Y10 Econ Midterm Review

Here’s what you’ll need to be able to do for the midterm:

Key Concepts to Understand

You should be able to define and explain these important terms:

• Supply and Demand Basics: Supply, Law of Supply, Demand, Law of Demand, Law of Supply and Demand
• Market Outcomes: Equilibrium, Equilibrium Price, Shortage, Surplus
• Goods Classification: Substitute goods, Complementary goods, Normal goods, Inferior goods
• Elasticity Concepts: Price elasticity of demand, Price elasticity of supply, Cross-price elasticity, Income elasticity
• Economic Foundations: Scarcity, Trade-offs, Opportunity cost
• Production & Trade: PPF (Production Possibilities Frontier), Efficiency, Absolute advantage, Comparative advantage, Specialization
• Market Benefits: Producer surplus, Consumer surplus
• Goods Types: Capital goods, Consumer goods

Equations to Remember

Notice: $Q_d$ or $Q_s$ is always on top.

• Equations
  PED:
  $ \frac{\% \Delta \ Q_d}{\% \Delta \ Price} $
  XED:
  $ \frac{\% \Delta \ Q_d\ Good\ A}{\% \Delta \ Price\ Good\ B} $
  PES:
  $ \frac{\% \Delta \ Q_s}{\% \Delta \ Price} $
  YED:
  $ \frac{\% \Delta \ Q_d}{\% \Delta \ Consumer\ Income} $

• How to find $\% \Delta$

  NOOO! (New - Old Over Old)
  $ \frac{New - Old}{Old} $

Practical Skills You’ll Need

1. Drawing and Analysis

• Draw and interpret a PPF (Production Possibilities Frontier)
• Draw supply and demand graphs showing shifts
• Identify consumer and producer surplus on graphs
• Show how markets reach equilibrium

2. Understanding Changes

• List what causes supply and demand curves to shift
• Identify whether events cause demand or supply shifts
• Predict how equilibrium price and quantity change
• Analyze related markets (like how Coke price changes affect Pepsi)

3. Elasticity Applications

• Calculate price elasticity of demand
• Calculate cross-price elasticity
• Interpret elasticity values (elastic vs. inelastic, substitute vs. compliement, inferior vs. normal)
• Understand how substitutes/complements affect elasticity

4. Application

• Explain concepts with clear examples
• Draw graphs for complex scenarios (like double shifts)
• Do these for actual market situations

How to Prepare

Focus on understanding the “why” behind each concept. I will ask you to apply these ideas, draw graphs to show your thinking, and explain your economic reasoning in your own words.