Discuss what factors influence resource supply and resource demand.

Study Guide: This study includes the information that is most likely to appear on the final exam. As you will see, it is derived from the textbook, lectures, and other assigned readings. It is not, however, exhaustive. Some exam questions may be based on information not contained here. So, while this study guide should be the priority during your exam preparation, be sure to know all of the information that we have covered. Important Concepts: 1) Know the different characteristics of monopoly (Textbook pg. 130 – 133 and class notes). 2) Know why monopolists are price makers and why their demand curve is downward sloping. 3) Know the different types of barriers to entry that protect monopolies (pg. 132 and class notes). 4) Know what is meant by economies of scale and “natural monopoly.” (pg. 132 and class notes). 5) Know and be able to calculate marginal revenue, marginal cost, total revenue, total cost, and how a monopoly uses this information to determine how many units to produce. (pg. 133 -137 and class notes). 6) Understand and be able to calculate all of the costs represented in the tables on pages 134 and 137. 7) Understand why price is greater than marginal revenue for a monopoly. (Textbook and learning module #3) 8) Know the harms associated with monopolies as described in the class notes. (Learning module #3). 9) Know why monopolies have neither allocative nor distribute efficiency (pg. 140). 10) Know the characteristics of monopolistic competition (pg. 147 and module #3) 11) Know the different types of product differentiation (pg. 148 and module #3) 12) Know that firms in monopolistic competition produce where marginal revenue equals marginal cost. 13) Know how the demand curve is shaped for both monopolistic competition and oligopoly. 14) Know the different types of oligopolies (pg. 152). 15) Know the barriers to entry that protect oligopolies (pg. 153 and module #3). 16) Know what is meant by crowding out (pg. 154). 17) Know what is meant by “collusion” and “cartels” and whether or not they are legal. 18) Know why collusion often fails (pg. 156 and module #3). 19) Know what is meant by game theory, payoff matrix, and prisoner’s dilemma (pg. 157). 20) Know why price is usually higher under oligopoly than in perfect competition (pg. 161) 21) Know the different resources (pg. 165 and module #3). 22) Know what factors influence resource supply and resource demand (pg. 165 and module #3). 23) Know what is meant by derived demand. 24) Know what is meant by marginal resource cost and marginal revenue product; how to calculate them; and how they are used to determine how many units of a resource will be purchased/ hired by a firm (pg. 172 and module #3). Remember that the profit maximizing point is where the marginal resource cost and the marginal revenue product of a resource are equal. 25) Know the factors that can change the demand for a resource (pg. 175 and module #3) 26) Know the differences between economic regulation, social regulation, and antitrust policy. 27) Know what natural monopolies are and why the government often regulates them. 28) Know the different approaches used by the government to establish the price of a good or service sold by a regulated monopoly (pg. 224 and module #4) 29) Know whether or not a regulated monopoly will make a profit when the government sets price equal to marginal cost or average cost. 30) Know what is meant by the regulatory dilemma (pg. 226). 31) Know all of the different antitrust laws and acts, their respective dates, and what each one does (pg. 228 and module #4) 32) Know what is meant by vertical and horizontal mergers. 33) Know how to calculate the HHI and how it’s used by the government to determine whether or not to approve a merger (pg. 230 and module #4) 34) Know the difference between public goods and private goods in terms of whether they are rival, nonrival, exclusive, or nonexclusive. For example, know whether a public good is rival or nonrival (pg. 238). 35) Know how to determine the optimum amount of a public good that should be produced (pg. 239) 36) Know what is meant by the “median voter model.” 37) Know the different combinations of the benefits and costs of providing public goods as described in the textbook on page 242. For example, one combination is widespread benefits and widespread costs