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midterm 2 Topics

midterm 2 Topics - Chapter 17 “Application of the...

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Topics for the Exam Chapter 6&7 “Production and Costs” Topics: Production Functions and Isoquants, Returns to Scale, Short-run vs Long-run Decisions, Costs of Production: Diminishing marginal returns, Deriving cost functions, Economies of Scale Chapter 8 “Competitive Firms” Topics: Horizontal residual demand curve as defining property of a competitive firm/market, Optimal choice of output, Shut down, Market supply as the sum of individual firm’s supply, Differences between Long-run and Short-run Chapter 9 “The Competitive Model and its Application” Topics: Producer Surplus. Welfare as the sum of consumer and producer surplus, Welfare is maximized in the (partial) competitive equilibrium. Application to taxes and to subsidies and price support. Optimal taxation.
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Unformatted text preview: Chapter 17 “Application of the Competitive Model: Externalities and Public Goods” Topics: Externalities. Public Goods. The (partial) competitive equilibrium is inefficient. Ways to solve the problem (Taxes, Subsidies, Quotas). Chapter 10 “General Equilibrium” Topics: Edgeworth Box, Pareto Efficiency, Dictator, Simple Bargaining, Competitive Equilibrium, First Welfare Theorem, Second Welfare Theorem, Production, Comparative Advantage. Not covered are the following subsections of the Book: Chapter 6 “Elasticity of Substitution,” “Productivity and Technological Change” Chapter 7 “How Learning reduces Costs,” “Costs of Producing Several Goods” Chapter 17 "Monopoly and Externalities," "Coase Theorem," and "Optimal Provision of Public Goods"....
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