Final Exam Study Guide Exam Thursday June 5 9 10 15 a m Coverage Chapter5 7 Concepts of MV and demand MC and supply Various elasticity ideas in chapters 2 3 as well the market equilibrium and economic efficiency discussed in chapter 4 Related class notes Session 10 18 Related practice questions on textbook All previous assigned practice questions For Chapter 7 Review Questions numbers 1 5 and in the Problems section numbers 1 9 11 15 There is also a set of extra problems with answers and hints titled Some Extra Questions for Ch 7 under Files and then Practice Questions for Exams on the course website Key Points Check List Chapter 5 session 10 12 Other forces effect on Demand e g income related good price Income and Cross Price Elasticity of demand Other forces effect on Supply Perfectly elastic and inelastic on demand and supply Predict effects of change in one market on a related market S and D application Short run VS Long run graph Effect of tax on steel on car market Effects of Tax and Subsidy Who pays the tax graph analysis Who receives the subsidy graph analysis Price control price ceiling VS price floor graph Non price competition when a price ceiling is present Chapter 6 session 13 14 Concept of productivity Production Possibility Frontier PPF graph Joint Production Possibility Frontier Joint PPF graph Marginal Cost of production of a good rises as more of the good is produced Reason run out of suitable resources MC rises due to our inability to replicate the resources suitable for production of increasing amounts of a good Use of principle of comparative advantage to international trade PPF with Many producers smooth curve Phenomenon Increasing Costs at the Extensive Margin 1 How to define the industry supply curve with many producers of a good The industry S curve is the lateral sum of firm s MC curves What are rents Why do rents exist example textbook p212 Rents show the excess of valuation of consumers over the cost of resources used in production Definition of property rights How do definition protection and enforcement of private property rights affect the efficiency of resource allocation Concept of economic efficiency economic pie Chapter 7 session 15 17 Law of diminishing returns Two forms of property rights private and common Marginal Product of an input Labor MPL Value of Marginal Product of Labor VMPL P MPL Total Product of Labor TPL related table calculation One thought As we add labor to the fixed capital and factory spaces each additional unit of labor is as good as suitable a resource as the previous units of labor Why not compare wage with VAPL Value of Average Product of Labor Why employees apply with a firm not firms apply with employees Because of falling MPL Law matters Other Related Material Summary Note 18 for review Quiz 3 4 and 5 Representative graphs from past quizzes Quiz 4 Question 1 Other factors effect on demand and supply curve P New textbooks Used textbooks P D S S D Q S Q D 2 Quiz 5 Question 1 Joint PPF Q of coconuts 11 6 fish and 8 coconuts 16 Q of fish 3