StudyQuestions1

A word about test preparation:

The goal of both this course and this study guide is to motivate students to understand and think about the economic issues presented in the course. The emphasis will be on your understanding and application of the concepts, theories, debates and alternative views presented in the course. Thus, memorization of definitions will only help to small degree, as a method to understand the basic terminology. In studying the text and your notes you should be challenging yourself by continuously asking the following questions:

What is the overall point that is being made? How does it relate to the previous issues?

Why is the material organized in this particular way? How are the details that are presented relevant to the big picture?

Always keep in mind the flow of the logic in the point being presented.

Avoid relying entirely on memorization.

Avoid thinking that the material is all familiar, or all foreign. If it seems familiar look for new examples, details, applications. If the material seems strange, try to grasp the basic point and relate it to your own experience or to the simplest example presented.

Always take thorough notes.

Try to buddy-up with someone in class to compare notes, ask questions, study together or at least share notes when one of you miss class.

Do not cheat, copy or allow someone else to cheat. Students caught cheating will be given zero points for their exam, and reported to the Office of the Vice President for Instruction.

Study Outline

This outline covers the basic issues in the course. It is intended to aide students in their preparation for exams and in managing the relevant information in the course. It is not intended to be entirely comprehensive. Nor does it imply anything about the detail to be tested. In other words, issues from the lectures and text (The Economy Today, 11th Ed., Schiller) may be tested which are not on this outline.

Introductory Material (lecture and webpage) :

Know the definitions of economics and be able to briefly discuss their implications.
Classical Definition of Economics
Know the major classical economists covered in lecture and the webpage and their primary contributions.
Neo-classical Definition of Economics
What is the relationship between the Classical and Neo-classical definitions?

Know three criticisms of the Neo-classical definition.

Methodology in Economics (lecture and webpage):

Be able to explain how the Scientific Method is applied in Economics.

What are the components of the Scientific Method?
What is the problem with applying the Scientific Method to Economics?

Why do we use mathematical models in economics?
Read my webpage summary of modeling in economics.

Graphing Review: Linear and Non-linear (lecture, Ch.1 Appendix, webpage)

Be familiar with the basics of graphs: slope, intercept, independent variable, dependent

variable, the relative rate of change, steepness, flatness.

Know how to interpret linear graphs, especially the sign and relative magnitude of the slope.
Be able to provide both mathematical and economic interpretations of graphs.

For non-linear graphs be able to identify sign, relative magnitude, the relative rate of change (i.e. increasing at decreasing rate, increasing at an increasing rate, decreasing at a decreasing rate, decreasing at an increasing rate), concave curves, convex curves, maximum and minimum points.

Ch. 1 Economics: the Core Issues (lecture, text, and webpage)

Scarcity & Resource Utilization

Know and be able to explain the three questions that every economy must answer.
Know and be able to explain the three factors of production.
Know and be able to explain the definitions and components of land, labor and capital; and

entreprenuership

Be able to define and identify relative scarcity.
How is the concept of scarcity applied in Neo-classical economics?
Be able to explain the importance of the issue of scarcity, choice, and opportunity cost.
What is the graphical representation of opportunity cost.
Be able to explain the concept of trade-offs in production.
The production possibilities curve:

know how to represent the basic model: maximum output levels; under-used resources; inefficient production; full efficiency; unattainable output levels;

know how to represent changes in resources & technologies; production levels; production trade-offs;

know how to represent increasing opportunity costs; decreasing marginal product.

The law of increasing opportunity costs.
The law of decreasing marginal product.
The Market Mechanism; Smith's "invisible hand"; prices and price adjustments.
Laissez-faire & Government Intervention
Market Failure & Gov't. Policy Failure
A mixed economy
Imperfect knowledge

Ch. 2 The U.S. Economy (lecture, and text)

SHORT ANSWER STUDY QUESTIONS for EXAM 1

Three of the following questions will be on the exam. Students are expected to answer each question in a short paragraph (approximately 5 sentences or less). Answers must be legible, complete, and written at an appropriate college level . This section of the exam provides an opprtunity for students to display their mastery of the material. Complete, high scoring answers will always be based upon how the material is presented in lecture.

1) Summarize the Classical version of the Theory of the Free Market.

2) Summarize the Neoclassical version of the Theory of the Free Market.

3) How is the Scientific Method applied in Economics? Explain the role of models in economics.

4) Explain the relationship between scarcity, choice, and opportunity cost?

5) Why is the Production Possibility downward sloping?

6) Why is the Production Possibility concave (bowed outward)?

7) Explain the relationship of Increasing Opportunity Costs. You may draw a graph as part of your answer, but are not required to.

8) Explain the relationship of Decreasing Returns (or Marginal Product). You may draw a graph as part of your answer, but are not required to.

9) What has been the long term trend of income distribution in the United States since the 1970s?