Topics for Exam 2

Wednesday May 19, 1999
(unless Day of Gracious Living)


Principles of Microeconomics
Economics 400



You will probably want a calculator for this exam

I. Role of Government

A. Equity and Income distribution
1. taxes and transfers
2. special policies and market intervention
a. price floor
b. price ceiling
c. quota

B. Macroeconomic Policy
1. inflation, unemployment, and growth
2. fiscal and monetary policy

II. Government Finance

1. sales tax analysis
2. tax systems
a. horizontal equity
b. vertical equity c. benefits principle
d. market distortion
 

III. Government decision-making

A. Cost Benefit Analysis
1. methods
2. problems

B. Public Choice
1. voters
2. politicians
3. civil servants

IV. Elasticity

IV. Theory of the Firm

A. Production

V. Profit Maximization

A. Economic Profit

1. total revenue - total cost
2. best quantity: marginal revenue = marginal cost

B. Economic Loss
1. exit (only in long run)
2. short run
a. minimize loss
b. shutdown

C. Breakeven
1. firm is covering all its costs
2. no excess profit

D. The Long Run

1. Entry and Exit

a. impact on industry
b. impact on firm

V. Market Structure

1. Competition
2. Monopoly
3. Oligopoly
4. Monopolistic Competition
 


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