Remember, we will be taking our tests now using Scantrons. Be sure to bring this one to each test. If you do not bring one, you will not be allowed to take the test.

Define the Law of Demand, demand schedule, and demand curve.

Define: substitutes and complements. What are perfect substitutes and perfect complements? How would a change in the price of good A result on the market demand of good B if A and B are complements? Give an example.

Differentiate between changes in quantity demanded and changes in demand. Differentiate between changes in quantity supplied and changes in supply.

What causes the demand curve to shift left or right?

Define: Law of Supply. How many of the following "goods" do you think conform to the the general law of supply? Explain your answer in each case.
a. gasoline
b. cheating on exams
c. political favors from politicians
d. the services of heart specialists
e. children
f. legal divorces

True or false: If global warming has the effect of allowing farmers to produce more crops due to longer summers, then the result would be an increase in the quantity supplied of agricultural goods.

What are some factors that affect demand? supply?

Which of the following do you think would lead to an increase in the demand for beef?
a. higher pork prices
b. higher consumer income
c. higher prices of feed grains used to feed cattle
d. widespread outbreak of mad cow or hoof-and-mouth disease
e. an increase in the price of beef

Given our lecture yesterday, it should not be surprising that Socialism.net approves of the federal takeover of Fannie and Freddie and then urges "let's take over the rest."

Textbook prices have risen three-fold since 1987, according to this article in the Birmingham News. Read it. The federal government is now getting involved, with legislation to curtail bundling by textbook publishers, a tactic that helped them counter losses due to the burgeoning Internet resale market. The article even notes the practice of scanning text pages and posting them to Pirate Bay.

Violating bundling violates the property rights of the publishers, notwithstanding the immense cost to students that bundling entails. But attacking bundling does not solve the industry's problems with respect to the Internet. If bundling becomes forbidden, what other ways might textbook publishers respond to the Internet threat?

Read the summary to "Private Property Rights to Wildlife: The Southern Africa Experiment" by Muir-Leresche and Nelson. They write: "It is thus particularly significant that in the past 30 years Zimbabwe, Namibia, and South Africa have altered their legal regimes to give full control over the use of wildlife to the private owners of the land on which the wildlife are located. Prior to that, private landowners had limited incentives to increase wildlife populations, because the state denied them the full opportunity to profit from wildlife."

What two important functions are performed when property rights institutions are established and enforced? (Answer in terms of Bill Gates's property rights over the code to Windows and that house next door to Sunny King in Anniston.)

What is the significance of this guy (and how would you interpret the quote provided at that link)?

Define: specialization and division of labor. (Be sure to read Adam Smith's pin factory example nearby.)

True or false and explain: The benefits that can accrue to society from well-defined property rights can occur as long as property owners hold a title to their property.

Define: comparative advantage. I LOVE Alabama wine. Based on the Law of comparative advantage, why shouldn't I support a state-funded program to encourage the development of the Alabama wine industry?

Define: capitalism and socialism. In a market economy, how is the new wealth created distributed? How did Marx critique this system?

Define command economies. How does the lack of market prices hurt socialist economies? What would happen if I took points away from A students to give to F students, so that everyone would pass this class with a C average?

What are voice and exit? How are they different in the public and private sectors? (See the Birmingham News editorial mentioned in class today, discussing a significant exit in Birmingham's public sector. What evidence is there that this has significantly affected the operation of Birmingham's public schools?)

"The government should provide goods such as health care, education, and highways because it can provide them free." Is this statement true or false? Explain your answer.

"The economic way of thinking stresses that good intentions lead to sound policy." Is this statement true or false? Explain your answer.

"Positive economics cannot tell us which agricultural policy is better, so it is useless to policymakers." Evaluate this statement.

Which of the following is a positive economic statement?
a. An increase in the minimum wage will reduce employment.
b. The minimum wage should be increased to reduce poverty.
c. Social conscience demands that we increase the minimum wage.
d. Thoughtful people oppose an increase in the minimum wage.