Study Guide

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GM545 Final Exam Study Guide

1. Demand and Supply (TCO A)

Know what the law of supply and demand is all about and be able to predict the impact on equilibrium price and/or quantity when supply and/or demand factors change. The interpretation of some basic graphs will be required.

2. Elasticity and Marginal Revenue (TCO B)

The label on this question suggests what you need to know. You need to be able to calculate price elasticity of demand and/or supply and be able to interpret it. Also, given demand, you need to be able to calculate marginal revenue when the price level changes. Remember that MR = Change in TR / Change in Quantity.

3. Labor Productivity (TCO C)

Be able to calculate Marginal Product (MP), Marginal Revenue Product (MRP), Marginal Cost (MC), and determine the proper number of workers to hire using Marginal Analysis (just like we did in our week 2 TDA discussion).

4. Calculating Profit or Loss (TCO C)

Given a product price, as well as fixed and variable costs at different production levels, be able to determine whether the firm earns an economic profit, breaks even, or incurs an economic loss at the best possible production level.  Also be able to determine how much the profit or loss will be (similar to a question you had on Quiz 1).  

5. Marginal Analysis (TCO D)

A key issue covered in several TCOs involves how firms in different market types make production decisions. Know how marginal analysis is used in imperfect markets (monopoly, monopolistic competition, and oligopoly) to make those choices when given info on fixed costs, variable costs, quantity and price. That is, what should the production level be at different price levels or different cost levels using marginal analysis.

6. GDP and Unemployment (TCO E)

Be able to calculate percentage changes in nominal and real GDP using the formula for the GDP deflator. Also, be able to calculate the size of the labor force and the unemployment rate...
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