Econ 0100: Introduction to Microeconomic TheoryFall 2016Midterm #2Chapters 6, 10, 11, 12, and 13 are covered on the second midterm.• Concepts:– Price ceilings and price floors– Shortages and Surpluses– Black Markets– Taxes, tax incidence, and efficiency implications– The relationship between elasticity and tax incidence– Production quotas and subsidies– Accounting vs. economic profit– Perfect competition, monopolistic competition, oligopoly, and monopoly– Production efficiency vs. allocative efficiency– Transactions costs– Economies of scale and economies of scope– Short-run vs. long-run– Total product, average product, marginal product– Diminishing marginal returns– Costs∗ Calculation graphing of TC, TVC, TFC, ATC, AVC, AFC, & MC∗ The relationship between the cost curves∗ Long-run average cost curve (LRAC)– Minimum efficient scale– Marginal revenue– Price takers– The firm’s short-run and long-run output decisions∗ Shutdown point∗ Short-run supply curve∗ Profits and losses in the short-run– Long-run equilibrium in a perfectly competitive market– Natural monopoly– Single priced monopoly– Price discrimination:∗ Two ways of price discriminating∗ Perfect price discrimination– Rent seeking– Monopoly regulation:∗ Efficient regulation of a natural monopoly∗ Second-best regulation of a monopoly1• Models:– Algebraic supply and demand:∗ Price ceilings and floors∗ Taxation∗ Monopoly– Cost curves:∗ Competitive firm’s output choice– Perfect competition:∗ Graphical long-run/short-run analysis– Monopoly:∗ Graphical
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