Final Exam Revision plan:

1. Demand, supply curves: shift vs. movement along, equilibrium quantity and price, price
ceiling/price floor (binding/non-binding, shortage/surplus)
2. Elasticity: price elasticity of demand, price elasticity of supply, income elasticity, cross-
price elasticity, calculation, mid-point formula, complement/substitute goods,
normal/inferior goods, elastic vs inelastic demand/supply.
3. Taxes: tax on buyers, tax on sellers, Price paid by buyers, Price received by sellers, tax
revenue, deadweight loss from tax, tax incidence (how tax is shared between buyers and
sellers), importance of relative elasticities
4. Welfare economics: meaning, graphing and calculation of total surplus, consumer
surplus, producer surplus, deadweight loss, socially efficient outcome (quantity and
price)
5. Costs of production: Accounting vs Economic Profit, TC, FC, VC, ATC, AVC, AFC,
MC – formulas, calculations and graphs
6. Perfect Competition: characteristics, graphs, profit-maximization rule, P*, Q*, MR, MC,
Demand curve. Short-run vs. long-run equilibrium. Shut-down and exit conditions
7. Monopoly: characteristics, graphs, profit-maximization rule, P*, Q*, MR, MC, Demand
curve. Comparison of monopoly and perfect competition. Deadweight loss of monopoly
8. Oligopoly: characteristics, comparison with perfect competition and monopoly. Duopoly
games: payoff matrices, dominant strategies, Nash Equilibrium, cooperative outcome.
9. Externalities: positive and negative externalities. Graphs: private value/social
value/private cost/social cost. External benefit and external cost. Examples of positive
and negative externalities. Different between market equilibrium and socially efficient
outcome. Public policies to achieve socially efficient outcome: taxes/subsidies,
regulation, tradable permits.
10. Public goods and Common resources: Excludable/non-excludable, rival/non-rival,
examples of public goods and common resources, free-rider problem, tragedy of
commons, public policy in case of public goods and common resources