Exam_Prep_06

Exam_Prep_06 - University of North Carolina Chapel Hill...

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Unformatted text preview: University of North Carolina Chapel Hill KenanFlagler Business School BA773 Microeconomics Suggestions for Final Exam Preparation Prof. Robert A. Connolly September 29, 2006 I see the following topic areas as central to the core microeconomics course: 1) Market Analysis 2) Output Decisions for Commodity Product Firm 3) Output/Pricing Decisions for Branded Product Firm 4) Price Discrimination 5) Cost Analysis and Control in the Short Run 6) LongRun Cost 7) Decisionmaking with Changing Exchange Rates The first topic is absolutely central to everything we do: expect to have the opportunity to demonstrate your skills in this area. The second and third topics involve applying the basic marginal analysis methods to the fundamental problem of senior managers: how much product to make and how to price it for customers. While there won't be any problems that require you to build and solve a spreadsheet model (as on quiz 1), I do expect that you can process some basic information on costs and demand and produce a solution (i.e., an optimal price/quantity combination). There are examples of this in the early practice problem sets. Problems 3c (pg. 319) and 6a, 7a, and 7b (pg. 321) in the textbook are additional examples of this sort of problem. Price discrimination is another central topic of the course, and I asked you to address this in some computational and conceptual detail on the second problem set. This topic is still fair game, but due to its computational intensity in realistic settings, I don't expect to throw a large, complex question at you. You should expect to see something from this area of the course. Really... I do expect that you can take regression output from a demand estimation problem, provide an economic interpretation (as we did in class), and use it in a sensible way. There won't be any demand functions to estimate on Oct. 10, however. As for cost, we have looked at both short and longrun determinants of cost, and the case discussions addressed application of the analysis. You should be thinking about how that work connects back to the fundamental problem of setting the optimal output and price for a firm. Finally, in the last week of class we will be working on how to make profitmaximizing choices in a setting where the firm has foreign currencydenominated demand and/or cost. Here, there are multiple opportunities for applying the market, demand, cost, and profitmaximization lessons of the course. If you haven't spent a lot of time with the book, don't start now. Slides, class discussions, and problem sets provide more guidance as to what I think is important. ...
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