Essential EC120 Final Exam Cheat Sheet for Students
School
Wilfrid Laurier University**We aren't endorsed by this school
Course
EC 120
Subject
Economics
Date
Dec 11, 2024
Pages
3
Uploaded by MateTeamSnail49
EC120 Final Exam Cheat SheetEC120 - Final Exam Cheat SheetChapter 1: Economic Principles- Interdependence: Choices depend on options and factors influencing them.- Cost-Benefit: Choose options with greater benefits than costs.- Opportunity Cost: Value of next best alternative.- Marginal Benefit: Max a consumer would pay for a service.- Rational Rule: Buy/sell more if MB > MC.Chapter 2: Demand and Consumer Choices- Everyday Goods: Demand increases with income.- Inferior Goods: Demand decreases with income.- Demand Shifters: Income, preferences, related goods, expectations, congestion/network effects, #/type of buyers.- Congestion Effect: Good value decreases as usage increases.- Network Effect: Good value increases as usage increases.Chapter 3: Supply and Producer Choice- Perfect Competition: Identical goods, many buyers/sellers, price takers.- Marginal Product: Output from additional input.- Diminishing Marginal Product: MP decreases with more input.- Supply Shifters: Input prices, productivity, related outputs, expectations, #/type of sellers.Chapter 4: Equilibrium- Equilibrium: Quantity demanded = Quantity supplied.- Shortage: QD > QS (Price increases).Page 1
EC120 Final Exam Cheat Sheet- Surplus: QS > QD (Price decreases).Chapter 5: Elasticity- Price Elasticity of Demand: delta%QD / delta%P.- Elasticity > 1: Less steep demand curve.- Elasticity < 1: Steeper demand curve.- Total Revenue = Price × Quantity.- Cross-Price Elasticity: Complements (-), Substitutes (+).- Income Elasticity: Inferior (-), Necessities (<1), Luxuries (>1).Chapter 6: Taxes and Market Efficiency- Statutory Burden vs Economic Burden: Assignment vs actual effect.- Tax Incidence: Shared economic burden.- Binding Price Floor/Ceiling: Prevents EQ price.- Subsidies: Government payments.Chapter 7: Externalities and Efficiency- Productive Efficiency: Lowest cost.- Allocative Efficiency: MB = MC.- Economic Surplus: ES = PS + CS.- Market Failure: Inefficient outcomes.- Externalities: Unaccounted side effects.Chapter 8: Trade and Comparative Advantage- Absolute Advantage: Fewer inputs for tasks.Page 2
EC120 Final Exam Cheat Sheet- Comparative Advantage: Lower opportunity cost.- Gains from Trade: Reallocating resources.Chapter 9: International Trade- Tariffs and Quotas: Trade barriers, inefficient.- Domestic vs Export: Local vs foreign sales.Chapter 10: Externalities and Public Goods- Cap and Trade: Set quota, allow trading.- Public Goods: Nonrival, nonexcludable.- Common Goods: Rival, nonexcludable.Chapter 11: Labour Market- Derived Demand: Linked to product demand.- MRPL = MPL × Price.... (Truncated for demonstration purposes)Page 3