Econ 101

Lecture #22 - Last class

2 December 2021
Go over Qz#4
Review for final
Questions?
• MUST TURN YOUR CAMERAS ON for final exam

• Topic: Econ 101 Final Exam

• ZOOM INVITE FOR ECON 101 (8X) FINAL EXAM

FRIDAY, DEC 10 12:45-3:45 PM (Vancouver
Time) https://columbiacollege.zoom.us/j/65573648406
• Qz # 4 Results Average 24.6/50
• Highest mark: 41.5
• 40+ I
• 35+ IIII
• 30+ IIII
• (Out of 24 people who took quiz)

• Course Grades: 40% of mark from best 3 or 4 quizzes (see next page)
• 60% of mark from Final/Midterm (60% from Final if final is better than
midterm)
Quiz Total
Best 3 of 4 (out of 40)

Do a doublecheck…..
Add best 3 of your 4
quizzes
Then multiply by 40/150
Materials to help you study for your final
• 1. Textbook gives the definitions of the concepts we have studied and an overall
summary of the ideas we have covered but not the details and models
• 2. Details and models are covered in the summary sheets posted on the portal
• 3. Power Points for all lectures have been placed on the portal and recordings for
lectures have been shared on OneDrive
• 4. A former final (with answers) is posted on the portal and other finals are
posted on the Columbia College library website. Not all finals cover the same
material. You will be responsible the material we covered this semester.
• ( 40% multiple choice (usually based on definitions and logical outcome of
knowing definitions); 40% calculation questions (material from your four quizzes);
20% longer definitions or showing you can make an economic argument using
some of the tools we have developed this semester)
• 5. GO OVER MIDTERM and 4 QUIZZES (all have been returned to you with answer
sheets on the portal)
Guides
• 1. Finding Equations for D & S curves: Reading Material #1
• 2. Finding the areas of D/S: Reading Material #2
• 3. Effects of ceilings & floors---DWL: Reading Material #3
• 4. Market Failure: Reading Material #5
• 5. How to Price Search: Reading Material #6
• 6. Summary of 1st half of course: Reading Material #8
• 7. Macro Calculations: Reading Material #10
• 8. Macro Policy: Reading Material #12
• 9. Keynes vs New Classical : Reading Material #14
• 10. Comparative Advantage Example: Reading Material #15
• 11. International Economics: Reading Material #16
• 12. Summary of Econ 101: Reading Material #19
Purpose of Econ 101
• Give you an appreciation for the “Economic Way of Thinking”
• Prices are not accidental but give us information about what people want
and how easy it is for owners of resources to produce what people want
• How do economists measure whether an economy is healthy or not?
• An introduction to the economic models (how economists try to simplify
the world into manageable units for us to study)
• An introduction to some of the controversies that economists argue
about (How well does the economy work? Does government policy help
or hinder the economy?)
• Further courses in economics dig deeper by making models more realistic
(and therefore more complex) and also dig deeper into economic
controversies
Summary of Topics (Reading Material #19)

MICRO
1. Allocating scarce resources to their most important use: Command vs Market
2. Production Possibility curves (scarcity), Inevitability of cost
3. Concept of demand (ranking of uses by desirability --- not need vs. want)
4. Concept of supply (ranking of availability by cost --- value of next best opportunity)
5. Comparative Advantage (Coconuts vs Fish)
6. Equations for D, S and how to find equilibrium.
7. How equilibrium moves from shifts of demand and shifts of supply
8. Equilibrium maximizes gains from trade (area under demand = value; area under supply = cost; consumer surplus plus
producer surplus = total gains from trade)
9. Ceilings and floors increases gains to some but result in net losses (dead weight loss)
10. Idea of Market Failure (Why demand or supply could be wrong and not reflect consumers’ true values or the true cost
to society). If D and S are wrong, then equilibrium does NOT maximize gains from trade. Compared to optimal point,
market equilibrium has DWL
11. Monopoly (set MR=MC), find P up on demand
12. Adam Smith vs Market Failure (Public Interest) Adam Smith economists believe that we should listen to the market
and not interfere with it if we want resources allocated to their best use (Laissez-faire). Public Interest economics believe
that market can be wrong and good government policy can direct resources to be used more efficiently. Public Interest
economists believe that anti-trust & regulation reduce DWL from market power. Adam Smith economists suggest that
market power is ephemeral (difficult to maintain) and that anti-trust and regulation can do more harm than good.
MACRO
1. GDP=C+I+G+X-M (calculate the value of all final goods and services by counting expenditures) Don’t count intermediate
transactions, change of ownership or transfers
2. Real vs Nominal (Levels and growth rates)
3. Two ways to calculate inflation rates: deflator vs CPI
4. Bubbles (Ye>Yf) and Recessions (Ye<Yf) and the Phillips Curve (a tradeoff between inflation and unemployment)
5. Fiscal Policy (ΔG, ΔT, deficits, debts) and Monetary Policy (ΔM and interest rates) to control economy
6. Keynesian vs New Classical opinions about how economy works and what is best policy
7. PV=FV/(1+r)n (bonds, treasury bills, choosing best buy over time)
8. How to measure money (M1, M2) and deposit multipliers
9. Connection between interest rates and money supply (open market operations)
10. Comparative Advantage Model (showing gains from trade when countries have different opportunity costs)
11. Tariffs and other barriers to trade that reduce the gains from trade
12. How to measure the BOP (both CA and KA)
13. How e is determined and how central banks buy and sell reserves to control e.
14. Fixed vs floating e