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GM545 Final Exam Study Guide The final exam will be an online open-book, open-notes, open-computer exam with a time limit of 3-1/2 hours. It will be...

GM 545 Business Economics' Final Exam Answers
GM545 Final Exam Study Guide The final exam will be an online open-book, open-notes, open-computer exam with a time limit of 3-1/2 hours. It will be worth 30% of the course grade. Your final course grades must come from Keller (not me). The final exam will consist of 9 essay questions ([email protected] 30 points each; 3 @40 points each), each having multiple parts. There are calculations to be performed, but they are straight forward arithmetic operations for which a calculator should not be needed. As with the quizzes, I believe that the final exam should focus on basic economic principles and models, and I have structured the exam in that way. Also, I have made sure to ask questions that reinforce all of the GM545 TCOs. A good way to prepare is to review the assigned chapters from the text, the Key Questions that were assigned from the text, and the two quizzes. There is quite a bit of material to cover. So, in the interest of helping you focus your study somewhat, why don’t I tell you what is the subject matter of each of the nine questions? 1. Demand and Supply (TCO A) Know what the law of supply and demand is all about and be able to predict the impact on equilibrium price and/or quantity when supply and/or demand factors change. The interpretation of some basic graphs will be required. 2. Elasticity and Marginal Revenue (TCO B) The label on this question suggests what you need to know. You need to be able to calculate price elasticity of demand and/or supply and be able to interpret it. Also, given demand, you need to be able to calculate marginal revenue when the price level changes. Remember that MR = Change in TR / Change in Quantity. 3. Labor Productivity (TCO C)
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Be able to calculate Marginal Product (MP), Marginal Revenue Product (MRP), Marginal Cost (MC), and determine the proper number of workers to hire using Marginal Analysis (just like we did in our week 2 TDA discussions). 4. Calculating Profit or Loss (TCO C) Given a product price, as well as fixed and variable costs at different production levels, be able to determine whether the firm earns an economic profit, breaks even, or incurs an economic loss at the best possible production level. Also be able to determine how much the profit or loss will be (similar to a question you had on Quiz 1). 5. Marginal Analysis (TCO D) A key issue covered in several TCOs involves how firms in different market types make production decisions. Know how marginal analysis is used in imperfect markets (monopoly, monopolistic competition, and oligopoly) to make those choices when given info on fixed costs, variable costs, quantity and price. That is, what should the production level be at different price levels or different cost levels using marginal analysis? 6. GDP and Unemployment (TCO E) Be able to calculate percentage changes in nominal and real GDP using the formula for the GDP deflator. Also, be able to calculate the size of the labor force and the unemployment rate using appropriate formulas. 7. Fiscal Policy (TCO G and H) Fiscal and/or monetary policy will have an impact on aggregate expenditures (AE) in the economy and, then, ultimately, on GDP. Know what is the role of the multiplier in achieving GDP outcomes, and be able to calculate the value of a simple multiplier, given appropriate data. Then, be able to use that multiplier in forecasting the change in GDP that would be associated with a given change in aggregate expenditure (AE). Also, know the views of Keynesian and Monetarist schools of economic thought regarding the use of fiscal policy.
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