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Headlines III

Headlines III. Elasticity. What does elasticity measure? Know how to measure the elasticity of demand for a good wrt its price from a graph or table Interpret an elasticity value

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Headlines III

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  1. Headlines III

  2. Elasticity • What does elasticity measure? • Know how to measure the elasticity of demand for a good wrt its price from a graph or table • Interpret an elasticity value • Know how the price elasticity of demand affects how the amount spent on a good changes when the price of the good changes.

  3. Market Structures • Perfect competition • Many firms and identical goods • Monopolistic competition • Many firms and differentiated goods • Oligopoly • Few firms and similar goods • Monopoly • One firm

  4. Monopoly • Understand: • Bases for monopoly • Profit maximization for a monopoly • Social efficiency of monopoly • Regulation of monopoly • Pricing strategies

  5. Strategic Behavior • Know the Prisoner’s Dilemma game and how it applies to real world situations. • Understand the Nash Equilibrium and how it applies

  6. Information • Use the concept of rational search to find the optimal amount of information market participants should obtain • Explain how middlemen add value to market transactions • Define asymmetric information and describe how it leads to the lemons problem • Discuss how advertising, conspicuous consumption, statistical discrimination, and other devices are responses to asymmetric information

  7. Labor Markets etc. • Understand the hiring decision of the firm • How are wages and employment determined in a competitive labor market • What factors do economists offer to explain differences in wages?

  8. Public Goods and Taxation • Use the concepts of rivalry and excludability to distinguish among private goods, public goods, collective goods, and common goods • Show how economic concepts can be used to find the optimal quantity of a public good and describe the ways in which private firms can supply public goods • Analyze the types of efficiencies and inefficiencies that are associated with provision of a public good • Discuss the criteria that should be applied to taxation to promote efficiency

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