Download Intermediate Microeconomics

Intermediate Microeconomics
Final Study Guide – June 2014
Basic Points:
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Test will cover Ch 7-9, 14-16
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About 40% of the test will be MC questions, the rest will consist of short answers, graphing
or equation-related questions.
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Will try to make all graphing or equations straightforward; will use linear base where
possible
Topics You Should Know/Understand….
Ch 7: Technology and Production
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Efficient Production methods – production possibilities set, efficient production frontier –
what
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Productivity – average product/marginal product, reasons for diff. prod.
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Law of Dimin. Marg. Returns
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Assignment of work between plants – (if a question relates to this, will only relate to basic
concept – no graphing or equations)
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Isoquant properties
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Input substitution in production with 1 or 2 variable inputs
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Returns to scale – def., what causes,
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Productivity in SR/LR – fixed and variable,
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MRTS, declining MRTS
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Prod. Technologies – substitutes, complements, Cobb Douglas – define, equation and
meanining/implications
Ch8: Cost
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Types of cost – variable, fixed (Sunk vs. avoidable), economic vs. acct., opportunity cost –
def., compare/contrast, examples
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Costs – SR/LR, 1 variable input, multiple
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Isocost lines – def., help identifying least-cost production, interior vs. boundary solutions
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Use cost function – equation, output expansion path, lumpy/avoidable costs,
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Ave/Marginal cost and efficient scale of production and relationship with slope
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Econ/disecon of scale
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2 product firms (if a question relates to this, will only relate to basic concept – no graphing
or equations)
Ch 9: Profit Maximization
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Profit max quantities and prices – how, view between lumpy and finely divisible output,
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Marginal revenue
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Output expansion vs. price reduction effects
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Why price taker vs. price maker
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Shut down with/out sunk costs – how know, written and graphically
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Supply functions – def., use of
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SR/LR Supply
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Producer surplus-identification
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Basics for 2 product firms – implications only
Ch 14: Equil. And Efficiency
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Competitive Markets – requirements,
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Market demand/supply – indiv. Vs. mkt,
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SR vs. LR – differences, equil., responses to changes in demand and cost,
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Aggregate surplus and maximization of that surplus, measuring, deadweight loss,
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Changes in terms of who produces, number of goods produced,
Ch 15: Market Interventions
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Understand basics for:

Taxes / Subsidies: who pays, who is affected, how
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Floors / supports / quotas
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Tariffs / quotas
How do the above affect the various parties
Which are better / worse
Ch 16: General Equilibrium
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Understand the basic concept for both partial and general equilibriums and how they both
work
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Understand the graphing, etc. needed to illustrate that basic concept of it
What is Not directly on:
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Questions specifically from the application sections. Might be used for example context but
will not use to any greater depth.
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No Ch 14 Appendix
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More emphasis on theory and basic graphing. Less emphasis on math related questions (but
still present).