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Topics:
- math quiz
- syllabus/orientation
- begin 5Es
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Video Lectures:
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Readings:
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Must Know / Outcomes:
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Topics:
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Video
Lectures:
- OPTIONAL: SIMPLE MATH, ALGEBRA, AND GEOMETRY FOR
ECONOMICS STUDENTS
- REVIEW OF GRAPHING CONCEPTS
- 1A.1 Using Graphs to Understand Direct
Relationships
- 1A.2 Plotting A Linear Relationship Between Two
Variables
- 1A.3 Changing the Intercept of a Linear
Function
- 1A.4 Understanding the Slope of a Linear
Function
- OPTIONAL:
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Readings:
- Syllabus
- 5Es
online reading
- Ch. 3: "Efficient Allocation" pp. 58-59
- Ch. 3 and 6: "Diminishing Marginal Utility" pp. 49
and 117
- Ch.1, Appendix on Graphing
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Must Know / Outcomes:
- Why it is GOOD for the people of Florida if, after a
hurricane strikes, the price of plywood (or other
products) increases from $10 a sheet to $30 a sheet
- Why it was GOOD when the Coca-Cola company (or other
companies lays off 6000 workers as they did in the year
2000.
- Why the price of gasoline in the United States is TOO
LOW (We may have to wait until after we finish chapter 5
to truly understand this.)
- What is "SCARCITY" as it is defined in economics?
(What two things cause the scarcity of goods and
services?
- What is "erskinite"? Is erskinite scarce?
- What is the goal of economics?
- What are society's three options for dealing with
scarcity?
- What do the 5Es do?
- For each of the following
- Define
- Explain how it affects society's satisfaction
- Give an example
- ECONOMIC GROWTH
- PRODUCTIVE EFFICIENCY
- ALLOCATIVE EFFICIENCY
- EQUITY
- FULL EMPLOYMENT
- How does economic growth differ from the other
Es?
- What are the three ways to achieve productive
efficiency?
- What is the President Obama example? Explain how it
can be used to show that equity can increase society's
satisfaction. Why did we use such a strange example?
- What is the law of diminishing marginal utility? What
does "marginal" mean?
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Topics:
- Intro. to Econ.
- Econ. models
- budget line
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Video
Lectures:
- WHAT IS ECONOMICS: SCARCITY, THE 5Es, AND MAKING
CHOICES
- 1.1.1 Scarcity - Defining Economics
- 1.2.1 What Economists Do
- 1.2.2 Micro and Macroeconomics
- BUDGET LINES
- 6A-1 Constructing a Consumer's Budget
Constraint
- 6A-2 Understanding a Change in the Budget
Constraint
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Readings:
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Must Know / Outcomes:
- definitions of economics
- definition of scarcity
- two things necessary to cause scarcity
- what is rational choice? (purposeful behavior?)
- what are economic models and why do economists use
them?
- what are opportunity costs? (trade offs?; "no such
thing as a free lunch"?)
- ceteris paribus
- positive vs. normative economics
- macroeconomics vs. microeconomics
- what is the consumer dilemma (economizing
problem)?
- what is a budget line (budget constraint)?
- how does the budget line illustrate the necessity of
making choices?
- how changes in income and prices affect the budget
line
- what are the four categories of resources (or factors
of production)?
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Topics:
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Video
Lectures:
- PRODUCTION POSSIBILITIES
- 2.1-1 Understanding the Concept of Production
Possibilities Frontiers
- 2.1-2 Understanding How a Change in Technology
Affects the PPF
- 2.1-3 Deriving the Algebraic Equation for the
PPF
- MAKING CHOICES: THE ECONOMIC WAY OF THINKING --
BENEFIT-COST ANALYSIS (also called Marginal Analysis or
Cost-Benefit Analysis)
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Readings:
- Ch1, pp. 11-22
- Ch. 1: p. 5, "Marginal Analysis: Benefits and
Costs"
- Ch. 1: pp. 13-14, "Optimal Allocation" (especially
Fig 1.3),
- Ch 1: p. 14, "The Economics of War" (box)
- Ch. 7: p. 158-159, “Last Word: Don't Cry over
Sunk Costs - Sunk costs are irrelevant in decision making”
- Ch. 5: pp. 108-109, "Society's Optimal Amount of
Externality Reduction"
- Ch. 22: p. 467, "Optimal Immigration"
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Must Know / Outcomes:
PPC
- what is the production possibilities curve (PPC) or
production possibilities frontier (PPF)?; what does it
show?
