Economics 310 Review Questions 1 Professor Tom K
Economics 310 Review questions 1 Professor Tom K. Lee
(There will be exam questions not from the review questions.)
Distinguish between relative price and absolute price.
State and explain the two views of demand(supply).
Define and explain demand price, market price and consumer surplus.
State and explain the First(Second) Law of Demand(Supply).
Define own-price(cross-price, income) demand elasticity.
State and explain the determinants of demand(supply).
Define and explain supply price, market price and producer surplus.
Define supply elasticity.
Define equilibrium price and graphically show how an equilibrium
price is determined.
State and explain the Law of Supply and Demand.
Graphically explain the equivalence of an excise tax on production
vs consumption.
Define price ceiling(floor) and explain why it is inefficient.
Explain how the agricultural price-support(target-price) program
works and why it is inefficient.
How is an exhaustible resource priced in a two period model?
Define a consumer budget line an indifference curve, graphically show how the optimal consumption point isdetermined.
Define MRS, and state and explain the Law of Diminishing MRS.
Define an income consumption curve and graphically show the income
consumption curves for a normal good vs an inferior good.
Define a price consumption curve and graphically show the price
consumption curve for an ordinary good vs a Giffen good.
Graphically demonstrate the various cases of the decomposition of the
price effect into the substitution effect income effect.
Demonstrate the relation between own-price demand elasticity and
the price consumption curve.
Graphically demonstrate the superiority of lumpsum tax(subsidy)
over an excise tax(subsidy).
Why might a tax-plus-rebate program reduce the satisfaction
level of a consumer?
Define an intertemporal budget line, an intertemporal indifference
curve and graphically demonstrate how the intertemporal optimal
consumption point is determined.
Graphically demonstrate how an increase in interest rate might
reduce the amount of savings.
State and explain the Ricardian Equivalence Theorem.
Define MP and state and explain the Law of Diminishing MP.
Define an isoquant, an isocost line and graphically demonstrate
how to determine the optimal input choice.
Define MRTS, and state and explain the Law of Diminishing MRTS.
Graphically demonstrate how to construct the long run
average(marginal) cost curves.
Graphically show how input choice restrictions increasecost.
State and explain the effect of an increase in input price on the
average and marginal cost curves.
State & explain the short-(long-)run profit-maximization conditions
of a competitive firm.
Graphically show how to construct the short-(long-)run supply curve
based on a set of short-(long-)run cost curves.
Economics 310 Review Questions 2 Professor Tom K. Lee
(There will be exam questions not from the review question list.)
State & explain the assumptions of a perfect competition model.
State & explain the zero-profit equilibrium conditions of a
competitive industry.
Why do firms(corporations) exist?
Name and explain the sources of monopoly power.
State & explain the assumptions of a pure monopoly model.
Explain why a monopolist never operates in the inelastic region of
a demand curve.
State & explain the short-run profit-maximization conditions of
a monopoly.
Name & explain the social costs of a pure monopoly.
Define and explain marginal-(average-)cost pricing.
State & explain the conditions for price discrimination.
Define and explain 1st, 2nd and 3rd degree price discrimination.
Define and explain uniform pricing.
State and explain the welfare comparison of 3rd degree price
discrimination vs uniform pricing.
Define & explain two-part tariffs & all-or-nothing contract.
Define & explain peak-load pricing and the reverse-peak problem,
and propose how to solve the problem.
State & explain the assumptions of the monopolistic competition.
State & explain the short run profit maximization conditions of
a monopolistic competitive firm.
State & explain the zero profit equilibrium conditions of a
monopolistic competitive industry.
State & explain the Excess Capacity Hypothesis.
State & explain the dominant-firm price-leadership model.
Explain the incentive to cheat problem in cartels.
Define isoprofit curves, best response function and the Cournot
Nash equilibrium.
Define & explain adverse selection and moral hazard.
State & explain the 3 conditions for profit maximizing input
choices for a competitive firm.
State & explain the 3 conditions for profit maximizing input
choices for a monopolist.
Define transfer pricing & state and explain transfer pricing in the absence(presence) of an intermediate good market.
Define and explain monopsony in the labor market.
State and explain the three alternative models of labor union.
Using the leisure-income tradeoff model, explain why labor supply
may be backward bending.
Define & graphically construct a consumption contract curve.
Define & graphically construct a production contract curve.
State & explain the 3 efficiency conditions for a general
competitive equilibrium.
Define & graphically construct an offer curve.
State and explain the First(Second) Fundamental Welfare Theorem.
Using the Edgeworth exchange box, explain the inefficiency of a
pure monopoly & the efficiency of a discriminating monopoly.
Define and explain a pure public good.
State and explain the Free-rider Problem.
Define & provide an example of demand revelation mechanism.