• Chapter 1

• Know what economics is

• real/nominal price

• using CPI, % change

• Chapter 2

• Supply/Demand

• Shifts/movements along a line

• Factors other than price that affect S/D

• Substitutes and complements

• Market Eqm, shortage and surplus

• Change in P, Q when S/D shift

• Elasticities!

• Elastic v. inelastic

• Point vs. Arc

• Price, income, cross price elasticities

• Short run vs. long run

• Graph a linear supply/demand curve (slope, x/y intercepts)

• Fit linear D/S curves to market data

• Using provided data like price elasticities, market eqm price and quantity

• % change in D/S effect on P, Q

• Chapter 3

• Consumer preferences

• Completeness/transitivity/more is better

• Violations of these in graph form

• Convexity

• Indifference curves

• Why can’t cross

• Marginal rate of substitution

 • Shape of indiff curves

• Substitutes and complements

• Map utility functions

• Budget constraints

• Budget lines

• Drawing in graph

• Labeling x, y intercepts, slope

• Income and price changes

• Maximizing utility

• Point at which Budget line is tangent to indiff curve

• To MAXIMIZE Consumer utility set MRS=

• Make sure you are able to set up and solve constrained optimization problem!
See notes on ecampus under “Syllabus/Notes” section.

• Marginal utility, diminishing MU

• Marginal cost and benefit

• Indiff curves

•
• So maximizing satisfaction also occurs when or (last dollar rule)
• Interior and corner solutions, how that relates to MRS and price ratios

• Interior MRS=

• Corner MRS> if consume only good on X-axis

• Corner MRS< if consume only good on Y-axis
• Revealed preferences

• Graphs for Rationing Gasoline

• What rationing means for consumer satisfaction/utility

• Chapter 4

• Individual demand curves

• Price consumption curve

 • Mapping budget lines/utility maximizing bundles into individual demand curves

• Drawing income consumption curves curves

• Slope of an engel curve for normal and inferior goods

• Drawing substitution and income effects on a graph

• Defining substitution and income effect.

• Income effect and whether a good is normal or inferior (or giffen)

• Individual and market demand curves

• Elasticity and expenditures

• Network externalities (positive and negative)

• Draw graphs, pure price effect vs. externality/snob effect