Chapter 1: Limits, Alternatives and Choices

A. What is Economics?

Definition:

1. Scarcity and Choice

2. Rational Behavior (purposeful)

3. Marginalism

B. Why Study Economics?

1.

2.

3.

C. Macro vs. Micro

-Positive vs. Normative

D. The Economizing problem; the individual

E. The Economizing problem; society

- Employment and efficiency.

1. Full emp

2. Full prod

- Production possibilities

- Unemployment, Growth and the Future.

1. Discard Unemp

2. Growth

Chapter 2: The Market System and the Circular Flow

A. Economic systems

1. Spectrum of systems

B. Characteristics of a market system

1. Private Prop

2. Freedom of ent and choice

3. Self-interest

4. Competition of interests

5. Markets and prices

6. Reliance on capt and tech

7. Specialization

8. Division of labor

9. Geographic Specialization

10. Money

11. Active but limited gov.

C. Four Questions.

1. What to produce

2. How to produce

3. Who gets what is produced

4. How to accommodate change. (book labels it how to promote progress)

D. Circular flow

Chapter 3: Demand, Supply and Market Equilibrium

Individual Markets

Def:

A. Demand

Def:

1. Individual demandSchedule

Law of demand:Justifications

123

Graph

2. Market demand

-Determinates of demand-

----

3. changes of demand.

B. Supply.

Def:

1. Individual Supply

Schedule

Law of supply:Justifications12.

Graph

2. Supply curve.

-Determinates of Supply------

3. Changes in supply

C. S+D market equilibrium

1. Schedule

2. Graph

D. Movement of curves and results

E. Price floors and ceilings. Theory and reality.

Chapter 6: Elasticities of Supply and Demand

A. Price elasticities of demand.

-General measure

1. Interpretations of Elasticity

a. Elastic

b. Unitary

c. Inelastic

d. Perfectly…

2. Midpoint formula

3. Elasticities over a straight line demand.

-Total Revenue test and total revenue curve

4. What determines elasticities?

5. Applications

B. Price elasticity of supply.

1. Market period

2. Short run

3. Long run

C. Income elasticity

D. Cross price elasticity

F. Consumer and Producer Surpluses

Chapter 20: Income Inequality and Poverty

A. Facts about income inequality

- Distribution to land labor and capital

- Distribution by income quintiles.

- The Lorenz curve and Gini ratio

A. continued- Income mobility and the time dimension

- Effect of government on redistribution

B. Causes of income inequality

- Ability

- Education and training

- Discrimination

- Preferences and risk

B. continued

- Unequal wealth distribution

- Market power

- Luck connections and misfortune

D. Income inequality over time

- Rising income inequality since the 1970’s

- Causes of growing inequality

E. Equality vs. efficiency

- Case for equality

E. continued

- Case for inequality

- Equality efficiency trade off

F. The economics of poverty

- definition of poverty

- Incidence of poverty

- Poverty trends

F. continued

- Measurement issues

G. US income maintenance system

- Social insurance programs

- Public assistance programs