Final Exam Syllabus and Study Guide: Fall 2024 PDF

Final Exam Syllabus and Study Guide: Fall 2024 The following topics are important for your examination. So make sure you get these concepts right while preparing for the examination Chapter 1: Art and Science of Economic Analysis 1. What is meant by scarcity in Economics? 2....

Final Exam Syllabus and Study Guide: Fall 2024 The following topics are important for your examination. So make sure you get these concepts right while preparing for the examination Chapter 1: Art and Science of Economic Analysis 1. What is meant by scarcity in Economics? 2. Concept of Opportunity Cost and how it is measured? 3. Difference between Positive and Normative economics Chapter 2,3: Economic Tools and Economic Systems and Eco- nomic Decision Makers 1. Production Possibilities Frontier/ Schedule 2. What is the economic implication of the PPF? 3. Opportunity Cost along the PPF 4. Distinction between the Inefficient zone and Non-feasible zone defined by the PPF 5. Increasing opportunity cost and the shape of the PPF 6. What is meant by Absolute advantage? 7. What is meant by Comparative advantage? How is it determined? Chapter 4: Demand, Supply, and Markets* 1. Law of Demand and why the demand curve is downward sloping 2. Factors that determine the demand for a good or service 3. What happens to the Demand curve of a product when the price of the product changes? [Movement along the Demand curve] 4. What happens to the Demand curve of a product when the non-price factors of the product change? [Shift the Demand curve] 5. Distinction between Change in ”Quantity Demanded” (Movement along the demand curve) and ”Change in Demand” (Shift in the Demand curve). [Understand the concept graphically] 6. How is market demand obtained from Individual Demand? 7. What is meant by Normal good and Inferior good? 8. What is meant by Substitute good and Complementary good? 9. Law of Supply and the upward sloping supply curve 10. Price and Non-price determinants of Supply 11. What causes a movement along the supply curve and what causes a shift in the supply curve? 12. How to obtain Market supply from Individual firms’ supply? 13. How do the Market Supply and Demand reach a point of equilibrium from a shortage or surplus? 14. In case of a Change in Supply/ Demand (Shift of Supply/ Demand curve) how does the equilibrium price and quantity change? 15. What happens to market equilibrium when both Demand and Supply are changing ○ Both are shifting in the same direction Anurag Deb # [email protected] 1/5  ○ Shifting in the opposite direction 16. What are the types of Price control introduced by the Government? ○ Price Ceiling: Maximum Price ○ Price Floor: Minimum Price 17. Difference between Binding Price Ceiling (Flooring) and Non-binding Price Ceiling (Flooring). 18. What happens to the Market Equilibrium condition in case of a Binding Price Ceiling and Binding Price floor? 19. What happens to the Market Equilibrium condition if there is a Non-binding Price Ceiling and Non-binding Price floor? Chapter 5: Elasticity of Demand and Supply* 1. What is meant by Elasticity in Economics? 2. Types of Demand Elasticity ○ Price Elasticity of Demand ○ Income Elasticity of Demand ○ Cross-Price Elasticity of Demand 3. Mid-point formula for calculating the Price Elasticity of Demand between 2 points along the Demand curve 4. Why does the Price Elasticity of Demand have a negative sign? 5. Based on the Absolute value of the Price Elasticity we have ○ Elastic Demand ○ Inelastic Demand ○ Unit elastic Demand ○ Perfectly elastic Demand ○ Perfectly inelastic Demand 6. How does the Demand curve’s shape vary with the Price Elasticity’s value? 7. Why is the Price Elasticity of Demand not constant along a Linear Demand curve? 8. What happens to the Total Revenues when the Price is changed in the ”Inelastic” zone of the Demand curve? 9. What happens to the Total Revenues when the Price is changed in the ”Elastic” zone of the Demand curve? 