Topics for Exam II 
Spring 2000

Principles of Microeconomics




Chapters 11, 6, 8, 12, 5, 13



I. The Role of Government (con't)


A. Address Monopoly

B. The problem of public goods
    1. non-rival and non-excludable
    2. private markets won't provide an efficient amount
    3. quasi-public goods
        a. open access resources (overuse)
        b. excludable public goods (quantity too low)
    4. Policy

C. Address income distribution

D. Taxes F. Cost Benefit Analysis G. Public Choice Theory II. Elasticity

A. Price elasticity of Demand

B. Cross elasticity
1. complements
2. substitutes
3. unrelated goods

C. Income elasticity
1. normal goods
2. inferior goods

D. Elasticity of Supply

III. Short run costs

A. total fixed cost
B. total variable cost
C. total cost
D. average fixed cost
E. average variable cost
F. average total cost
G. marginal cost

IV Other Cost concepts

A. implict and explict costs
B. dimishing returns and increasing marginal cost
C. marginal and average cost
    1. U-shaped
    2. minimum average cost is at intersection of AC and MC
D. Costs and Profit
    1. profit (P>ATC)
    2. loss (P<ATC)
    3. breakeven (P=ATC)


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