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Exam 2 Info - Info for Exam 2 Exam 2 8:00 — 9:30 PM...

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Unformatted text preview: Info for Exam 2 Exam 2: 8:00 — 9:30 PM Wednesday April 6‘“ in Lily G126 ID required Exam 2 will cover topics from Chapters 10, 11, 12, 14, and part of 13, which corresponds to classes through March 28““ [and possibly the start of class March 30th] and homework assignments 12, 14 -— 20. The homework problems on assignments 2 — 20, all the Sample Problems posted on katalyst, the questions on exam 1, and the types of questions addressed in class through March 28‘“ [and possibly the start of class March 30m], are good examples of the “styles” of questions to expect on the exam. The topic coverage on the exam will focus on material after the first exam along with the earlier material that is necessary to understand those topics. There will be problems and possibly short—answer type questions. There will not be any multiple-choice questions. In order to receive credit, you will need to show your work on problems and to provide explanations when they are requested. Note the homework was not graded. Be sure to read the sample solutions posted on katalyst for complete answers. Important Topics for the Second Exam Efficiency of Competitive Equilibrium Area under the aggregate supply function out to Q* as the (non—sunk) cost of producing Q* in the least cost way [given the available firms] — Productive Efficiency is built into the aggregate supply function Height of the aggregate supply function at Q* as the “social marginal cost” of production at Q* . Area under the aggregate demand function out to Q* as the “social value” of Q* when allocated to consumers in the highest value way — Allocative Efficiency among consumers is built into the aggregate demand function Height of the aggregate demand function at Q* as the “social marginal value” of the next unit Competitive equilibrium output maximizes net social value Interventions in Competitive Markets and their Effect on Outcomes and Efficiency Taxes or subsidies on each unit of output or on the value of output Tax incidence Taxes or subsidies on inputs used in production Price ceilings or price floors Production quotas or price supports Import quotas or tariffs i . I | I i | . Basic Monopoly and Monopsony Monopoly outcomes and their comparison to net social value maximizing outcomes Marginal social benefit versus marginal private benefit (to the monopolist) for additional output Cost minimization for a monopsonist Marginal social cost versus marginal private cost (to the monopsonist in the labor market) for additional labor input Price Discrimination First-degree price discrimination outcomes and efficiency Comparison of first— degree discrimination outcomes and “regular” monopoly outcomes Third— degree price discrimination outcomes and efficiency Comparison of third- -degree discrimination outcomes and “regular” monopoly outcomes Basic Game Theory Simple strategic form games Nash equilibrium Simple sequential move games Backward induction Simple Oligopoly Models with Homogeneous Goods Cournot’s model [simultaneous quantity choice] Bertrand’s model [simultaneous price choice] Stackelberg’s model [sequential quantity choice] ...
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