Here are some notes to prepare for the exam.
It covers ch 1-4. There will be 5 questions, with parts. While you will often make a choice (multiple choice) I encourage you to write about how you got the answer so I can give you extra points if you did not get it right, when your thinking is proper.
ch 1: Economics and scarcity, principles, opportunity cost, four pitfalls. Economic naturalism, and positive vs normative statements. Economic models and their role.
ch 2: Comparative advantage vs absolute advantage. Be prepared to work simple problems. PPC, interpretation, slope as opportunity cost. What causes comparative advantage, how dochanges in PPC happen?
ch 3: Supply and demand, graphs, equations, equilibrium. Be prepared to find equilibrium and graphs from equations, and interpret the slope, y-intercept etc. Change in supply/demand vs movement along the supply/demand curve. Interpretation of demand as reservation prices, and supply as opportunity costs. Predicting effects of changes in supply or demand or both. Predicting outcomes of price supports and price controls; excess supply and demand. Economic surplus; why a market gives the most economic surplus; producer and consumer surplus– finding them and identifying them on a graph– division of surplus. What does the market model leave out that makes it not necessarily socially optimal?
ch 4: Key macroeconomic measures and areas of study. History of economy, especially the depression. How to measure productivity. Doess productivity increase lead to increased living standards for people? The types of economic policy ( monetary, fiscal, and structural– give an example of each!). Aggregation– what is it, examples, and what does it leave out?