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Basic Economic Concepts
The Nature and Functions of Product Markets
Factor Markets
Market Failure and the Role of Government

HSS-009 – Principles of Microeconomics

About the Course
The Principles of Microeconomics examination covers material that is usually taught in a one-semester undergraduate course in introductory microeconomics, including economic principles that apply to the behavioral analysis of individual consumers and businesses. You will be required to apply analytical techniques to hypothetical as well as real-world situations and to analyze and evaluate economic decisions. Youre expected to demonstrate an understanding of how free markets work and allocate resources efficiently, how individual consumers make economic decisions to maximize utility, and how individual firms make decisions to maximize profits. You must be able to identify the characteristics of the different market structures and analyze the behavior of firms in terms of price and output decisions. You should also be able to evaluate the outcome in each market structure with respect to economic efficiency, identify cases in which private markets fail to allocate resources efficiently, and explain how government intervention fixes or fails to fix the resource allocation problem. It is also important to understand the determination of wages and other input prices in factor markets, and be able to analyze and evaluate the distribution of income.

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Flash Cards Quiz Forums Crib Sheet
Flash Cards Practice Exam Course Forums Crib Sheet

Credit by Exam Program
College Level Examination Program (CLEP)

Exam Bank Questions = 195
FlashCard Phrases = 295
Media Web Links = 5

Recommended Prerequisits

Section 1 - Basic Economic Concepts
  • Scarcity, choice, and opportunity cost
  • Production possibilities curve
  • Comparative advantage, specialization, and trade
  • Economic systems
  • Property rights and the role of incentives
  • Marginal analysis
Section 2 - The Nature and Functions of Product Markets
  • Supply and demand
    • Market equilibrium
    • Determinants of supply and demand
    • Price and quantity controls
    • Elasticity
    • Price, income, and cross-price elasticities of demand
    • Price elasticity of supply
    • Consumer surplus, producer surplus, and market efficiency
    • Tax incidence and deadweight loss
  • Theory of consumer choice
    • Total utility and marginal utility
    • Utility maximization: equalizing marginal utility per dollar
    • Individual and market demand curves
    • Income and substitution effects
  • Production and costs
    • Production functions: short and long run
    • Marginal product and diminishing returns
    • Short-run costs
    • Long-run costs and economies of scale
    • Cost minimizing input combination
  • Firm behavior and market structure Profit
    • Accounting versus economic profits
    • Normal profit
    • Profit maximization: MR=MC rule
  • Perfect competition
    • Profit maximization
    • Short-run supply and shut-down decision
    • Firm and market behaviors in short-run and long-run equilibria
    • Efficiency and perfect competition
  • Monopoly
    • Sources of market power
    • Profit maximization
    • Inefficiency of monopoly
    • Price discrimination
  • Oligopoly
    • Interdependence, collusion, and cartels
    • Game theory and strategic behavior
  • Monopolistic competition
    • Product differentiation and role of advertising
    • Profit maximization
    • Short-run and long-run equilibrium
    • Excess capacity and inefficiency
Section 3 - Factor Markets
  • Derived factor demand
  • Marginal revenue product
  • Labor market and firms' hiring of labor
  • Market distribution of income
Section 4 - Market Failure and the Role of Government
  • Externalities
    • Marginal social benefit and marginal social cost
    • Positive externalities
    • Negative externalities
    • Remedies
  • Public goods
    • Public versus private goods
    • Provision of public goods
  • Public policy to promote competition
    • Antitrust policy
    • Regulation
  • Income distribution
    • Equity
    • Sources of income inequality

Available Resources
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