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Final Exam Outline - XII Political Economy Roles for...

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Unformatted text preview: XII. Political Economy Roles for Government Intervention... A) Difficulties in Learning about Consumer Preferences from voting outcomes 1) Condorcet's Voting Paradox 2) Arrow's Impossibility Theorem B) Voting outcomes 1) Median Voter Theorem C) Difficulties of Government Provision of Public goods 1) Equity vs Efficiency XIII. International Trade A) Describing International Trade 1) What do trading partners generally have in common? Different? 2) Characteristics of Exporting Firms 3) Trade Volume in the US B) Reasons for Trade Comparative Advantage 1) PPF & Opportunity Cost 2) Absolute Advantage and Comparative Advantage 3) Trade Equilibrium i) terms of trade ii) specialization 4) Gains from trade C) Reasons for Trade Variety: Trade in Similar Goods 1) Preferences for many varieties 2) Increasing returns to scale and comparative advantage in specific varieties 3) Gains from trade D) Adjustment to trade 1) One sector diagram of trade i) domestic and world price and Comparative advantage ii) Imports and Exports iii) Consumer & Producer Surplus and Total Social Welfare 2) Import competition and domestic supply i) displaced supply and job loss ii) equity issues changes in Consumer & Producer Surplus 3) Exports and domestic supply E) Trade Policy 1) Trade Protection for import industries i) tariffs a) Surplus, Tariff Revenue, Welfare, and Dead Weight Loss b) Domestic Supply c) Equity vs. Efficiency 2) Trading Agreements and Organizations i) GATT a) negotiations ii) World Trade Organization b) Most Favored Nation Principle iii) Regional Trade Agreements XIV. Firm Boundaries organizing the firm (See power point presentation on ANGEL) A) Horizontal vs. Vertical Boundary of the firm 1) Horizontal Scope 2) Vertical Control of Supply Chain B) Horizontal Integration 1) Advantages i) Economies of Scope ii) Brand Recognition iii) Diversification iv) Potential for greater market power 2) Disadvantages i) Management and Control issues ii) AntiTrust regulation iii) Loss in efficiency due to less specialization 3) Decision to integrate C) Vertical Integration 1) Final Goods vs. Intermediate Goods 2) Advantages i) Avoid supplier markup ii) Control of production quality and specifications 3) Disadvantages i)Loss of specialization and efficiency 4) Decision to Integrate XV. Firm Location (See power point presentation on ANGEL) A) ProximityConcentration Tradeoff 1) Proximity to customers 2) Concentration of production ...
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