Exam Study Kit

Your kit is complete: a 17-card flashcard deck, a 10-point quiz with answer key and scoring guide, a study schedule running through your Monday, October 26 exam, and a one-page cram sheet. Every card and answer cites the section of your Lecture 1 notes it traces to. The notes carried no ambiguous items, so nothing needed flagging. Each artifact is written to your folder as its own markdown file and pasted in full below.

The schedule starts tomorrow, Tuesday, October 20, and runs six study days plus exam morning. Session lengths fit 30 to 45 minutes each.

Flashcard Deck: Microeconomics Lecture 1

17 cards, built from your outline notes. Read the front, answer aloud from memory, then check the back. A card answered correctly two sessions in a row retires; everything else stays in rotation.

1. What is microeconomics?
   The study of how individuals and firms make decisions in a world of scarcity.
   [What Microeconomics Is]
2. Why is economics called the dismal science?
   Economists always point out trade-offs: you have to give up x to get y.
   [What Microeconomics Is]
3. What example connects engineering to the course?
   The 2.70 contest: build something from a pile of junk. Engineering and the course are both constrained optimization.
   [What Microeconomics Is]
4. Who founded modern microeconomics, where, and when?
   Paul Samuelson at MIT in the 1950s, by teaching 14.01 and bringing mathematics into economics.
   [What Microeconomics Is]
5. What is an economic model?
   A description of any relationship between two or more economic variables.
   [The Two Actors and Their Models]
6. What two properties must a good model balance?
   Explaining reality and staying tractable: teachable in a lecture or less.
   [The Two Actors and Their Models]
7. What does the consumer maximize, and subject to what?
   Utility, subject to the budget constraint.
   [Consumer and Firm Objectives]
8. What is a utility function?
   A model of preferences: everything you love in life written down as a u function.
   [Consumer and Firm Objectives]
9. What does the firm maximize, and subject to what?
   Profit, subject to consumer demand and input costs.
   [Consumer and Firm Objectives]
10. What are the three fundamental questions of microeconomics?
    What goods and services to produce, how to produce them, who gets them.
    [The Three Fundamental Questions]
11. What single state variable answers all three questions?
    Prices, which emerge from consumers and firms interacting in the marketplace.
    [The Three Fundamental Questions]
12. How has concert ticket allocation changed since the professor's youth?
    The line mechanism has given way to price allocation through StubHub and Ticketmaster.
    [The Line Example]
13. Positive vs normative: what is the difference?
    Positive economics describes the way things are; normative describes the way things should be.
    [Core Distinctions]
14. What is the goal of theory, and how is it tested?
    Testable predictions; tested empirically with data and statistics, typically regression analysis.
    [Core Distinctions]
15. Why did the kidney auction price climb so high?
    The twin forces of supply and demand: extreme demand from dying patients, very low supply of donors.
    [The Kidney Auction]
16. How does Adam Smith explain the water-diamond paradox?
    Water demand is enormous, and water supply is even larger, so water ends up nearly free; diamonds sit at the far end on both sides.
    [The Kidney Auction]
17. Name the five arguments from class against allowing the kidney sale.
    Substitution, need-based allocation, paternalism, legal ramifications, equity.
    [The Kidney Auction]

Self-Scoring Quiz: Microeconomics Lecture 1

10 questions, 1 point each, closed notes. Score with the key below, then follow the study prescription for your band.

1. Define microeconomics in one sentence.
2. The professor compares the course to the 2.70 contest. What does that comparison say the course does?
3. State the consumer's optimization problem in full.
4. State the firm's optimization problem and name both constraints.
5. List the three fundamental questions of microeconomics.
6. The iPod launched at what price, and what did that price signal to Apple?
7. Classify each claim as positive or normative: (a) kidney auction bids reached 5 million dollars; (b) eBay should have allowed the kidney sale.
8. Why has waiting in line for concert tickets declined since the professor's youth?
9. Explain the water-diamond paradox in Adam Smith's terms.
10. Name any three of the five arguments from the class discussion against allowing the kidney sale.

Answer Key

1. The study of how individuals and firms make decisions in a world of scarcity. [What Microeconomics Is]
2. It says the course is constrained optimization: take the resources given and do the best job possible, the way the contest builds from a pile of junk. [What Microeconomics Is]
3. Maximize utility subject to the budget constraint: write preferences as a utility function, write resources as the budget constraint, solve the constrained maximization. [Consumer and Firm Objectives]
4. Maximize profit subject to consumer demand and input costs. [Consumer and Firm Objectives]
5. What goods and services to produce; how to produce them; who gets them. [The Three Fundamental Questions]
6. 300 dollars; it signaled consumer willingness to pay, answering whether to produce. [The Three Fundamental Questions]
7. (a) positive; (b) normative. [Core Distinctions]
8. The economy has shifted toward price allocation through secondary sellers such as StubHub and Ticketmaster; a classroom poll showed most students have still waited in line, though far fewer than 30 years ago. [The Line Example]
9. Demand alone does not settle prices: water demand is enormous yet supply exceeds it, so water stays nearly free; diamonds carry astronomical prices from low supply. [The Kidney Auction]
10. Any three of: substitution, need-based allocation, paternalism, legal ramifications, equity. [The Kidney Auction]

Scoring guide

• 9 to 10 points: exam-ready on this lecture. Run one deck pass over the missed cards and stop.
• 7 to 8 points: re-study the cards behind the missed questions tonight, then re-quiz tomorrow.
• 5 to 6 points: rebuild from the cram sheet and the deck, focusing on the sections you missed.
• Below 5 points: re-read the lecture notes first, then restart the deck from card 1.

Study Schedule: Seven Days to the Exam

Exam: Monday, October 26. Sessions fit 30 to 45 minutes each. The taper day carries no new material, and exam morning is the cram sheet only.

Cram Sheet: Microeconomics Lecture 1

Read this the night before and again on exam morning. Twelve lines, nothing else needed from the notes.

1. Microeconomics is how individuals and firms make decisions under scarcity; the whole course is constrained optimization.
2. Samuelson founded modern microeconomics at MIT in the 1950s by bringing mathematics into the field.
3. A model is a description of a relationship between two or more economic variables; it balances explaining reality against staying teachable.
4. Consumers maximize utility subject to the budget constraint; the utility function is preferences written as u.
5. Firms maximize profit subject to consumer demand and input costs.
6. The three fundamental questions are what to produce, how, and who gets it; prices answer all three.
7. The iPod launched at 300 dollars, signaling willingness to pay; tickets have shifted