Review for ECO 165
Test #3
Students are expected to read & understand their book & class notes. Here is a checklist containing most of the topics you should have
mastered:
Review sheet may not be
completely up-to-date until 2 days before the exam!
Market Structures
- For each market structure you should know the defining assumptions,
whether or not there are long-run profits, and whether or not it is
allocatively or technically efficient.
Monopolistic Comp
- Assumptions
- SR & LR equilibrium
- Implications for profits & efficiency
- Excess capacity: what is it; any potential benefits?
Oligopoly
- Assumptions
- Kinked demand
- Cartels; price leadership
- Game theory: prisoners dilemma & maxi-min
Taxation
- Producer and consumer surplus
- Tax incidence; statutory and economic
- Excess Burden of tax
- Effect of elasticity on tax incidence and on excess burden
Market Failures
- Externalities
- Definition; implications; possible solution; examples
- Pollution Permits, Direct Regulation
- Pigouvian Taxes, Tax Incidence
- Public goods
- Definition; implications; free riders; examples
- Moral Hazard & Adverse Selection
- Principal-Agent Problem
- Incomplete Information
Income Distribution & Poverty
- Quintiles
- Lorenz Curve, Gini coefficients
- Poverty Line