MICRO EXAM REVIEW SHEET
1. Firm in Perfect
Competition (Long-Run Equilibrium)
2. Monopoly Industry
with comparison of price & output of a Perfectly Competitive Industry
3. Natural Monopoly
with Fair-Return and Socially-Optimum Regulation
4. Negative Externality
showing that too much is being produced at too low of a price
5. Positive externality
showing that too little is being produced at too low of a price
6. Monopsony Labor
Market with comparison of workers hired and wage rate in a p.c. labor mkt.
7. Production
Possibilities Curve illustrating the concept of opportunity cost
8. MPL and
APL (As long as the additional worker (MPL) is > than
the average, APL is rising)
9. Perfectly
Competitive Labor Market with Total Labor Costs in red and Non-labor Costs in yellow
10.
TP (Total Product) with MP and AP curves below
to show the stages of production, return rates,and relationship between MP and
TP (As long as MP > 0, TP is increasing)
11. Illustration of an effective
Price Floor creating a Surplus since Qs > Qd
12. Illustration of an
effective Price Ceiling creating a Shortage since Qd > Qs
13. Market in
equilibrium with Consumer surplus shaded in yellow
14. Illustration of
Perfectly Inelastic supply or demand
15. Illustration of
Elastic Demand
16. Illustration of
Inelastic Demand
17. Illustration of
Perfectly Elastic supply or demand
18. Illustration of a
Long-Run Average Total Cost Curve (∑ ATC curves for various plant sizes)
19. TFC + TVC = TC
20. TFC / Q = AFC
21. TVC / Q = AVC
22. AFC + AVC = ATC
23. TC / Q = ATC
24. ∆ TC / ∆ Q = MC
25. TR / Q = AR or P
26. ∑ MP = TP
(Output)
27. P x Q = TR
28. ∆ TR / ∆ Q = MR
29. ∆ TP / ∆ L = MPl
30. TP / L = APL
31. AR < AVC : Shutdown
32. % ∆ QD / % ∆ P = Ed (Elasticity of Demand) Coefficient
33. P = ATC : Fair-Return
Regulation (0 Economic Profit or Normal Profit)
34. P = MC : Socially-Optimum
Price Regulation (Allocative Efficiency)
35. P > MC : Underallocation
of Resources
36. P < MC : Overallocation
of Resources
37. MUA / PA = MUB
/ PB : Equimarginal Rule (Utility
Maximization Rule)
38. MPA / PA = MPB
/ PB : Least-Cost Rule
39. MR = MC : Optimal
Output Rule
40. MRP = MRC : Hiring
Rule
41. MP x P = Marginal
Revenue Product (MRP)
42. MRPA / PA = MRPB
/ PB = 1 : Profit-Maximization Rule
43. TR – TC = Profit
44. P > ATC : Economic
Profit
45. P < ATC : Economic
Loss
46. MR < 0 : Demand
is inelastic (TR is declining)
47. MR > 0 : Demand
is elastic (TR is rising)
48. MR = 0 : Demand
is unit elastic (TR is at a maximum)
49. ∆ TR / ∆ Input = Marginal Revenue Product (MRP)
50. ∆ TC / ∆ Input = Marginal Resource Cost (MRC)
51. P = Min ATC : Productive
Efficiency
52. ed < 1 : Demand is inelastic
53. ed > 1 : Demand is elastic
54. ed = 1 : Demand is unit elastic
55. ∆ Price = Movement
Along the Curve
56. ∆ Non-Price Determinant = Shift of the Curve
57. P Increases, TR increases : Demand is inelastic
58. P increases, TR decreases : Demand is elastic
59. P decreases, TR decreases : Demand is inelastic
60. P decreases, TR increases : Demand is elastic
ADDITIONAL
THINGS YOU SHOULD KNOW!
1.
Ways
for the government to correct positive externalities.
2.
Ways
for the government to correct negative externalities.
3.
Justification
for government regulation of a monopoly.
4.
Definition
of inferior goods.
5.
Definition
of normal goods.
6.
Assumptions
of the PPC (Production Possibilities Curve).
7.
What
would cause the PPC to shift inward and outward.
8.
Adam
Smith’s view on the nature of the economy and economic growth.
9.
Fair-Return
vs. Socially-Optimum Return (Which one might require a payment of a subsidy to
the firm?).
10.
Characteristics
of elastic and inelastic goods (elastic, inelastic, perfectly elastic,
perfectly inelastic).
11.
Economic
Roles of the government.
12.
What
are variable costs?
13.
Derived
Demand.
14.
Determinants
of Resource Demand.
15.
Determinants
of Supply and Demand.
16.
Definition
of Marginal Resource Cost, Marginal Revenue Product, Marginal Revenue, and
Marginal cost (in words).
17.
How
to apply the Least-Cost Rule.
18.
What
to do when facing a surplus or shortage in order to clear the market (to reach
equilibrium).
19.
Definition
of Price Discrimination.
20.
Concepts
involving the Production Possibilities Curve.
21.
What
would cause a firm’s short run cost curves (MC, AVC, and ATC) to shift?
22.
Definition
of Diminishing Marginal Returns and the point at which it occurs.
23.
Definition/Characteristics
of Perfect Competition, Monopolistic Competition, Oligopoly, Monopoly, and
Monopsony.
24.
Why
is a monopolistically competitive firm allocatively inefficient in the long
run?
25.
How
to apply the Total Revenue Test.
26.
What
can happen during the short run?
27.
Nominal
Wages vs. Real Wages.
28.
What
are the factor payments for land, labor, Capital, and Entrepreneurship?
29.
Definition
of Free-Rider and how it applies to public goods.
30.
Characteristics
of Natural Monopolies.
31.
What
are some barriers to entry?
32.
Why
do long run average total costs eventually rise as a firm grows larger?
33.
Explain
the relationship between Demand and Marginal Revenue for a Monopoly.
34.
Allocative
and Productive Efficiency in the various market structures.
35.
Entry
and Exit into various market structures in the long run.
36.
Graphical
representations of Perfect Competition, Monopoly, Purely Competitive Labor
Market, and Monopsony.
37.
How
to properly label economic graphs!