ECN 221 Microeconomics First Exam Review

Chapter 1 [7] The study of Economics, Definitions Scarcity, Trade-offs Efficiency versus Equality Opportunity Costs Inflation and Unemployment

Chapter 2: [8] Economics as Science – Scientific Method Purpose of models Rationale for assumptions Circular Flow Model Factors of Production Capital

Chapter 3: [11] Production Possibility Frontier, Problems Opportunity Cost Measurements (e.g. like the farmer-rancher) Comparative Advantage Specialization Rationale for Trade

Chapter 4: [10] Demand, Supply, Equilibrium Competitive Markets, Monopoly Deriving the Market Demand Curve Individual Demand and Market Demand – analysis of tabular schedules, graphs

Chapter 5: [8] Price Elasticity of Demand Elastic, Inelastic PED Necessities versus Luxury Goods (elasticities) Formula for computing PED (basic) Interpreting demand schedules (slopes)

Chapter 6: [6] Price Ceilings, Price Floors – impact on D, S Impact of Taxes on S, D, Elasticity Graph problem ceiling, floor, and equilibrium surplus or shortage, binding, non-binding