- what are the 5 assumptions behind the PPC?
- what does a point outside the PPC represent?
- how does the PPC show that society must make
choices?
- what two things would a point inside the PPC
indicate?
- define opportunity cost
- calculate opportunity cost using the PPC
- explain the shape of the PPC. why is it concave to
the origin? why does it have the shape that it does?
- what is the law of increasing costs?
- what would cause the PPC to shift outward?
- what causes economic growth and how is it illustrated
on the PPC?
- use the PPC to explain what is meant by present
choice affect future possibilities
- discuss the PPC and allocative efficiency (or the
optimal combination of output)
- use the PPC to illustrate the effect of international
trade, discrimination, unemployment,
Benefit Cost Analysis
- define benefit cost analysis (BCA) and use it to
solve problems
- define "marginal" and give examples
- define marginal benefits (MB) and marginal costs
(MC)
- explain why we ignore fixed, or sunk, costs
- know what happens if MC increases. decreases.
- know what happens if MC increases. decreases.
- draw MB and MC on a graph and explain their
shapes
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Topics:
- Econ. Systems
- Capitalism and efficiency
- The Gains from Trade
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Video
Lectures:
- ECONOMIC SYSTEMS
- SPECIALIZATION AND GAINS FROM TRADE
- 2.2-1 Defining Comparative Advantage with the
PPF
- 2.2-2 Understanding Why Specialization Increases
Total Output
- 2.2-3 Analyzing International Trade Using
Comparative Advantage
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Readings:
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Must Know / Outcomes:
- terms and concepts listed at the end of the
chapter
- Pure Laissez-faire economic system
- Centrally Planned Economy
- mixed economic systems
- The Bolshevik Revolution
- Contributing factors to the collapse of the Soviet
Union
- characteristics of the market system
- the important role of profits and losses
- property rights
- how specialization increases output
- the "invisible hand" of capitalism
- the coordination problem
- the incentive problem
- the circular flow model
- absolute advantage
- straight line PPCs
- The concept of comparative advantage
- calculate comparative advantage
- specialization and trade
- show the gains from trade
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Topics
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Video
Lectures:
- DEMAND
- 3.1-1 Understanding the Determinants of
Demand
- 3.1.2 Understanding the Basics of Demand
- 3.1.3 Analyzing Shifts in the Demand Curve
- 3.1-4 Changing Other Demand Variables
- 3.1-5 Deriving a Market Demand Curve
- OPTIONAL:
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Readings:
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Must Know / Outcomes:
Demand
- know the "Terms and Concepts" listed at the end of
the chapter
- define demand
- be able to correctly draw and label a demand
graph
- why do economists employ the ceteris paribus
assumption when creating a demand curve?
- what is the law of demand?
- why is the demand curve downward sloping (three
explanations)
- list the non-price determinants of demand and
understand how they affect the demand schedule and
curve
- explain the difference between the a "change in the
quantity demanded" and a "change in demand"
- what is an increase in demand and a decrease in
demand and show how they affect the demand schedule and
the demand curve
- what is "market demand"?
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Topics
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Video
Lectures:
- SUPPLY
- 3.2-1 Understanding the Determinants of
Supply
- 3.2-2 Deriving a Supply Curve
- 3.2-3 Understanding a Change in Supply versus a
Change in Quantity Supplied
- 3.2-4 Analyzing Changes in Other Supply
Variables
- 3.2-5 Deriving a Market Supply Curve from
Individual Supply Curves
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Readings:
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Must Know / Outcomes:
Supply
- know the "Terms and Concepts" listed at the end of
the chapter
- define supply
- be able to correctly draw and label a supply
graph
- why do economists employ the ceteris paribus
assumption when creating a supply curve?
- what is the law of supply?
