Economics: Modules 6-8 Exam

• The exam will occur in the UCF College of Business Testing Center.
• A valid UCF ID, writing utensil, and a non-programmable calculator are required for the exam.
• The exam has 45 questions and lasts 90 minutes.
• Questions can be multiple choice, numerical, or fill-in-the-blank.
• The exam covers material from Modules 6-8.

How to Study

• Review homework and learning curve problems.
• Rewatch lecture and worked example videos.
• Read the textbook.
• Review in-class activities.
• Complete supplemental questions at the end of each chapter.
• Make flashcards to review vocabulary.
• Practice using the graphical models to answer questions.
• Answer the questions at the beginning of each lecture video.
• Review learning objectives at the start of each module.

Module 6 – Elasticity

• Midpoint and elasticity formulas are needed.
• Economists use elasticity over slope to calculate price sensitivity.
• The midpoint method calculates percent change.

Price Elasticity of Demand

• Calculation given a demand curve, demand schedule, or values in a word problem is necessary.
• Interpret elasticity of demand by taking the absolute value to determine if elastic, inelastic, or unit elastic.
• Determinants of price elasticity of demand must be known.
• The relationship with total revenue is examined.
• The relationship between slope and price elasticity, specifically how flatter demand curves are more elastic.
• Elasticity is measured along a linear demand curve.

Cross-Price and Income Elasticity

• Calculation methods are needed.
• Interpretation of cross-price and income elasticity is necessary.

Elasticity of Supply

• The calculation given a supply curve, supply schedule, or values in a word problem is required.
• Interpretation of elasticity of supply is needed.
• Determinants of elasticity of supply must be known.

Module 7 – Price Controls

• The motivation for price controls should be understood.
• Distinctions between when price controls are binding versus non-binding.
• The method to determine quantity sold with price controls.
• How to determine whether price controls lead to a shortage or surplus.

Welfare Impacts of Price Controls

• Consumer surplus
• Producer surplus
• Deadweight loss
• Effects of price ceilings and price floors should be understood.
• The effects of rent control must be known.
• The impact of minimum wage has to be learned.

Module 8 – Taxes and Subsidies

• Modeling of taxes on buyers and sellers.
• Knowing which curves shift due to taxes.
• Identifying the new equilibrium after a tax.

Tax Wedge

• Finding the price buyers pay versus sellers receive.
• Calculating consumer and producer tax burden.
• Relationship between tax burden and relative elasticity is key.
• Consumer surplus, producer surplus, and deadweight loss calculations related to tax.
• Tax revenue must be graphically represented for tax.
• Modeling subsidies on buyers and sellers.

Subsidy Wedge

• Finding the price buyers pay versus sellers receive.
• Calculate and identify graphically for subsidy:
• Consumer surplus, producer surplus, and deadweight loss.
• Cost of subsidy.