PRINCIPLES OF MICROECONOMICS

Study Guide for Test #1

1.  Scarcity

2.  Fundamental economic questions

3. Types of economies

4.  Efficiency and equity

5.  Normative vs. positive analysis

6.  Microeconomics vs. macroeconomics

7.  Production possibilities frontier (PPF)

8.  PPF and efficiency - graph

9. Production possibilities frontier and opportunity cost - graph

10. Law of Increasing Marginal Opportunity Cost - graph and explanation

11. PPF and economic growth - graph

12  Factors of production

13. Circular flow of income model

14.  Legal basis of a market system

15.  Patents vs. copyrights

16.  Law of demand - definition

17.  Substitution vs. income effect

18.  Factors causing changes in demand

19. Normal vs. inferior goods

20. Substitutes vs. complements

21. Change in quantity demanded vs. change in demand - know the difference

22.  Law of supply - definition

23. Factors causing changes in supply 

24. Market equilibrium - algebraic

25. Market equilibrium - graph

26. Surplus - graph and explanation

27. Shortage - graph and explanation

28. Equilibrium and changes in supply - graph

29. Equilibrium and changes in demand - graph

30. Equilibrium and changes in both demand and supply - graph

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Recommended problems

Chapter 2 - 1.9, 1.10

Chapter 3 - 4.14, 4.15, 4.17

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Answers to recommended problems

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