- why is the supply curve upward sloping (three
explanations)
- list the non-price determinants of supply and
understand how they affect the supply schedule and
curve
- explain the difference between the a "change in the
quantity supplied" and a "change in supply"
- what is an increase in supply and a decrease in
supply and show how they affect the supply schedule and
the supply curve
- what is "market supply"?
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Topics
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Video
Lectures:
- PUTTING SUPPLY AND DEMAND TOGETHER
- 3.3-1 Determining a Competitive Equilibrium
- 3.4-1 Defining Comparative Statics
- 3.4-1 Classifying Comparative Statics (should be
3.4-2, but the link works)
- MARKETS AND EFFICIENCY
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Readings:
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Must Know / Outcomes:
Equilibrium
- know the "Terms and Concepts" listed at the end of
the chapter
- what are the two assumptions of a competitive
equilibrium?
- define equilibrium
- what happens if the price is below the equilibrium
price? If it is above it?
- how to find the equilibrium price and quantity on a
supply and demand schedule and graph
- define "shortage" and "surplus" and explain using a
supply and demand graph
- what is the "bidding mechanism"?
- the three (or four) steps to finding a new
equilibrium when a non-price determinant changes and how
to use them
- what happens to the equilibrium price and quantity if
(1) demand increases, (2) demand decreases, (3) supply
increases, and (4) supply decreases.
- what happens if both supply and demand changes
Markets and Efficiency
- two models to show why competitive market economies
achieve allocative efficiency
- define consumer surplus and shade it in on a supply
and demand graph
- define marginal social benefit and explain why it is
often measured by the demand curve
- define producer surplus and shade it in on a supply
and demand graph
- define marginal social cost and explain why it is
often measured by the supply curve
- define dead weight loss and be able to locate it on a
supply and demand graph
- explain why allocative inefficiency occurs where MSB
> MSC causing an underallocation of resources; show on
graph using the MSB=MSC model and show the dead weight
loss on the consumer and producer surplus model
- explain why allocative inefficiency occurs where MSB
< MSC causing an overallocation of resources; show on
graph using the MSB=MSC model
- be able to find WHAT WE GET and WHAT WE WANT the
MSB=MSC model graph
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Topics:
- price ceilings
- price floors
- negative externalities
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Video
Lectures:
- GOVERNMENT INTERFERENCE IN MARKETS: Price Ceilings
and Floors
- MARKET FAILURE:NEGATIVE EXTERNALITIES
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Readings:
- Chapter 3: pp 61-64, "Application: Government Set
Prices"
- Chapter 3: pp 62-63, "Last Word: A Legal Market for
Human Organs?"
- Chapter 5: pp 99-110, "Public Goods", "Externalities"
and “Government’s Role in the Economy”
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Must Know / Outcomes:
Price ceilings and floors
- define "price control" or "price ceiling"
- give examples of price controls / price ceilings
- how price controls/price ceilings affect allocative
efficiency and explain using the MSB=MSC model and the
consumer and producer surplus (dead weight loss)
model
- what other effects price controls/ceilings have
- define price floor and give examples
- what happens if the government sets a minimum wage
rate that is higher then the equilibrium?
- he efficiency effects of a price floor using the
MSB=MSC model and show on a graph
- what happens if a price ceiling is set above the
equilibrium? if a price floor is set below the
equilibrium?
Market Failure: negative externalities (also called
external costs or spillover costs)
- know the "Terms and Concepts" listed at the end of
the chapter
- what is a market failure?
- what is an externality?
- define negative externalities (external costs or
spillover costs)
- give examples of negative externalities
- use the MSB=MSC model to show the effects
(overallocation) on allocative efficiency of negative
externalities
- what can the government do to correct the market
failure caused by negative externalities and show the
effects of these policies on the MSB=MSC model
- why is the MSC curve not the same as the supply (or
MPC) curve when there are negative externalities?
- what is an excise tax?
- what is the Coase theorem?
- explain how according to the Coase Theorem that under
certain circumstances bargaining can solve the problems
created by negative externalities without the government
using an example
- what are the necessary condition needed for the Coase
Theorem to work?
- what is the tragedy of the commons?