10. What factors determine the Price elasticity of demand for a good? ○ Presence of substitutes ○ Category of the good ○ Time duration for consumer’s adjustment ○ Proportion of Income spent on the good 11. What does the Sign of the Income Elasticity indicate about the nature of a Good? [Normal or Inferior] 12. How does the value of the Income elasticity say whether a good is a luxury or a necessary good? 13. How does the Sign of the Cross-price elasticity determine the nature of the relationship between 2 goods? ○ The Cross Price elasticity of Demand is Positive for Substitute Goods ○ The Cross Price elasticity of Demand is Negative for Complementary Goods 14. How does the value of the Cross price elasticity determine the degree of substitutability and complementary between 2 goods? 15. What is meant by the Price Elasticity of Supply? Anurag Deb # [email protected] 2/5 16. Why is the Price Elasticity of Supply positive in sign? 17. What is meant by Elastic, Inelastic, Unit elastic, Perfectly elastic, and Perfectly inelastic supply? 18. How does the shape of the Supply curve vary with the value of the Price elasticity of supply? Chapter 6: Consumer and Producer surplus 1. What is meant by the Consumer’s willingness to pay / Reservation price? How is it related to the Marginal utility? 2. What does the Consumer surplus represent? How is it measured both mathematically and in terms of graphs? 3. What happens to the Consumer surplus when the market price increases/ decreases? 4. What does the Producer surplus represent? 5. How do we measure the producer’s surplus? Both mathematically as well as graphically 6. What happens to the value of the Producer surplus as market price changes in the market? 7. What is meant by the Total surplus? Chapter 7: Production and Cost in the Firm 1. What is the distinction between Explicit cost and Implicit cost? 2. How is Accounting profit different from Economic profit? 3. How is Short-run production defined in Microeconomics? 4. What is a fixed input in the short run? 5. What is a variable input in the short run? 6. Difference between Total Product, Average Product, and Marginal Production. Calculation of Marginal production from Total production. 7. What is meant by the Increasing and Diminishing Marginal product of a variable input in the Short run? What causes this in the short run? 8. Total Fixed cost, Total Variable cost, and Total cost. Learn their definitions and remember the examples. What do their graphs look like in the Short run? 9. Calculating Average fixed/ variable/total cost from total values. What do their graphs look like in the short run? 10. How to obtain Marginal Cost from Total Cost? The shape of the Marginal Cost curve. 11. Short run relation between Marginal and Average costs. 12. What does the minimum point of the Short-run Average cost curve signify? 13. Shape of the Long-run Average Cost curve ○ Dis-economies of Scale and Decreasing Returns to Scale ○ Economies of Scale and Increasing Returns to Scale ○ Constant returns to scale Chapter 8: Perfect Competition* 1. Basic Characteristics of Perfectly Competitive Market and examples of Perfect Competition market 2. Why is a Firm in a Competitive market considered a Price-Taker? 3. How is the Price that the competitive firm charges decided? 4. Calculation of Total Revenue, Average Revenue, and Marginal Revenue for a competitive firm 5. Firm’s Demand/ AR and Marginal Revenue curves. Why are the Firm’s AR and MR curves equal to the market price? 6. Why is the Firm’s Demand curve horizontal in shape? Anurag Deb # [email protected] 3/5  7. How do firms in the PC market decide on profit-maximizing output? How do they determine the price? 8. Graphically as well as using tables analyze how much a Firm in the PC market will produce to maximize profit. How do we obtain the maximizing level of profit from the graph? 9. What happens to the firm’s demand curve when the market price changes? 10. Why is the Individual Firm’s Supply curve in the PC market represented by the Marginal Cost curve? 11. How do we obtain Market Supply from Individual firms supply in a competitive market? 12. Does the profit-maximizing price and quantity guarantee a positive economic profit for the firms in the short run? 13. If in the short run, a firm in a Perfectly competitive market faces economic loss should it continue in the market or shut down production? 