Microeconomics Study Library.

Scarcity, choice, and resource allocation · Opportunity cost and trade-offs · Production possibilities curve (PPC): efficiency, opportunity cost, growth · Absolute advantage vs. comparative advantage · Gains from specialization and trade · Marginal analysis and the cost-benefit principle · Economic systems and property rights

Law of demand and determinants (shifters) of demand · Demand vs. quantity demanded (shift vs. movement along curve) · Law of supply and determinants (shifters) of supply · Market equilibrium: equilibrium price and quantity · Effects of supply and demand shifts on equilibrium · Price elasticity of demand (PED): formula, determinants, relationship to total revenue · Price elasticity of supply (PES) · Income elasticity of demand · Cross-price elasticity of demand (substitutes vs. complements) · Price ceilings and price floors: effects on markets · Tax incidence: consumer vs. producer burden, deadweight loss · Subsidies: effects on markets · Comparative advantage, tariffs, and quotas in international trade · Gains and losses from trade (consumer surplus, producer surplus)

Production function: total product (TP), marginal product (MP) · Law of diminishing marginal returns · Short-run cost curves: fixed cost (FC), variable cost (VC), total cost (TC) · Average fixed cost (AFC), average variable cost (AVC), average total cost (ATC), marginal cost (MC) · Geometric relationships among cost curves: MC crosses ATC and AVC at their minima; AFC = ATC − AVC · Economic profit vs. accounting profit; normal profit; sunk cost · Total revenue (TR), marginal revenue (MR), and price in perfect competition (P = MR = D) · Profit-maximization rule: MR = MC · Short-run equilibrium: profit, loss, and shutdown condition (P < min AVC) · Long-run equilibrium in perfect competition: P = min ATC, zero economic profit · Productive efficiency (P = min ATC) and allocative efficiency (P = MC)

Monopoly: downward-sloping demand curve, MR below demand · Monopoly profit maximization: MR = MC → find Q, then go up to demand for P · Monopoly economic profit, consumer surplus loss, and deadweight loss · Natural monopoly: ATC still falling; socially optimal vs. fair-return (average-cost) pricing · Price discrimination: first-degree (perfect), second-degree (quantity discounts), third-degree (market segmentation) · Monopolistic competition: short-run profit or loss, long-run zero economic profit · Monopolistic competition: excess capacity and product differentiation · Oligopoly: mutual interdependence and strategic behavior · Collusion, cartels, and incentives to cheat · Game theory: payoff matrices, dominant strategy, Nash equilibrium · Prisoners' dilemma and its implications for oligopoly behavior

Derived demand for factors of production · Marginal revenue product (MRP) = marginal product × price (or MR) in competitive output markets · Value of marginal product (VMP) in perfectly competitive output markets · MRP as the firm's demand curve for labor · Labor market equilibrium: wage and employment determination under competition · Shifts in labor demand and labor supply; effects on equilibrium wage and employment · Monopsony: single buyer of labor, marginal factor cost (MFC) curve above labor supply · Monopsony equilibrium: below-competitive wage, fewer workers employed, deadweight loss · Land and capital markets (brief coverage)

Negative externalities in production and consumption: social cost exceeds private cost · Positive externalities in production and consumption: social benefit exceeds private benefit · Pigouvian taxes: correcting negative externalities by taxing to internalize external costs · Pigouvian subsidies: correcting positive externalities by subsidizing to internalize external benefits · Public goods: non-rival and non-excludable characteristics, free-rider problem, under-provision by markets · Common resources and the tragedy of the commons · Income distribution: Lorenz curve and Gini coefficient · Government redistribution tools: marginal tax rates, transfer payments · Government failure: unintended consequences of intervention