Microeconomics Exam 1 review CHAPTERS 1-3...

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