Intro to Econ 1 Wk Sh. Doc

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Introduction to Economics

The sheet below covers primarily the introduction to economics handout, but you mayneed to refer to your textbook to assist you in answering a few of the questions properly.You may write on these sheets. It will be checked for a grade before going into thehandout section of your binder.

1. efine Economics!

". Inputs that a society uses to produce outputs is called #####################.$. Resourcesinclude! #####################,#################### % #########.&. 'hat are goods(

). Is a serviceconsidered a good(#############*. 'hy are goodsand servicesconsidered scarce(

+. 'hat is a free resource(

. 'hat is the motivating force behind a society-s economic decisions(

. efine Market!

1/. 'hat is the purpose of a market system(

11. 'hat are the branches of study in 0conomics(

1". efine Macroeconomics!

1$. 'hat does aggregate mean(

1&. ow does Microeconomicsand macroeconomicsdiffer(

1). 'hich is our focus in this course(

1*. efine economic policy!

1+. 2ame four examples of economic policy the government may use to affect economicpolicy.

1. In what two ways can the government be evaluated in its handling of economicpolicy( ######################%####################

1. 'hich economic evaluation attempts to be non3udgmental(


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"/. 'hich evaluation uses value 3udgments(

"1. ow are the two different(

"". 4nder which does the goals of economic policyfall( WHY?

"$. 2ame three universally accepted economics goals. ################################################## % ##########################

"&. efine economic growth:

"). efine ull employment:

"*. efine !rice sta"ility:

"+. efine Inflation:

". efine #eflation:

". 'hat does one do when considering marginal analysis(

$/. If in hiring a additional worker after examining through marginal analysis, thebenefits and cost an employer discovers he5she will make an additional three dollar profita week will the change be made( 'Y( ################

$1. 'hat is the literal definition of $eteris pari"us(

$". 'hat assumptionis made by economists when invoking the 6eteris paribusassumption(

$$. ow does the efficient productionassumption differ from reality( ow( #########

$&. 'hat is the production possi"ility frontiershow( ow many goods are compared(728T0! it is also referred to as the production possi"ility curve.9

$). :ooking at the graph on page ), if one increasesthe production of good Y, whathappens to good ;(


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$*. 'hat does represent on the graph(

$+. 'hat does I represent on the graph(

$. If production falls at point 0, ####### Y goods are being produced and ####### ;goods are being produced.

$. 'hy is the graph concave rather than straight(

&/. 'hen might the line showing the relationship between the two product be straight(

&1. 'hat would have to happen for the line to shift right to point (

&". efine opportunity cost:

&$. I can watch a movie n economy is producing ) units of ; and ) units of Y. 'hy at units of ; does theproduction of Y drop to & units(

&*. 'hat are the two common pitfallsin economic analysis(#######################% #########################

&+. efine both pitfalls!

%&'E:post hoc ergo propter hoc fallacies is another term for causation fallacies.

&. 'hat determines demand(

&. 'hat determines supply(

)/. 'hat does a demand schedule illustrate(

)1. ?rom the demand schedule on page 11 what relationship can you determine exitsbetween price and quantity(

)". 'hat type of relationship exists according to the law of demand( 'hy(

)$. ow many ways may demand be expressed in economics(


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)&. 'hat does @ represent( A( #################### %####################

)). 'hy is the slope of the demand curve always a negative(

)*. 'hat does movement along the demand curve represent(

)+. If the price increases from B$ to B+ in which direction will the movement migrate(

). 'hat would explain the movement in number )+(

). If the price should drop from B+ to B), in which direction would the movement be(

*/. 0xplain the differences in the change in quantity demanded and a change in demandgraphically.

*1. ow does a shift to the left effect demand(

*". ow does a shift to the right effect demand(

Y84 C4:82G T00C>2 64E=0 >2 > 2HHH

*$. 'hat effects movement along the demand curve and a change in demand(

*&. 'hat are the four things that effect a change in demand most often(#########################################, ########################,##################################### % #################################

*). efine su"stitutes:

**. Give three examples of products that are substitutes and what they are substitutes for.

*+. efine complements:

*. Give three examples of products that are complements and the product theycomplement.

*. efine %ormal (ood:+/. efine Inferior (ood:


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+1. Give an example of a normal good and an example of an inferior good.

+". The price of a certain hot computer will fall in three months. ow will this effectdemand(

+$. ow will the rise in unemployment effect demand(

+&. :ike demand, supply also determines market ############## % ###############.

+). In what three ways can supply be illustrated( ###################, ############################### % ######################.

+*. 'hat is the relationship between price and quantity supplied(

++. 0conomists call this relationship ############## ################.

+. ow does the slope of the curve in supply differ from the slope of the curve indemand(

+. 'hat is the mathematical measurement of the slope of supply(

/. ow does a change in the movement along the supply curve differ from a change insupply(

1. ow does a shift to the left effect supply(

". ow does a shift to the right effect supply(

Y84 C4:82G T00C>2 64E=0 >2 > 2HHH

$. 'hat is the factor that would cause movement along the supply curve(

&. 'hat four factors cause a shift in the demand curve( #########################,########################, ########################.

). Coving from cassettes to 6-s would have caused ###########################.

*. 'hich direction( ######################(

+. 'hen does equilibrium occur(. ow can one determine the equilibrium quantity and price. #############################################%#############################################

. ow does one use the graphical approach to finding equilibrium(


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/. 'hat will happen to the equilibrium price and quantity if the demand or supply curveshifts(

1. 'hat does a shift to the left of the demand curve lead to(

". 'hat happens when there is a shift to the right in the demand curve(

$. 'hat does elasticity measure(

&. Give an example of a product that is elastic. 7on-t use candy bars9

). Give an example of a product that is inelastic. 7on-t use prescription drugs.9

*. 'hat were the two extreme cases of price elasticity given(

+. If milk and cola both increase from a B1 to B1.)/ demand for both will drop. 'hichwill experience the greatest drop( 'Y(

. 0lasticity measures the impact of price effect. If impact is large then the demand issaid to be more elastic. Therefore a relative small change in price will create a 7large orsmall9 change in demand.. 0xplain the difference between income elastic and income inelastic.

1//. 6rossprice elasticity of demand examines the impact of complementary goods onelasticity. If gasoline goes up to B$. a gallon, what will be the impact on the overalldemand for automobiles(

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