final_exam_review_2016_w_answers - Study Guide for final exam Spring 2016 What will be covered on the final exam The final exam will be cumulative Many

final_exam_review_2016_w_answers - Study Guide for final...

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Study Guide for final exam –Spring 2016 What will be covered on the final exam? The final exam will be cumulative. Many of the topics we covered in the first half of the semester (the theory of the firm, economic models of production, derived demand for factor inputs, models of imperfect competition and market power, inter-temporal decision making, static versus dynamic efficiency, market failure) resurfaced in the second half of the semester. So in this sense, all course material is “fair game” for the exam. That said, there will be strong emphasis will be on material/applications covered after the midterm. In some cases, your lecture notes cover topics in more detail than the readings. In other cases, the reverse is true. Please use your lecture notes and section as a guide for your exam preparation! Topics emphasized in lecture will be emphasized on the exam. But you will be responsible for the readings listed below. The ESG was a very important component of the second half of the course. I cannot stress this enough. Although there will not be questions about specific outcomes of the game (what was the market clearing price in hour 2 of round 2?!), there will be questions about the ESG model and how we used it to analyze/understand key topics in the course (e.g. firm-level profit maximization problems, market power, market based environmental regulation, etc. In what follows, I list the key topics and readings that we have covered since the midterm (to be emphasized on the final). 1. Introduction to economic regulation: Policy instruments, overview of the regulatory process, the theory of regulation. Review lecture notes, section notes. Supplement using VHV Ch. 10 (web access – see syllabus). 2. Regulation of a natural monopoly Review lecture notes, section notes. Supplement using VHV Ch. 11, 12 (web access- syllabus). 3. Electricity market regulation and “deregulation” Review lecture notes, section notes. Read: Borenstein and Bushnell (2014) “The US Electricity Industry after 20 years of restructuring” Read: Borenstein (2002) “The Trouble with Electricity Markets: Understanding California's Restructuring Disaster” . 4. Environmental regulation - introduction Review lecture notes Other useful supplementary reading: KO Chapter 8
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