14. What motivates new firms to enter the PC market in the long run? 15. What motivates existing firms to exit the PC market in the long run? 16. What happens to market price and quantity as new firms enter the market in the long run? 17. What happens to the market price and quantity when existing firms exit the market in the long run? 18. Why does every firm in the competitive market earn zero or normal profit in the long run? 19. What does the Long-run Industry Supply curve represent? 20. The distinction between Increasing Cost Industry, Constant Cost Industry, and Decreasing Cost Industry 21. Is the Perfectly competitive market Productively efficient in the long run? explain 22. Is the Perfectly competitive market Allocatively efficient in the long run? explain 23. What does the Producer surplus represent? 24. How do we measure the producer’s surplus? Both mathematically as well as graphically 25. Why is a Perfectly competitive market considered Socially optimal? 26. What is meant by the Total surplus? 27. If the Government imposes any binding price ceiling or price floor how does it impact the competitive markets Total surplus? [Dead-weight loss] Chapter 9: Monopoly Market* 1. What are the basic features of a monopoly market? 2. Why is a monopolist considered a ”Price-maker”? 3. How do patents and licenses lead to Monopoly formation? 4. Why controlling key inputs can lead to a monopoly-like market structure? 5. What is meant by a Natural Monopoly? What can lead to a Natural monopoly? 6. Why is the Monopolist’s demand curve downward slopping? 7. Why is the Average Revenue (AR) curve the same as the monopolist’s demand curve? 8. Why does the Monopolist’s Marginal Revenue(MR) Curve slope downward? Why is it lower than the AR/ Demand curve? 9. How does a Non-price discriminating monopolist determine its Profit-maximizing/ Loss-minimizing level of output and price? [Using both Graphs and Tables] 10. Determining per unit and total profit for a monopolist using tables and graphs. 11. If a monopolist earns economic loss in the short run how does it decide whether to continue or shut-down 12. Comparison between Monopoly and Perfect competition Anurag Deb # [email protected] 4/5  ○ Why does a Monopolist charge a Higher price than a competitive firm? ○ Does a monopolist produce a higher or lower output than a competitive market ○ Why is consumer surplus smaller in a monopoly market than in a competitive market? ○ Why does the Monopoly market cause a Deadweight-loss in social welfare? 13. What is meant by First-degree Price Discrimination? How does it affect the Consumer’s surplus? 14. Why is the case of First-degree price discrimination considered to be allocatively efficient? 15. What is Second-degree Price Discrimination? 16. What is the Third degree of Price discrimination? How is third-degree price discrimination implemented based on the consumer/ market segment price elasticity? Chapter 10: Monopolistic Competition and Oligopoly* 1. What are the basic features of Monopolistic Competition? 2. How is Monopolistic Competition similar to a Perfectly competitive market? 3. How is Monopolistic Competition similar to a Monopoly market? 4. Why is the Monopolistic competitive firm’s demand curve downward-sloping? 5. Graphically determine the profit-maximizing/ loss-minimizing level of output and price for the monopolistic competitive firm 6. When a firm faces loss how does it decide to continue or shut down in the short run? 7. What is meant by Excess capacity in a Monopolistic competitive market? 8. What leads to the Excess capacity in the Monopolistic competitive market? 9. What is meant by Product Differentiation? ○ Physical Differentiation ○ Spatial Differentiation ○ Service Differentiation ○ Product information 10. What are the basic features of an Oligopoly market? 11. What are the measures of Concentration Ratios? ○ Four firm Concentration Ratio ○ Eight firm Concentration Ratio 12. What are the different forms of Entry barriers that lead to an Oligopoly market? 13. Why do oligopolies form cartels? 14. What are the conditions that make cartel work? 15. Why cartels may fail? 16. What is Price Leadership in an Oligopoly Market? 17. In a 2-player 2 strategy game, what is meant by a Dominant strategy? 18. How does the Prisoner’s dilemma game explain why firms in an oligopoly market choose not to cooperate? Anurag Deb # [email protected] 5/5