One of these questions will be selected at random on the day of the exam. You will write an essay on it. It will count for 40% of your exam grade. It will be graded for subject mastery. The version for exam day may have slight differences, for example in numbers or the exact choices of examples, but will be basically identical to one of these.
1) Models. We use models in all our activities of life, including science, business, social relationships. Write an essay on the subject of models. Your goal is to write what is interesting to you, and also what is important to your instructor, about this fascinating subject. (Warning: your instructor does not like the discussion of models in the text very much!) In addition to these general instructions, you should be sure to cover at least the following:
A) Definition of "model" (according to your instructor, not the text).
B) Why do we use models?
C) What are the characteristics of a good model?
D) Give two examples of models you use in everyday life, and four models already presented which we use in the study of economics.
2) "The Basic Model" was presented in early lectures in the course to account for the basic features of economic life in any society. Write an essay on the subject of "The Basic Model". Your goal is to write what is interesting to you, and also what is important to your instructor, about this fascinating subject. In addition to these general instructions, you should be sure to cover at least the following:
A) What are the assumptions of the basic model, and the significance of each one?
B) Why do all societies seem to operate according to the assumptions of "The Basic Model"?
C) How are Capitalism, Socialism and Traditional Societies, as discussed in the text, all examples of economic systems operating under "The Basic Model"?
3) Money. Write an essay on the subject of "Money". Your primary goal is to show that you now have an economist's perspective on money--a good model about money. Your basic goal is to write what is interesting to you, and also what is important to your instructor, about this fascinating subject. In addition to these general instructions, you should be sure to cover at least the following:
A) Money's benefit to society, as logically deduced in "The Basic Model". (If any you write "money makes the world go 'round", or "money is the root of all evil", or write about how to get rich, you will go directly to jail without any lunch, as that is a capital offense!)
B) Money's relationship to "barter".
C) Characteristics which good money should have. (You had a homework problem on this.) I suggest including some examples of goods which have been used as money.
D) Why does society need more than one denomination of money?
4) Cost, Opportunity Cost, Marginal Cost, Price, Value and Transformation. Write an essay in which you discuss these topics, focusing particularly on relationships, similarities and differences between them. Your basic goal is to write what is interesting to you, and also what is important to your instructor, about this fascinating subject.
5) Linkages. The process of dealing with scarcity and opportunity cost results in linkages between various goods and activities. To be a really good economist you must know how to search for, uncover and analyze linkages. Your goal is to write what is interesting to you, and also what is important to your instructor, about this fascinating subject. In addition to these general instructions, you should be sure to cover the following:
A) Examples of linkages generated by scarcity, opportunity cost, "substitutes" and "complements", linkages between inputs and outputs, linkages caused by specialization and the division of labor, and any other types of linkages you can think of.
X) Markets, "The Law of One Price", Equilibrium, and Prices. In this topic are several possible questions:
6) Essay. Write an essay on Markets. Your goal is to write what is interesting to you, and also what is important to your instructor, about this fascinating subject. In addition to these general instructions, you should be sure to cover the following:
A) Definition of "Market", being sure to use the definition from lecture, NOT from the text!
B) Why do price, and also quantity pouring through a market, come to some equilibrium level? (What is the "mechanism" as observed in the real world?)
C) What conditions must exist in a market for neither buyer nor seller to control the price? Why or how does this work? Give examples of what might happen if this condition does not hold.
7) Essay. Write an essay on "The Law of One Price". Your goal is to write what is interesting to you, and also what is important to your instructor, about this fascinating subject. In addition to these general instructions, you should be sure to cover the following:
A) Under what conditions does it hold?
B) Under what conditions might the law NOT hold, and give several examples.
C) What is the "mechanism" by which the law holds? Give examples of what happens if several prices exist in a market.
8) Supply and Demand model. Write an essay on the subject of Supply and Demand. Your goal is to write what is interesting to you, and also what is important to your instructor, about this fascinating subject. In addition to these general instructions, you should be sure to cover at least the following:
A) Why do we treat supply and demand separately if supply always equals demand in a market?
B) What are the variables which affect supply?
C) What are the variables which affect demand?
D) For each variable, what "signs" do you expect for its relationship to the "affected variable" (supply or demand), +, -, 0 or some combination? (You may want to give examples.)
E) What is the special importance of the "own price" of the product in the supply and demand model?
9) Solve a simple supply and demand problem such as the following: In your mind, model the airline industry as a single market, with tickets selling at a single price. Draw a supply and demand curve diagram to represent the situation in that industry before the attack and destruction of the World Trade Center. Then show modifications of the diagram to illustrate your analysis of the attack's impact on equilibrium price and quantity (price of tickets and supply and demand for travel) in the airline industry. Use a properly labeled and presented supply and demand curve diagram in your answer, and also the kind of explanatory language an economist would use.