Curtis Kephart Sections Mon & Fri 11am
Mid-Term & Final Exam Study Checklist
I have no way of knowing for sure exactly what the professor will ask
of you on the exam, but based on previous exams, lectures & the
book, I think that focusing on the following subjects will help you do
well.
Drawing Charts – the difference between a
& an  grade is
often the correct labeling of your graphs. Be sure that you
label the axes (price, quantity etc), you label your curves
Office E2 403F 12:30 Fri
income, be able to explain which way the demand curve will
shift (pg 68)
Supply Curve – similar to the demand curve to-do list above,
be prepared to be given a supply schedule and asked to
draw a supply curve from scratch. That will require you to
label the axes and curve correctly. Understand why the
supply curve is upward slopping. (figure on pg 72)
Know the difference between a shift in the supply curve and
movement along the supply curve (pg 73 – questions may try
(,   ଴ ଵ & ଴ ଵ  
. Also, if you shift
demand & supply curves you may need to show shifts in
Price and Quantity (଴ ଵ , &/ ଴ ଵ ). Page 85 has
good examples to emulate.
Chap 2
Definition of Opportunity Costs
Importance of Ceteris Paribus (pg 24)
Production Possibilities Frontier (graphs & tables pgs 25 - 30)
be able to draw one with correct axis labeled. Example, be
ready to explain its ‘bowed-out’ shape
Opportunity Costs - be able to calc OC given PPF data (table
on pg 31)
Comparative Advantage – given PPF data or opportunity
costs data, be able to state who has CA in what (pg 31 – 33)
Gains of Trade – given opportunity costs & comparative
advantage, be able to calculate the number amount for gains
of trade (table on pg 31)
The Circular Flow Diagram of Economy – be ready to answer
questions about this (text on pg 35 & table)
Chap 3
Demand Curve – given demand schedule, be able to draw
demand curve. Be sure to label curve and axes correctly. Be
ready to explain why the demand curve is downward sloping.
(table on pg 63, text on page 63 & 64)
Shifts in the Demand Curve – be prepared to be given a real-
world example & asked to explain whether or not the demand
curve shifts. If a shift does occur, be prepared to explain
which way the curve shifts, & what will happen to equilibrium
price & quantity. (pg 66 & 67, figure 3-3 & 3-4)
Know difference between shift in demand curve and
movement along demand curve (sometimes the question will
try to trick you – pg 64

….)
Examples of Shifts – get to know how each will shift the
demand curve pg 66 - 69
Compliments VS Substitutes be able to pick one from the
other, and explain how changes in the price of one good will
shift the demand curve it’s compliment/substitute (pg 67)
Normal vs Inferior goods/services – given a real world
example, be able to differentiate & then given a change in
curtisk@ucsc.edu
to trick you on this)
Shifts in the Supply Curve – know the examples on pgs 75-
77. Be ready for questions that ask you to explain intuition
behind the factors that cause the shift, and be ready to draw
what happens to the curve, price & quantity (pg 74)
Combining Supply & Demand - Market Equilibrium – get
ready to explain the forces that drive prices and quantity
back to equilibrium – pg 81 - be ready to be given an
example and asked to draw one of those two graphs
Demand & Supply Shifts – given an example from any one of
the shifts listed on pgs 75-77 or pgs 66-69, be ready to draw
& correctly label the shifts in demand and/or supply curves, &
to explain the dynamics on price and quantity.
Definitely understand what is happening on pg 84 & 85
Chap 4
Consumer Surplus – given data, be able to calculate the
consumer surplus. And given a change in prices, be ready to
explain if that increases or decrease the CS (figures on pgs
96 & 97)
Producer Surplus – similar to Consumer Surplus, given data
be able to calc the PS. And given a change in prices be
ready to explain how the affects PS. (see figures and tables
on pgs 100-104)
CS & PS Together – understand what’s going on in figures 4-
10 thru 4-13
Equity & Efficiency – in a very general and basic way, know
why markets can be good (pg 111) & why markets might be
bad (pg 112).
Chap 5
Given a demand and supply schedule, be prepared to draw
and correctly label curves and axes of a market equilibrium
(figure on pg 119) – based on that, make a statement about
the equilibrium price and quantity.
Price Ceiling – be able to draw this. Given data, be able to
calculate the shortage created by such a price ceiling.
