Exam 2 Rev iew - ECO 211 Introductory Microeconomics Review...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ECO 211: Introductory Microeconomics Review Sheet—Exam 2 Fall 2007 The exam will cover chapters 7-11 (material since the first exam) and all the required non-text readings (“Three Cords and the Truth”, “Emissions Trading—Lessons from Experience”, “Earth in the Balance Sheet”, “Is Gasoline Undertaxed?”, “Paper Victories”). Economic Efficiency (Chapter 7) 1.Consumer Surplus • Know the definition of Consumer Surplus (CS) • Know how to find CS on a graph of demand • Be able to explain (and show) how CS changes as the price of a good changes 2. Producer Surplus • Know the definition of Producer Surplus (PS) • Know how to find PS on a graph of supply • Be able to explain (and show) how PS changes as the price of a good changes 3. Efficiency • Know what “efficiency” means in economics: An resource allocation is efficient if it maximizes the Total Surplus (TS = CS + PS) received by society. • We conclude that the market outcome is efficient — with some exceptions (e.g., externalities) for the following reasons: ❑ Free markets allocate the supply of goods to buyers who value them most highly, as...
View Full Document

{[ snackBarMessage ]}

Page1 / 2

Exam 2 Rev iew - ECO 211 Introductory Microeconomics Review...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online