PADP 6950:
Founda1ons of Policy Analysis
Surpluses
PRACTICE
Angela Fer1g, PhD
Extemporaneous Policy Analysis
5 groups will evaluate the following excise taxes:
1. CigareIe Tax
2. Alcohol Tax
3. Soda Tax
4. Snack Ta

PADP 6950:
Founda1ons of Policy Analysis
Intertemporal Choice & Uncertainty
Angela Fer1g, PhD
Special cases: Dierent kinds of goods
to choose between
Before: food and other goods, etc.
Intertemporal Choice: c

PADP 6950:
Founda1ons of Policy Analysis
Intertemporal Choice & Uncertainty
PRACTICE
Angela Fer1g, PhD
Point of these exercises
Try out a calcula1on on your own
Make sure you understand some concepts
Demonstrate

PADP 6950:
Founda1ons of Policy Analysis
Asymmetric Informa0on
Angela Fer1g, PhD
Asymmetric Informa1on
It just means one knows more than another
Examples:
Seller know more about quality of good than buyer
Worke

PADP 6950:
Founda1ons of Policy Analysis
Asymmetric Informa0on
PRACTICE
Angela Fer1g, PhD
Health Insurance Game
1. Divide into 6 seller groups; Read instruc1ons
2. Sellers choose premiums for T1 policy and T2 (sicker

PADP 6950:
Founda1ons of Policy Analysis
Theory of the Firm
Angela Fer1g, PhD
The Firm
A rm is an organiza1on that transforms
inputs into outputs in order to earn prots
Inputs include labor, capital, land,

PADP 6950:
Founda1ons of Policy Analysis
Theory of the Firm
PRACTICE
Angela Fer1g, PhD
Golf Ball Game
Developing a short-
run produc1on func1on:
Produc1on: moving golf balls to nal bucket in 15 sec
K is x

PADP 6950:
Founda1ons of Policy Analysis
Supply
Angela Fer1g, PhD
Cost Curves
We need to learn about cost curves to
understand where the supply curve comes
from
1
Average Fixed Cost
AFC = FC/Q
At Q=0, AFC

PADP 6950:
Founda1ons of Policy Analysis
Supply
PRACTICE
Angela Fer1g, PhD
Results from Golf Ball Game
Let PQ=$5, PL=$10, PK=$10 (where K=bucket)
K
L
Q
TC
FC
VC
AFC
AVC
ATC
MC
2
0
0
2
1
6
2

PADP 6950:
Founda1ons of Policy Analysis
Perfect Compe,on & Monopoly
Angela Fer1g, PhD
Perfect Compe11on
Perfect compe11on is a type of market with:
Large numbers of buyers and sellers
Firms that produce a homo

PADP 6950:
Founda1ons of Policy Analysis
Perfect Compe,on & Monopoly
PRACTICE
Angela Fer1g, PhD
Price Discrimina1on Game
Break up into 6 groups of 4-
5 people each
Within each group, split into buyer group
(exa

PADP 6950:
Founda1ons of Policy Analysis
Game Theory
Angela Fer1g, PhD
Game Theory
Game theory is the study of how people
behave in strategic situa1ons
Relevant to policy analysis:
Important in determining beha

PADP 6950:
Founda1ons of Policy Analysis
Game Theory
PRACTICE
Angela Fer1g, PhD
Prisoners Dilemma Game 1
Your
Decision
Each person get 1 black and 1 red card
Other Players
Decision
Black
Red
Black

PADP 6950:
Founda1ons of Policy Analysis
Surpluses
Angela Fer1g, PhD
Consumer Welfare
Policy analysts are oAen concerned with how policy
changes aect the welfare of consumers.
For example, if we reduce p

PADP 6950:
Founda1ons of Policy Analysis
Demand
PRACTICE
Angela Fer1g, PhD
Market Demand Experiment
1
Market Demand Experiment
Discussion
Which group had highest price elas1city of
demand for snickers? Which gr

PADP 6950 Fertig Name _ Final Exam
Spring 2011 UGA
1. (20 points) Use supply and demand analysis to show what happens to the equilibrium price and quantity of doughnuts in each of the following cases: a. Consumer income increases (assume doughnuts are n

American Economic Review 2009, 99:3, 667699 http:/www.aeaweb.org/articles.php?doi=10.1257/aer.99.3.667
Distributional and Efficiency Impacts of Increased US Gasoline Taxes
By Antonio M. Bento, Lawrence H. Goulder, Mark R. Jacobsen, and Roger H. von Haefen

PADP 6950 Fertig
Fall 2011 UGA
Homework 1 Due August 31, 2011 1. Find the optimal bundle of health insurance (HI) and other goods (G) given the following budget constraint and utility function. Budget constraint: 1500 = 150*HI + 25*G Utility function: U

Dr. Fertig
PADP6950: Foundations of Policy Analysis
Spring 2011
Monday, January 24, 2011:
- like snacks going to have them every day
- please call Angie or Dr. Angie
- philosophy: you are responsible for what Angie says in class & what is on the
lecture n

Dr. Fertig
PADP6950: Foundations of Policy Analysis
Spring 2011
Monday, January 24, 2011:
- like snacks going to have them every day
- please call Angie or Dr. Angie
- philosophy: you are responsible for what Angie says in class & what is on the
lecture n

PADP 6950:
Founda1ons of Policy Analysis
Introduc)on
Angela Fer1g, PhD
Gree1ngs
Pair up
Talk for 5 minutes
Introduce your partner
1
3 hours!
How will we survive?
Snacks sign up sheet
Only 1-
1.5 hou

PADP 6950:
Founda1ons of Policy Analysis
Introduc)on
PRACTICE
Angela Fer1g, PhD
Pit Market Game
1
AHer the game discussion
Buyers
Number
valua,on of people
53
48
43
38
33
28
Sellers
costs
Nu

PADP 6950:
Founda1ons of Policy Analysis
Consumer Choice
Angela Fer1g, PhD
Economic Theory of the Consumer
We assume that consumers are ra1onal
decision-
makers
They purchase the bundle of goods that
maximizes the

PADP 6950:
Founda1ons of Policy Analysis
Consumer Choice
PRACTICE
Angela Fer1g, PhD
Policy 1: Food Stamp Program
Under this program, the eligible household
receives food stamps (worth say, $300 dollars)
that can

PADP 6950:
Founda1ons of Policy Analysis
Demand
Angela Fer1g, PhD
Consumer Choice Demand
A useful feature of the consumer choice model is
it gives us a rigorous way of understanding where
demand curves come fr