In this 40-page pdf I have summarized the 4 chapters that will be on the first midterm of Econ 201. There are graphs figures definitions etc. Solely focused on the bigger and most important points of the textbook. ECON 201 Midterm Fall 2004 ECON 201: Principle of Macroeconomics Name: Fall 2004 Bellas Midterm You have two hours and thirty minutes to complete this exam. Answer all questions, explain your answers, label axes and curves on graphs and do your own work. Fifty points total, points per part indicated in parentheses. ECON 201: Introduction to Macroeconomics Professor Robert Gordon Midterm Exam 1: February 1, 2016 NAME Circle your section time: 9:00 am 3:00 pm Directions: This test is in two parts, a multiple choice question part and a short-answer part. Use this answer packet to.
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Econ 201 Midterm Quizlet
| Front | Back |
|---|---|
economics | study of how society have unlimited wants, allocates scarce goods and services, across competing ends. |
Allocation: distribution | 1. willingness to pay. 2. first come, first served--> opportunity cost 3. special characteristics 4. lottery/raffle (chances to get these particular goods) |
Economic analysis | explains/predicts econ dents. (changes in specific variable ). |
CPI (consumer price index) | -inflation: bad for consumers -deflation: bad for producers -national output -GDP: overall measure of output, unemployment |
Market | A group of buyers (demand) and sellers (supplier) of a good or service and the institution or arrangement by which they come together. |
Economic model | Simplified versions of reality used to analyze real-world situations |
PPC (Production Possibility Curve) | Shows the maximum combination of 2 goods an economy can produce given available resources and technology |
Factors of Production | 1. labor- wages 2. capital- machine, building, equipment 3. land- rent 4. entrepreneurship |
Economic events | 1. increase in productivity (wheat &corn)=> shift in PPC- it will shift out, to the right. Affects both goods. 2. increase in available labor (shift out, both goods) 3. increase in productivity for WHEAT (shift out for wheat alone) 4. increase in demand for wheat |
Shift variables for PPC | 1. available supply factor 2. productivity 3. technology 4. available supply for input |
Opportunity cost | 'cost' of next best alternative |
marginal analysis | analyze how small changes in one variable affect another variable (loss divided by gain) |
Comparative Advantage | lower opportunity cost |
law of comparative advantage | Producers should produce the goods they are most efficient at producing and purchase from others the goods they are less efficient at producing. |
Demand & Supply (economic model) | explain/predict changes in (market) Price and Quanity exchange. |
Demand curve | Quantity demanded at each possible price. As the price goes down, the quantity increases; as the price gets higher, the quantity gets lower. -consumers prefer lower price. |
Law of Demand | demand curve has a negative slope. (quantity demanded and price are negatively related) Quantity demanded and price and negatively related. |
Supply Curve | Quantity supplied at each Possible Price. (as price goes up, quantity gets lower; as price goes up, quantity increases)- supplier prefer higher prices. |
Law of supply | supply curve has a positive slope. Quantity supplied and price are positively related. |
Demand-related shift variables | 1. price of substitutes (ex.,cheaper version of coco puffs) 2. price of complements (buy things together) 3. expectation of demanders (thinking in advance of price) 4. income- normal and inferior goods 5. numbers of demanders 6. taste and preferences 7. taxes on demanders (commodity… |
Shift variables | 1. cost in supplying- cost of labor, inputs, etc. 2. technology 3. expectation of supplier 4. number of suppliers 5. productivity 6. taxes on supplier (e.g., gasoline) 7. weather |
one cause, one effect (shift) | NEVER A DOUBLE SHIFT |
Equilibrium | point where the demand curve and the supple curve intersect (Qd=Qs) |
elasticity | responsiveness of change of quantity bought to certain types of change (demand related) |
own-price elasticity | %ΔQ/%ΔP ED> 1 elastic ED< 1 inelastic |
Income elasticity | %ΔQ/%ΔI EI> 0 normal good EI< 0 inferior good EI> 1 luxury good EI< 1 necessity |
Cross-price elasticity | %ΔQA/%ΔPB -Ecp> 0 A&B are substitutes (if PB increases and QA increases) -Ecp< 0 A&B are complements (if PB increases and QA decreases) |
price controls | Government imposed price MAX or price MIN. |
price ceiling | price MAX (example: rent control) |
price flooring | price MIN (example: minimum wage) |
direct effect | the effect of PC or PF on the Qd and Qs. |
indirect effect | the effect of the shortage or surplus on behavior within the market. |
indirect effects: | - lower quality -higher fees -bribes -underground economy (ebay) -discrimination -increase in demand for substitutes -decrease in demand for complements |
commodity taxes | tax on exchange of good or service. |
tax on demanders | tax is added to the price at moment of sale. (sales tax) |
tax of su | ... |
tax on suppliers | tax is included in price. (cigarettes & gasoline) |
Advaloren tax | tax on the value of each unit sold. |
Per unit (specific) tax | tax (same tax) on each unit. Same amount each unit . |
tax wedge | difference between Pre and Post tax price. |
consumer burden | change in price paid by consumer as a result of tax. CB= P**-P* |
producer burden | change in price that suppliers keep and use as a Total Revenue (TR) |
tax | CB+PB |