Define the following terms.

Fundamentals of Economics

-Definition and scope of economics

-Scarcity, choice, opportunity cost

-Preferences - ranked and subjective

-Marginal units and the "diamond-water paradox"

-Diminishing marginal utility

-Individual demand, individual supply

-market demand, market supply

-equilibrium, Qs=Qd

-Broken Window Fallacy

-Micro Review

-Price and quantity

-Change in quantity demanded/supplied vs. change in demand/supply

-Consumer and producer surplus

-Surpluses and shortages

-Dead Weight Loss

-Government interventions

-Taxes, price ceilings, price floors, minimum wage

-Binding vs. non-binding

-Production Possibilities frontiers

-Attainable vs. unattainable points

-Efficient vs. inefficient points

-Linear vs. bowed outward PPFs

-Tradeoffs/opportunity costs

-Absolute vs. comparative advantage

-Specialization and the gains from trade

-Macro Measurements

-Nature of production

-Factors of production

-Entrepreneurship

-Profit=Revenue-Cost

-Circular flow model

-Two agents - Households/individuals and firms

-Two markets - final goods/services and factors of production

-National income/output and GDP

-GDP definition, issues, real vs. nominal, units

-Price level and CPI

-No common unit for prices, indexing

-Inflation adjustments and measuring the rate of inflation.

10. Work It Out . Consider an economy described as follows: Y = C+ I+G. Y = 8,000. G = 2,500. T = 2,000. C = 1,000 + 2/3 (Y - T). I = 1,200 - 100 r. a. In this economy, compute private saving, public saving, and national saving. b. Find the equilibrium interest rate. c. Now suppose that G is reduced by 500. Compute private saving, public saving, and national saving. d. Find the new equilibrium interest rate.8. The government raises taxes by $100 billion. If the marginal propensity to consume is 0.6, what happens to the following? Do they rise or fall? By what amounts? a. Public saving Silog aids zoob b. Private saving c. National saving d. Investment11. Suppose that the government increases taxes and government purchases by equal amounts. What happens to the interest rate and investment in response to this balanced-budget change? Explain how your answer depends on the marginal propensity to consume