Study Guide for Test #1

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1.  Be able to apply supply and demand analysis to evaluate the impact of different events

2.  Be able to calculate the price elasticity of demand

3.  Be able to categorize goods according to the elasticity

4.  Know the factors affecting the price elasticity of demand

5.  Know how the price elasticity affects the demand curve

6.  Understand the relationship between the price elasticity and revenue

7.  Understand the relationship between the price elasticity, the demand curve, the marginal revenue curve, and total revenue

8.  Be able to calculate the income elasticity of demand

9.  Be able to categorize goods according to the income elasticity of demand

10.  Be able to calculate the cross-price elasticity of demand

11.  Be able to categorize goods according to the cross-price elasticity of demand

12.  Be able to calculate the price elasticity of supply

13.  Know how the price elasticity affects the supply curve

14.  Be able to interpret the calculated elasticities

15.  Understand the difference between fixed and variable costs

16. Understand the relationship between average and marginal costs

17.  Know the relationship between short-run costs and long-run costs

18. Be able to calculate economic and accounting profits

19.  Understand the difference between economies of scale and economies of scope

20.  Know the sources of economies of scale

21.  Know the special sources of economies of scale

22. Know the factors leading to diseconomies of scale

23. Understand the distinction between the learning curve and economies of scale

24.  Know the efficiency-based reasons for diversification

25.  Know the managerial reasons for diversification