Generally be sure you understand what is going on with
figure 5-2 on pg 120. Be aware of examples of price ceilings,
rent control to name one.
sites.google.com/site/curtiskephart/ta
Curtis Kephart Sections Mon & Fri 11am
… chap 5 continued
Deadweight Loss – understand the concept, and be able to
draw the graph (pg 121)
If you have trouble with the concept, the example on page
122 is good and very exam like. This was a question on Mid-
Term 1 several years ago.
Consequences of Price Ceiling – advantages and
disadvantages of price ceilings (skim pg 123-125)
Price Floor – given demand and supply schedule, be ready to
draw a price floor (figures on pg 127 & 128). Be able to
calculate the surplus & generally understand the intuition of
what’s going on. Deadweight Loss (pg 130) & consequences
& reasons for price floor (pg 130-132). Be ready with
examples of a price floor, several soft-commodities come to
mind.
Quota – given demand and supply schedules, plus info on
the quota, be able to draw the Deadweight loss “wedge” (pg
134-135) Calc Shortage. Know a few examples, taxis in NYC
for one. Know that quotas assume the quota level is less than
equilibrium quantity (otherwise….)
∎ I suspect you’ll have to draw at least two of the above three
types of market interventions. Beware
Chap 6
Mid-Point Method – you need to have this method for finding
elasticity based on two prices & two points memorized (pg
146)
Elasticity of Demand – given a demand schedule, or
alternatively, given points on a demand curve, be ready to
calculate the elasticity of demand. (146-147)
Elasticity of Supply - same as for demand, be prepared to
calculate this given the four numbers required.
Inelastic vs Elastic – (148 & 149) Understand what is meant
when it is said, ‘a good has inelastic demand’. If given
examples of goods or services (say, gasoline vs diamonds),
be ready to explain which is inelastic, which is elastic, and
why.
See page 152-154 for characteristics that determine
elasticity.
Cross Price Elasticity – have the equation memorized (top of
pg 156). If given two goods, be ready to explain if the cross
price elasticity is positive or negative, and what that means.
(substitutes vs compliments)
Income Elasticity of Demand – have the equation
memorized. (pg 156 & 157). This measures how ‘normal’ or
how ‘inferior’ a good/service is. Given a good or service, be
ready to explain if the Income Elasticity of Demand is positive
or negative & what that means.
Elasticity of Supply – know what that is (pg 159 - …) & know
factors that affect the degree of elasticity of supply (pg 160 &
161)
curtisk@ucsc.edu
Office E2 403F 12:30 Fri
Note on Chap 7 & 8 – Note that Chap 7 & 8 have not really
been on Professor Fung’s first-exam the previous two times
he taught the class – he seems to save the material for mid-
term-two. Thus if you suspect he intends to cover that
material, I’d go over the following guide focusing on the
ability to replicate the graphs and the analysis discussed in
lecture. If you don’t think he’ll cover the material, I’d cover the
study material last, or for the next exam.
Chap 7
Incidence of a Tax (pg 171, read full text, and compare
figures 7-2 through 7-5)
Does a tax on suppliers or consumers affect the market price
or quantity? (pg 170-171)
How does elasticity of demand affect the incidence of a tax?
pg 171
Elasticity of supply and the tax incidence pg 172
Deadweight Loss and elasticities pg 181 – expect a
paragraph describing how inelastic or elastic a good or
service is, and to be asked if the supply or demand side
would be expected to pay a higher part of the incidence.
Costs & Benefits of Different Taxes (pg 175-176, figure 7-7)
Fairness vs Efficiency – know about this generally pg 183-
184
Chap 8
Comparative Advantage is Gains from Trade. Expect a
question like the opportunity costs questions in chapter 2, but
with countries and international trade. pg 196-200 closely
Understand what’s going on in Figure 8-6 thru 8-9. This may
require reading closely 205-209
Figures 8-7 & 8-9, given a scenario, be prepared to recreate
these graph analyzes, and explain which polygons are
producer and consumer surpluses.
pg 209-211 cover where the professor might source exam
question scenarios
Trade Protection – Figure 213. Be prepared to replicate this
graph given a specific exam example. Note the values for
consumer, producer and government surplus, and change in
surplus. Learning this may require closely reading pg 211-
214
sites.google.com/site/curtiskephart/ta