Microeconomics – 5. Perfect Competition

  1. To what does industry structure refer? What are the major types of industry structures?
  2. What is the central concept driving the structure-conduct-performance paradigm?
  3. Identify several types of market conduct.
  4. How is market performance measured?
  5. What is the most important requirement of perfect competition?
  6. Illustrate the price taker concept.
  7. Define marginal revenue.
  8. What is the relationship between the industry market price and the firm’s marginal revenue in a perfectly competitive industry?
  9. Define a homogenous product.
  10. What does free entry and exit mean? Why is this assumption important?
  11. What does perfect or complete information mean? What does this assumption ensure?
  12. Explain the externalities problem.
  13. Explain the public goods problem.
  14. Why is the market failure concept so important?
  15. Given a market structure of perfect competition, what kind of conduct with respect to pricing can we expect? What is the profit-maximizing rule?
  16. If the profit-maximizing firm always sets its output at a level where marginal cost equals marginal revenue, then what must be true about the firm’s supply curve?
  17. Explain the shutdown condition or shutdown rule.
  18. Illustrate long run equilibrium for the competitive firm. What does price equal and how much economic profits does it earn?
  19. What is the difference between accounting and economic profits?
  20. What is the relationship between price and average total cost in the long run equilibrium?
  21. What is the difference between allocative and productive efficiency?
  22. Explain Pareto Optimality.
  23. Illustrate consumer and producer surplus and the dead weight loss.
  24. A perfectly competitive market yields the most efficient use and allocation of resources, as embodied in productive and allocative efficiency. Yet still, there are several problems. Describe two.
  25. What is the difference between positive versus normative analysis?

Microeconomics – Lecture 4. Supply and Production Theory

  1. Illustrate the production function algebraically and explain its components.
  2. What does the production function specify?
  3. Define the short run. Define the long run.
  4. What is the difference between fixed versus variable costs? Provide several examples of each.
  5. Explain the difference between the short and long run.
  6. Define marginal cost.
  7. Explain the law of diminishing returns.
  8. Define marginal product.
  9. Define and illustrate average fixed cost, variable cost and total cost.
  10. The long run average cost curve is the envelope of what? Illustrate this.
  11. Explain the difference between economies of scale, diseconomies of scale and constant returns to scale. Illustrate each with the appropriate cost curve.
  12. Economies of scale may be traced to what factors?
  13. An industry characterized by increasing returns to scale is called what?
  14. Define minimum efficient scale.
  15. Define both the law of supply and the price elasticity of supply.
  16. What is the difference between economic versus accounting profits? Explain why this difference is important.

Microeconomics – 3. Demand and Consumer Behavior

  1. Consumer choice boils down to what three things?
  2. What is the difference between a cardinal and ordinal measure of utility?
  3. What is the difference between total versus marginal utility?
  4. Explain the law of diminishing marginal utility.
  5. State the utility-maximizing rule or the equimarginal principle.
  6. When is utility maximized?
  7. What is the difference between real and nominal income?
  8. What does the price elasticity of demand measure? Write out the formula.
  9. Why do we use percentages rather than absolute amounts in measuring consumer responsiveness?
  10. Define and illustrate elastic and inelastic demand.
  11. What are the four major determinants of price elasticity of demand? Explain how each affects demand elasticity.
  12. Suppose your business sells widgets and demand for your product is relatively price elastic. What would you do to raise your total revenues?
  13. Why do many airlines offer fare discounts to people who stay over on a Saturday night?
  14. Why don’t most new cars sell at their sticker price?
  15. Why do many farmers go bankrupt when crops are plentiful?
  16. If the government imposes a sales tax on a product that is highly elastic, what will happen to total tax revenues?

Microeconomics – 2. Supply, Demand and Equilibrium

  1. Why does quantity demanded tend to fall as price rises?
  2. Suppose the average income of consumers rises. What happens to the demand curve?
  3. Suppose you are analyzing the market for beef and the price of chicken rises. What do you think will happen to the beef demand curve?
  4. Explain the difference between a change in demand versus a change in the quantity demanded.
  5. The market demand curve is the horizontal sum of what?
  6. Explain the Law of Supply.
  7. Name three shift factors influencing the supply curve.
  8. Suppose your company comes up with a new cost-saving, computerized process for making corn flakes. What do you think will happen to the supply curve?
  9. Suppose the price of labor or raw materials increases for corn flakes manufacturers. What happens to the supply curve?
  10. Illustrate a shortage, a surplus, and equilibrium using supply and demand curves.
  11. Illustrate a price floor for milk.
  12. Illustrate a price ceiling for wheat.
  13. Explain how the market mechanism answers these three questions: What goods are produced? For whom are goods produced? How are goods produced?
  14. Provide several examples of how the supply and demand framework can help you save or make money in your professional or personal life.

Microeconomics – 1. Introduction

  1. How can microeconomics help you at a business and professional level?
  2. How can microeconomics help you at a personal level?
  3. How is microeconomics distinguished from macroeconomics?
  4. Regardless of whether a country has a command or mixed economy, what three basic questions must be answered?
  5. Define and illustrate the production-possibility frontier.
  6. Use PPF analysis to illustrate the concept of opportunity costs.
  7. Use PPF analysis to illustrate the concept of economic efficiency.
  8. What are the three most important market failures?
  9. Summarize the various reasons why the government might intervene in the private marketplace.
  10. What are the three major factors of production?

Peter Navarro – Director of Trade and Industrial Policy

http://www.businessinsider.com/peter-navarro-trade-op-ed-wall-street-journal-2017-3 The guy running Trump’s trade policy just wrote a seriously troubling op-ed in The Wall Street Journal

2 MOOCs on Coursera which he is teaching

https://www.coursera.org/learn/principles-of-microeconomics/home/welcome The Power of Microeconomics: Economic Principles in the Real World

The Power of Macroeconomics: Economic Principles in the Real World

Time is now 2018/06/21, and China and US is on the brink of a trade war.

Quote from the article, dated 2017/03/06:

Peter Navarro writes like a man ready to start a trade war.

Navarro’s views expressed in the article shouldn’t surprise many who’ve been following his career. The Economist called him a “China-bashing eccentric,” and much of the US economics community was surprised by his appointment to the White House.

But Navarro does fit with the Trumpian worldview that the US is a victim and that there is no win-win situation in international economic dealing.

”the best way to grow faster is by closing this deficit

He is also concerned that foreign countries will buy up the US’s military industrial complex:

At this point Navarro is hysterical, painting a picture of a US that is rapidly selling itself off bit by bit.

This not the country of Google and Exxon Mobil. It’s certainly not the country of Boeing and Lockheed Martin. This is a vision from a man who desperately fears a modern, globalized world and the change it brings with it.

The things Peter Navarro wants to fight against — the things that keep him up at night — are windmills, waving their blades at a paranoid mind. To charge them he wants to disrupt global supply chains and put up tariffs; he wants to bully the US’s way into new markets and upset our trading partners. This is no way to do trade policy.

But Navarro and his team seem on a reckless mission to try.