ECON 302

Intermediate Microeconomic Theory

Fall 2008

Dr. Dao

Review for First Exam

· Normative vs. Positive Economics

· Perfectly competitive market

· Equilibrium price and equilibrium quantity

· Shortage vs. Surplus

· Effects of Changes in Supply and Demand on Equilibrium price and quantity

· Income Elasticity of Demand

· Price Elasticity of Demand

· Cross price elasticity

· Transitivity assumption

· Perfect substitutes vs. Perfect complements

· Price consumption curve and Demand curve

· Expected value

· Inferior vs. Normal goods

· Income and Substitution Effects of Change in Price

· Measure of risk

· Calculation of risk premium

· Individual vs. Market Demand

· Indifference curves

· Marginal rate of substitution

· Optimal combination (mix)

· Price elasticities of supply and demand

· Price supports vs. Price ceilings