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The Classical versus Keynesian controversy is primarily a dispute over what?
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State Say’s Law.
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What was Thomas Malthus’ critique of Say’s Law?
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Use the circular flow diagram to illustrate Say’s Law.
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Describe the quantity theory of money.
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Explain the two major assumptions of the quantity theory of money.
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Describe the Keynesian income adjustment mechanism.
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Illustrate equilibrium in the aggregate supply-aggregate demand model.
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Explain the three reasons why the .aggregate demand curve slopes downward.
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List at least five major reasons why the aggregate demand curve shifts.
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Why does the aggregate supply curve slope upward?
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List at least five reasons why the aggregate supply curve shifts.
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Draw and explain the three ranges of the economy.
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Draw and describe the Classical price adjustment mechanism.
Microeconomics – Lecture 4. Supply and Production Theory
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Illustrate the production function algebraically and explain its components.
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What does the production function specify?
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Define the short run. Define the long run.
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What is the difference between fixed versus variable costs? Provide several examples of each.
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Explain the difference between the short and long run.
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Define marginal cost.
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Explain the law of diminishing returns.
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Define marginal product.
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Define and illustrate average fixed cost, variable cost and total cost.
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The long run average cost curve is the envelope of what? Illustrate this.
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Explain the difference between economies of scale, diseconomies of scale and constant returns to scale. Illustrate each with the appropriate cost curve.
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Economies of scale may be traced to what factors?
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An industry characterized by increasing returns to scale is called what?
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Define minimum efficient scale.
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Define both the law of supply and the price elasticity of supply.
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What is the difference between economic versus accounting profits? Explain why this difference is important.
Microeconomics – 2. Supply, Demand and Equilibrium
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Why does quantity demanded tend to fall as price rises?
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Suppose the average income of consumers rises. What happens to the demand curve?
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Suppose you are analyzing the market for beef and the price of chicken rises. What do you think will happen to the beef demand curve?
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Explain the difference between a change in demand versus a change in the quantity demanded.
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The market demand curve is the horizontal sum of what?
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Explain the Law of Supply.
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Name three shift factors influencing the supply curve.
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Suppose your company comes up with a new cost-saving, computerized process for making corn flakes. What do you think will happen to the supply curve?
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Suppose the price of labor or raw materials increases for corn flakes manufacturers. What happens to the supply curve?
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Illustrate a shortage, a surplus, and equilibrium using supply and demand curves.
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Illustrate a price floor for milk.
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Illustrate a price ceiling for wheat.
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Explain how the market mechanism answers these three questions: What goods are produced? For whom are goods produced? How are goods produced?
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Provide several examples of how the supply and demand framework can help you save or make money in your professional or personal life.