- how does the tragedy of the commons affect allocative
efficiency?
- what can be done to better achieve allocative
efficiency when there is a tragedy of the commons?
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Topics:
- positive externalities
- public goods
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Video Lectures:
- MARKET FAILURE: POSITIVE EXTERNALITIES
- MARKET FAILURE: PUBLIC GOODS
- 15.1-1 Defining Public Goods
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Readings:
- Chapter 5: pp 99-110, "Public Goods", "Externalities"
and "Government's Role in the Economy"
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Must Know / Outcomes:
Market Failure: positive externalities (also called
external benefits or spillover benefits)
- know the "Terms and Concepts" listed at the end of
the chapter
- define positive externalities (external benefits or
spillover benefits)
- give examples of positive externalities
- use the MSB=MSC model to show the effects on
allocative efficiency of positive externalities
- what can the government do to correct the market
failure caused by positive externalities and show the
effects (underallocation) of these policies on the
MSB=MSC model
- why is the MSB curve not the same as the D (or MPB)
curve when there are negative externalities?
Market Failure: Public Goods
- define "public goods (non-exclusive)"
- give examples of public goods and explain why they
are public goods
- define private (exclusive) goods" and give
examples
- define "rival goods" and give examples
- what is the "free rider problem"?
- explain how to derive the demand curve for public
goods
- what effect do public goods have on allocative
efficiency?
- what can the government do to correct for the market
failure of public goods?
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Topics:
- price elasticity of demand
- tax incidence and efficiency loss
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Video
Lectures:
- PRICE ELASTICITY OF DEMAND
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Readings:
- Chapter 4: pp. 75-84,
- Chapter 4: pp 86-87, Last Word
- Chapter 16: pp 347-354, "Tax Incidence and Efficiency
Loss”
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Must Know / Outcomes:
- know the "Terms and Concepts" listed at the end of
the chapter
- define price elasticity of demand
- compare "the law of demand" with "price elasticity of
demand"
- calculate the coefficient of price elasticity of
demand using the midpoint formula
- explain why the midpoint formula is used
- know how to interpret the coefficient (what does the
number mean?)
- price elastic demand
- price inelastic demand
- unit elastic demand
- how does the price elasticity of demand change along
a single demand curve?
- perfectly price elastic demand (graph)
- perfectly price inelastic demand (graph)
- total revenue test (how do price changes affect total
revenue with different elasticities (show
graphically)
- P x Q = TR
- explain how the shape of the total revenue graph is
explained by the price elasticity of demand
- determinants of price elasticity of demand
- Why might farm incomes fall if crops are good (bumper
crops)?
- how does the price elasticity of demand explain the
rise in street crime after a major drug bust?
- how does price elasticity of demand help[ explain
how the minimum wage affects unemployment?
- define price discrimination and explain the role of
the price elasticity of demand
- define "excise tax" and give examples
- understand the connection between price elasticity of
demand and the effect of excise taxes on (1) tax
incidence (burden), (2) tax revenue, and (3) allocative
efficiency (social welfare)
- explain the efficiency loss of excise taxes using the
(1) MSB = MSC model and (2) the consumer and producer
surplus model (dead weight loss)
- the role of excise taxes in income redistribution and
reducing negative externalities
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Topics:
- price elasticity of supply
- cross elasticity of demand
- income elasticity of demand
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Video
Lectures:
- PRICE ELASTICITY OF SUPPLY
- CROSS ELASTICITY OF DEMAND
- INCOME ELASTICITY OF DEMAND
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Readings:
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Must Know / Outcomes:
Price Elasticity of Supply
- know the "Terms and Concepts" listed at the end of
the chapter
- define price elasticity of supply
- calculate and interpret the coefficient of price
elasticity of supply using the midpoint formula
- determinants of price elasticity of supply
- price elasticity of supply and the market period, the
short run, and the long run
Cross Elasticity of Demand
- define cross elasticity of demand
- interpret the coefficient of cross elasticity of
demand including both its value and the sign
(substitutes, complements, and unrelated goods)
Income Elasticity of Demand
- define income elasticity of demand
- interpret the coefficient of income elasticity of
demand including both its value and the sign (inferior
goods, normal goods, luxury goods)
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Topics:
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Video
Lectures:
- CONSUMER BEHAVIOR: Utility Maximization
- 6.1-1 Understanding Utility Theory
- 6.2-1 Optimal Consumer Choice - Finding Consumer
Equilibrium
- Professor Harmon Calculates the Utility Maximizing
Bundle in 5 mins (YouTube - 02001orh 4:58)
http://www.youtube.com/watch?v=LY1slp1dacA
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Readings:
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Must Know / Outcomes:
- Vocabulary
- law of diminishing marginal utility
- utility
- total utility
- marginal utility
- rational behavior
- budget constraint
- utility-maximizing rule
- consumer equilibrium
- "util"
- Define, graph, and explain the relationship between
total utility, marginal utility, and the law of
diminishing marginal utility.
