Key+Topics

The following are the key topics for the Course: Supply and Demand Value Marginal value Marginal cost marginal analysis: Marginal Benefit including marginal revenue and Marginal cost. Demand include what is a demand curve and what shifts a demand curve. Supply include what is a demand curve and what shifts a demand curve. Supply and Demand Taxes including ad valorem taxes and excise taxes Prices including full economic price. Price ceiling Price floor Using regression analysis to derive a demand curve, also t-stats, R-squaredt-stats, F-stat, R-squared, adjusted R-square. elasticity of demand, elasticity of supply, cross price elasticity, income elasticity budget constraints indifference curves. Including assumptions such as transitivity, completeness and more is better. Diminishing MU, income effects and substitution effects. Comparative advantage and trade Production Process and Costs Opportunity costs including implicit costs and explicit costs. Profit: the difference between economic and accounting costs, economic profit, economic losses, and zero economic profit Value of the firm Total cost including implicit and explicit costs. Average cost (long run and short run) economies of scale, diseconomies of scale, constant returns to scale. Average variable cost Economies of scope Marginal revenue product Efficiency in production Organization of a Firm Concentration indexes: Four firm concentration ratios, Herfindahl Hershman indexes (HHI) Contracts, Dedicated assets, incentive contracts, opportunism, physical-asset specificity, principal agent problems, profit sharing, relationship-specific exchange, revenue sharing, site specificity, specialized investments, spot exchange, vertical integration. Mergers: Conglomerate merger, horizontal merger Perfect competition: Interpretation of the long-run supply curve (perfect competition) Marginal revenue and the relationship with elasticity of demand. monopoly monopolistic comp oligopoly: how to maximize profit when there are two production plants, long-run equilibrium. Cournot Stackelberg Bertrand Collusion contestable markets Sweezy oligopoly sunk costs coordination games dominant strategy Finitely repeated games, the end-of period problem, infinitely repeated games Nash equilibrium sequential move games prisoners dilemma. Profit maximizing markup for monopoly and monopolistic competition and Cournot. asymmetric information, adverse selection, moral hazard Networks Pricing Strategies 1st, 2nd and 3rd Price discrimination. Two part pricing, Block pricing, peak load pricing, cross subsidies, price matching, randomized pricing transfer pricing limit pricing, predatory pricing, raising rivals costs Economics of Information Risk: mean, variance, standard deviation, risk aversion, risk neutral, risk lover, optimal search, signaling, screening, Auctions including English auction, First price sealed bid auction, second price sealed bid auction, Dutch auction, winners curse. Government in the Marketplace Positive and Negative externalities, Public goods, rent seeking