TOPIC SHEET for TEST 1

EC 102 Principles of Microeconomics

Bernasek

1. Definitions of economics.

2. The economic problem - scarcity, choice, opportunity cost.

3. The PPF.

4. Economic systems.

5. Positive/normative distinction.

6. Structure of theories.

7. Surplus, specialization, gains from trade.

8. Circular flow of income.

9. Factor markets and goods markets.

10. Private sector vs. public sector.

11. Qd and Demand (D).

12. Factors that shift the demand curve.

13. Movements along versus shifts of the demand curve.

14. Qs and supply (S).

15. Factors that shift the supply curve.

16. Movements along versus shifts of the supply curve.

17. Equilibrium price and quantity.

18. Disequilibrium price and quantity - excess supply and excess demand

19. Shifts of D and S - changes in equilibrium P and Q.

20. Price elasticity of demand.

21. Classifying price elasticity of demand: ND> 1, ND< 1, ND= 1

22. Determinant of price elasticity of demand.

23. Price elasticity of demand in the SR and LR.

24. Price elasticity of demand and total revenue (TR)

25. Price elasticity of supply.

26. Classifying price elasticity of supply: NS> 1, NS< 1, NS= 1

27. Price elasticity of supply in the short run and in the long run.

28. Income elasticity of demand - normal good and inferior good.

29. Cross price elasticity of demand - substitutes, complements, no relationship.

30. Incidence of a sales tax - who bears more of the burden depends on price elasticity of demand versus price elasticity of supply.

31. Price ceilings and price floors.

32. Examples of price ceilings and price floors - minimum wage, ag price supports, rent control.

33. Dollars and Sense: Readings 7 and 8.

34. New Field Guide: 1.1, 2.7, 6.1, 6.3.