- Describe how rational consumers maximize utility by
comparing the marginal utility-to-price ratios of all the
products they could possibly purchase. (Utility
maximizing rule)
- Explain how a demand curve can be derived by
observing the outcomes of price changes in the
utility-maximization model
- Discuss how the utility-maximization model helps
highlight the income and substitution effects of a price
change.
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Topics:
- accounting and economic profits
- production function
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Video
Lectures:
- AN ECONOMIST'S VIEW OF COSTS AND PROFIT
- 7.1-1 Finding Economic Profit
- PRODUCTION IN THE SHORT RUN
- 7.2-1 Understanding Output, Inputs, and the Short
Run
- 7.2-2 Explaining the Total Product Curve
- 7.2-3 Drawing Marginal Product Curves
- 7.2-4 Understanding Average Product
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Readings:
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Must Know / Outcomes:
- Define and understand the terms and concepts listed
at the end of the chapter.
- Distinguish between explicit and implicit costs, and
between normal and economic profits
- Explain why normal profit is an economic cost, but
economic profit is not
- Why is a zero economic profit OK?
- What are sunk costs and why are they ignored?
- Explain the law of diminishing returns
- Differentiate between the short run and the long
run.
- Compute and graph marginal and average product when
given total product data
- Explain the relationship between total, marginal, and
average product
- Explain the shape of the total, marginal, and average
product graphs (specialization and teamwork, congestion,
and overcrowded)
- differentiate between production, productivity, and
productive efficiency
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Topics:
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Video
Lectures:
- SHORT RUN COSTS
- 7.3-1 Defining Variable Costs
- 7.3-2 Graphing Variable Costs
- 7.3-3 Defining Marginal Costs
- 7.3-4 Deriving the Marginal Cost Curve
- 7.3-5 Understanding the Mathematical Relationship
between Marginal Cost and Marginal Product
- 7.3-6 Defining Average Variable Costs
- 7.3-7 Understanding the Relationship between
Marginal Cost and Average Variable Cost
- 7.3-8 Defining and Graphing Average Fixed Cost and
Average Total Cost
- 7.3-9 Calculating Average Total Cost
- 7.3-10 Putting the Cost Curves Together
- 7.3-11 Shifts in the Cost Curves
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Readings:
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Must Know / Outcomes:
- Define and understand the terms and concepts listed
at the end of the chapter.
- Distinguish between fixed, variable and total
costs
- Explain the difference between average and marginal
costs
- Compute and graph AFC, AVC, ATC, and marginal cost
when given total cost data
- Explain how TC, TVC, and TFC relate to one another
- do TC and TVC get closer together?
- Explain how AVC, ATC, and MC relate to one another
- do ATC and AVC get closer together?
- why does MC cros ATC and AVC at their lowest
points?
- Explain the shapes of the total, average, and
marginal cost curves (TC, TVC, TFC, ATC, AVC, AFC, and
MC)
- Relate average product to average variable cost, and
marginal product to marginal cost
- Explain what happens to the cost curves if there is a
change in fixed costs; variable costs (what can cause
cost curves to rise or fall?)
