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MIDTERM REVIEW ITEMS (PAGE 1)

BASIC CONCEPTS AND DEFINITIONS (CHAPTERS 1 AND 2)

Economics
Scarcity
Choice
Opportunity Cost
Resources
Decision Makers
Decisions Made at Margin
Market
Circular Flow Diagram
Evolution of Market Economies
Command vs Market Systems
Invisible Hand
Microeconomics vs Macroeconomics
Efficiency vs Equity
Market Failure
Externality
Market Power
Positive vs Normative Statements
Endogenous vs Exogenous Variables
Positive vs Negative Correlation
Direct vs Inverse Relationship

PRODUCTION POSSIBILITIES FRONTIER (PPF) (CHAPTER 2)

Definition
Assumptions
Characteristics
Illustrates Scarcity, Choice and Opportunity Cost
Changes

INTERDEPENDENCE AND GAINS FROM TRADE (CHAPTER 3)

Gains from Trade

Absolute Advantage
Comparative Advantage
Terms of Trade
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MIDTERM REVIEW ITEMS (PAGE 2)

DEMAND AND SUPPLY (CHAPTER 4)

Demand
Demand Law
Factors Affecting Demand
Substitutes vs Complements
Normal vs Inferior Goods
Demand Schedule
Demand Curve
Changes in Quantity Demanded
Changes in Demand
Market Demand Curve
Engel Curve
Supply
Supply Law
Factors Affecting Supply
Supply Schedule
Supply Curve
Changes in Quantity Supplied
Changes in Supply
Market Supply Curve

MARKET EQUILIBRIUM (CHAPTER 4)

Equilibrium Price
Excess Supply (Surplus)
Excess Demand (Shortage)
Comparative Statics
Giffen Good
Double Shifts

CONTROLLED PRICES (CHAPTER 6)

Ceiling Price
Rent Control
Floor Price
Minimum Wage
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MIDTERM REVIEW ITEMS (PAGE 3)

ELASTICITY (CHAPTER 5)

General Definition
Point vs Midpoint (Arc)
Price Elasticity of Demand -> sign, ranges, graphs, determinants, revenue
Income Elasticity of Demand -> signs, determinants
Cross Price Elasticity of Demand -> signs
Price Elasticity of Supply -> sign, ranges, graphs, determinants

TAX INCIDENCE AND EFFICIENCY OF MARKETS (CHAPTERS 6-8)

Tax Incidence
Consumers’ Surplus
Producers’ Surplus
Total Surplus
Efficiency
Deadweight Loss