ECON 1102 Study Guide - Midterm Guide: National Research Universal Reactor, Marginal Product, Human Capital

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15 Sep 2018

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Chapter 19: what macroeconomics is all about. Chapter 20: the measurement of national income. Chapter 21: the simplest short-run macro model. Chapter 22: adding government and trade to the simple macro model. Chapter 23: output and prices in the short run. Chapter 24: from the short run to the long run: the adjustment of factor prices. Food - not if there is no change in the amount of expenditure. Capital has gotten more productive, people with more capital are getting richer: these are sometimes referred to goods and services: goods are tangible, services are tangible, we live in a service industry. Example: you can only spend on either pizza or beer. If we assume beer is , and pizza is. , what does our budget line look like: if i only want beer - you can buy / = 10, if i only want pizza - you can buy / = 20, plot these on your axes.

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Essay questions are due at the end of the course. It is strongly recommended that you accumulate your answers as you complete each unit and don't leave them all until the last minute. Please type your responses to the following short answer/discussion questions and short problems. Although your answers need not be lengthy (generally, 1-2 short paragraphs is fine), you should be careful to respond to all parts of the question asked. It is very important that your answers demonstrate that you have made the effort to read the chapter that relates to the question and thoroughly studied the relevant topic. Answers should be submitted in complete sentence and paragraph form, and writing presentation is important. Please remember that late essay questions are NOT accepted. 1. How is a "market" defined? Distinguish between an industry and a market. (1 point) 2. Suppose a market becomes more competitive over time. What happens to the elasticity of demand for a particular firm's good as its market becomes more competitive? (1 point) 3. Why are the monopolist's and the monopolistically competitive firm's demand curves downward sloping while the competitive firm's demand curve is horizontal? (1 point) 4. Why is a perfectly competitive firm's long-run supply curve the same as its marginal cost curve above the average total cost curve? (1 point) 5. Explain why monopolists do not achieve efficiency. (1 point) 6. Another student advocates the forced break-up of large firms, such as Microsoft and AT&T, on the grounds that they have a lot of monopoly power, which they use to charge inefficiently high prices. According to Schumpeter, would breaking apart these gigantic firms guarantee consumers lower prices? Explain. (1 point) 7. Explain why firms should not shut down in the short run until price falls below average variable cost. (2 points) 8. Suppose your economics professor publicly states that she grades on a curve (i.e., the top 10% of the students get an A, the next 20% get a B, the next 40% get a C, the next 20% get a D, and the lowest 10% fail). The whole class could save itself a lot of work by agreeing privately not to study at all for the final exam and just letting the rankings thus far determine the final grades. Why might such an agreement be difficult to maintain and enforce? Which market structure, if any, is this situation most analogous to? (1 point) 9. Why do firms practice price discrimination? Is efficiency affected by price discrimination? If so, how? (1 point)

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ECON 1102 Study Guide - Midterm Guide: National Research Universal Reactor, Marginal Product, Human Capital

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