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Topics:
- short run cost curves con't
- long run costs
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Video Lectures:
- SHORT RUN COSTS [11 continued]
- PRODUCTION AND COSTS IN THE LONG RUN
- 7,4-1 Defining the Long Run
- 7.4-2 Determining the Firm's Return to Scale
- 7.4-3 Understanding the Short Run and Long Run
Average Cost Curves
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Readings:
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Must Know / Outcomes:
- Define and understand the terms and concepts listed
at the end of the chapter.
- Explain the difference between short run and long run
costs
- State why the long run average cost is expected to be
U shaped
- List causes of economies and diseconomies of
scale
- Indicate relationship between economies of scale and
number of firms in an industry and their sizes
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Topics:
- market structures
- pure comp. - short run equilibrium
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Video
Lectures:
- MARKET STRUCTURE
- 10.1-1 Understanding Market Structure
- WHAT IS A PERFECTLY COMPETITIVE MARKET? (PURE
COMMPETITION)
- 8.1-1 Understanding the Role of Price
- 8.2-1 Calculating Total Revenue
- PURE COMMPETITION -BSHORT RUN PROFIT MAXIMIZATION
- 8.3-1 Finding the Firm's Profit Maximizing Output
Level
- 8.3-2 Proving the Profit Maximizing Rule
- 8.3-3 Calculating Profit
- 8.3-4 Calculating Loss
- 8.4-1 Finding the Firm's Shut-Down Point
- PURE COMMPETITION - SHORT AND LONG RUN MARKET SUPPLY
- 8.5-1 Deriving the Short-Run Market Supply
- 8.7-1 Deriving the Long-Run Market Supply
Curve
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Readings:
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Must Know / Outcomes:
- Define and understand the terms and concepts listed
at the end of the chapter
- List the four basic market models and characteristics
of each.
- Describe characteristics of a purely competitive firm
and industry.
- Explain how a purely competitive firm views demand
for its product and marginal revenue from each additional
unit sale.
- Compute and graph average, total, and marginal
revenue when given a demand schedule for a purely
competitive firm.
- Use both total revenue minus total-cost and marginal
revenue = marginal cost approaches to determine short run
price and output that maximizes profits (or minimizes
losses) for a competitive firm.
- with a table of data
- on a graph with numbers
- on a graph using geometry (graph with
letters)
- Find the short run supply curve when given short run
cost schedules for a competitive firm.
- Explain how to construct an industry short run supply
curve from information on single competitive firms in the
industry.
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Topics:
- pure comp - long run equilibrium
- pure comp and efficiency
- marginal coat pricing
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Video
Lectures:
- PURE COMPETITION - LONG RUN EQUILIBRIUM AND
EFFICIENCY
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Readings:
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Must Know / Outcomes:
- Define and understand the terms and concepts listed
at the end of the chapter
- Distinguish between the short run and the long run in
pure competition.
- Explain the long run equilibrium position for a
competitive firm using entry and exit of firms to explain
adjustments from nonequilibrium positions.
- Describe the role of profits and losses in achieving
the long run equilibrium
- Explain the shape of long run industry supply curves
in constant cost and increasing cost industries.
- Differentiate between productive and allocative
efficiency.
- Explain why allocative efficiency and productive
efficiency are achieved where P = minimum ATC = MC.
- Explain why allocative efficiency and productive
efficiency are consistent with maximizing consumer and
producer surplus and an efficient use of resources.
- Evaluate the impact of creative destruction on purely
competitive industries.
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Topics:
- monopoly - short run equilibrium
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Video
Lectures:
- MONOPOLY
- 9.1-1 Barriers to Entry - Defining Market
Power
- 9.2-1 Defining Marginal Revenue for a Firm with
Market Power
- PROFIT MAXIMIZATION FOR A MONOPOLY
- 9.3-1 Determining the Monopolist's Profit
Maximizing Output and Price
- 9.3-2 Calculating a Monopolist's Profit and
Loss
- OPTIONAL
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Readings:
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Must Know / Outcomes:
- Define and understand the terms and concepts listed
at the end of the chapter
- List the five characteristics of pure monopoly.
- Explain the difference between a "pure" monopoly and
a "near" monopoly.
- List and give examples of the four barriers to
entry.
- Describe the demand curve facing a pure monopoly and
how it differs from that facing a firm in a purely
competitive market.
