Download Exam I Review Sheet - Principles of Microeconomics | ECON 201 and more Study notes Microeconomics in PDF only on Docsity! Econ 201: Review for First Midterm The test will be multiple choice, with 15-20 questions. You will have 50 minutes to complete it. For the questions that require a calculation, you will be given multiple choice answers from which to choose after doing your calculation. Please bring a #2 pencil, eraser, and calculator Recognize the definition of: A product market A factor market Capital versus Land (as resources used in production) Entrepreneurship versus Labor (as resources used in production) Consumer goods versus capital goods Comparative Advantage in trade A production function A production frontier Law of Increasing Cost Full production (in the context of production frontiers) Full employment (in the context of production frontiers) Marginal Product A market An equilibrium point Substitute Goods Complementary Goods Law of Demand Law of Supply Law of Substitutes Law of Complements Shortage Surplus Price Floor Price Ceiling Consumer surplus Reservation prices Marginal Utility Law of Diminishing Marginal Utility Be Able to Calculate You will be asked to find an opportunity cost, given the necessary information about the market value lost and gained when a resource is allocated two different ways In Comparative Advantage, you will be asked to : • calculate the domestic opportunity cost of two products for two different countries, in order to determine which product each country should export and import • calculate the gains from trade as the difference between the two domestic opportunity costs. • be able to identify terms of trade these countries could possibly agree upon, given that terms of trade must fall in between the two domestic opportunity costs. Regarding changes in the market equilibrium price and quantity in response to changes in the non-price determinants of demand and supply, you will be asked to decide whether equilibrium prices and quantities are going up or down when: • the income of the consumer is increased or decreased • the price of a substitute good is increased or decreased • the price of a complementary good is increased of decreased • the price of a factor of production (resource used in production) is increased or decreased
