Topics for Microeconomics: Exam I

Fall 2005

Friday, October 14

Chapters: 1-4, 7, 10, 11


I. Introduction to Economics

A. Specialization, self-interest, global interdependence
B. Central questions
C. Economic Systems

II Scarcity and Opportunity cost

A. trade-offs and efficiency

B. production possibilities curve

C. Growth

III. The Market System

A. Advantages of trade

1. comparative advantage

2. efficient

3. both parties gain

B. Demand

1. relation between price and quantity demanded
2. preferences, income, complements, substitutes, number of consumers
3. increase in demand (shift to right)
4. decrease in demand (shift to left)
5. Shifts in demand vs. changes in quantity demanded

C. Supply

1 relation between price and quantity supplied
2. costs of production, number of producers
3. increase in supply (shift to right)
4. decrease in supply (shift to left)
5.shifts in supply vs. changes in quantity supplied

D. Demand and Supply

1. finding equilibrium price and quantity
2. effects of changes in supply or demand

E. The social value of markets

1. consumer surplus

2. producer surplus

3. optimal market outcome

4. deadweight loss

IV. The Role of Government

A. Institutional Framework for markets
    1. legal system
    2. system of standards
    3. monetary system

B. Address market failure

    3. The problem of public goods
        a. non-rival and non-excludable
        b. private markets won't provide an efficient amount
        c. quasi-public goods
            i. open access resources (overuse)
            ii. excludable public goods (quantity too low)
        d. Policy

Eco 105 home page

Kalamazoo College Homepage

Chuck Stull's Homepage