- Compute marginal revenue when given a monopoly demand
schedule.
- Explain why the marginal revenue is equal to the
price in pure competition but not in monopoly.
- Determine the price and output level the monopoly
will choose given demand and cost information in both
table and graphic form.
-
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Topics:
Monopoly
- Long Run Equilibrium
- Efficiency
- Price Discrimination
- Natural Monopolies and Regulation
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Video
Lectures:
- THE SOCIAL COST OF MONOPOLY
- REGULATING NATURAL MONOPOLIES
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Readings:
- Ch 10, pp, 203-214
- Ch. 18 ALL
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Must Know / Outcomes:
- Define and understand the terms and concepts listed
at the end of the chapter
- Discuss the economic effects of pure monopoly on
price, quantity of product produced, allocation of
resources, distribution of income, and technological
progress.
- Give examples of how new technology has lessened
monopoly power.
- List three conditions necessary for price
discrimination.
- Explain why profits and output will be higher for a
discriminating monopoly as compared to non-discriminating
monopoly.
- Identify two pricing strategies of monopoly
regulation and explain the dilemma the regulators face in
utilizing these strategies
- Distinguish between three types of mergers.
- Explain how the Herfindahl index is used as a
guideline by the government in deciding whether to permit
horizontal mergers.
- Define price fixing, price discrimination, and tying
contracts, and explain which are strictly prohibited,
which are permitted, and why.
- Identify the options that government might use when a
natural monopoly exists.
- Explain why a regulated monopoly does not have an
incentive to reduce costs.
- Explain two major problems encountered in regulating
natural monopolies
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Topics:
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Video
Lectures:
- MONOPOLISTIC COMPETITION
- 10.1-2 Defining Monopolistic Competition
- 10.2-1 Short-Run Profit Maximization for a
Monopolistically Competitive Firm - Understanding
Pricing and Output in Monopolistic Competition
- Monopolistic
Competition (econclassroom.com 20:51)
efficiency begins at 15:00
- Monopolistic Competition in the Long-Run: Econ
Concepts in 60 Seconds with AP Economics Teacher
(ACDCEcon 3:25)
http://www.youtube.com/watch?v=erdzOu3juNI
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Readings:
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Must Know / Outcomes:
- Define and understand the terms and concepts listed
at the end of the chapter
- List the characteristics of monopolistic
competition.
- Explain how product differentiation occurs in similar
products.
- Determine the profit maximizing price and output
level for a monopolistic competitor in the short run when
given cost and demand data.
- Explain why a monopolistic competitor will realize
only normal profit in the long run.
- Identify the reasons for excess capacity in
monopolistic competition.
- Explain how product differentiation may offset these
inefficiencies.
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Topics:
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Video
Lectures:
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Readings:
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Must Know / Outcomes:
- Define and understand the terms and concepts listed
at the end of the chapter
- Describe the characteristics of an oligopolistic
industry.
- Differentiate between homogeneous and differentiated
oligopolies.
- Identify and explain the most important causes of
oligopoly.
- Describe and compare the concentration ratio and the
Herfindahl index as ways to measure market dominance in
an industry.
- Distinguish between three types of mergers. (Ch.
18)
- Explain how the Herfindahl index is used as a
guideline by the government in deciding whether to permit
horizontal mergers. (Ch. 18)
- Use a profit-payoffs matrix (game theory) to explain
the mutual interdependence of two rival firms and why
oligopolists might tempt to cheat on a collusive
agreement.
- Identify three possible models of oligopolistic
price-output behavior.
- Use the kinked demand curve theory to explain why
prices tend to be inflexible.
- Explain the major advantages of collusion for
oligopolistic producers.
- List the obstacles to collusion behavior.
- Explain price leadership as a form of tacit
collusion.
- Explain why oligopolies may prefer nonprice
competition over price competition.
- List the positive and negative effects of
advertising.
- Explain why some economists assert that oligopoly is
less desirable than pure monopoly.
- Explain the three ways that the power of oligopolists
may be diminished.
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FINAL ECO
211-008
(6:45 Class)
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6:45 Tuesday, 5/14 in J-261
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