ECONOMICS 1100: MICROECONOMICS, EXAM 1 REVIEW SHEET

The following is a list by chapter of the general topics covered in this section of the course and is not
necessarily all-inclusive. You are responsible for all of the relevant material covered in the book. You
should be able to identify, define, and apply these concepts. The exam is 40 multiple choice questions
with a 60 minute time limit.
Chapter 1:

Economics, micro/macroeconomics, normative/positive economics

Resources, scarcity, trade-offs, opportunity cost; economic questions of what to
produce, how to produce, who gets to consume output
Economic theories, models, ceteris paribus assumption
Fallacies in reasoning: fallacies of false cause, composition, division
Cost-Benefit approach; marginal benefit, marginal cost
Circular Flow Model: demand/supply by households/firms, balance of trade
Economic Systems: characteristics of capitalism, socialism, mixed economy

Chapter 2:

Production Possibilities Model: assumptions, what it illustrates

PP Schedule: attainable/unattainable combinations, opportunity cost between
combinations and constant/increasing opp. cost over entire relationship
Production Possibilities Frontier: assumptions, points on, inside, outside PPF
opportunity cost between points and moving down along entire PPF
PPF: illustrating economic growth, conditions for economic growth

Chapter 3:

Absolute advantage, comparative advantage, specialization and gains from trade

Production Possibilities Model: from graphs showing output amounts and from a table
giving time needed to produce output, find absolute advantage, opportunity cost,
comparative advantage, gains from specialization and trade

Chapter 4:

Demand: law of demand, demand schedule, demand curve, effect of price change on
quantity demanded, determinants of demand, changes in demand; difference
between a change in quantity demanded and a change in demand
Supply: law of supply, supply schedule, supply curve, effect of price change on
quantity supplied, determinants of supply, changes in supply; difference
between a change in quantity supplied and a change in supply
Market equilibrium: equilibrium price, equilibrium quantity; shortages/surpluses;
changes in equilibrium
Role of prices and supply and demand in market economy

Chapter 5:

Price elasticity of demand: calculate using mid-point formula and percentage changes
Ranges of elasticity, elasticity along linear demand curve
Perfectly elastic/inelastic and unit elastic demand
Relationship between price elasticity of demand and total revenue
Determinants of price elasticity of demand
Income elasticity of demand: normal goods, inferior goods
Cross elasticity: substitute goods, complementary goods