Transcript APEC3001-–-Second-Review-Sessionx

APEC3001 – Second Review
Session
Marc F. Bellemare
Fall 2015
Structure of the Exam
• Four multi-part questions
• No huge surprises: Everything on the exam
(save for bonus question) is stuff I discussed in
lecture/similar to book problems.
• 60 points -> 75 minutes. Budget your time
wisely, and you’ll have an extra 15 minutes at
the end.
• Don’t leave anything blank.
Structure of the Exam
• Non-scientific, non-graphing calculator OK.
Everything else (scientific, graphing calculator,
phones) is NOT OK.
• Mixture of more technical and essay-type
questions. Maybe some true-false questions
with justifications, maybe some definitions—I
want to reward all types of learner.
• Don’t leave anything blank.
Chapter 8
• The Effects of a Tax
• What determines the size of the deadweight
loss?
• DWL and the elasticities of S and D
• How big should government be?
• What happens when the size of a tax changes?
• Multiplying the tax by X means an increase of
more than X in the deadweight loss
Chapter 8
• Revenue and the size of the tax (also known as
the Laffer curve)
Chapter 9
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World price and comparative advantage
Small economy assumption
The welfare effects of international trade
Bottom line: surplus always increases, even
though one group’s surplus decreases
• Other benefits of international trade
• Why the opposition to trade?
Chapter 9
• Tariffs
• Quotas
• Arguments for restricting trade and
economists’ responses thereto
• Trade agreements
Chapter 10
• Example of negative externalities
• Welfare analysis of negative externalities
• What does it mean to “internalize” an
externality?
• Examples of positive externalities
• Welfare analysis of positive externalities
• Public policy and externalities: command-andcontrol versus market-based approaches
Chapter 10
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Corrective taxes or subsidies
Corrective taxes vs. regulations
The gasoline tax
Tradable pollution permits
Corrective taxes vs. tradable pollution permits
Private solutions to externalities
The Coase Theorem
Chapter 11
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Excludable goods
Rival goods
Private goods: excludable, rival
Public goods: nonexcludable, nonrival
Common resources: nonexcludable, rival
Club goods: excludable, nonrival
Chapter 11
• The Tragedy of the Commons
• Policy options to prevent overconsumption of
common resources
• Examples of each type of good
Chapter 12
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Taxation in the US
Government receipts since 1929
Government revenue as a share of GDP
Taxes and efficiency
Deadweight loss
Income vs. consumption taxes
Administrative burden
Marginal vs. average tax rates
Chapter 12
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Lump-sum taxes
Taxes and equity
The benefits principle
The ability-to-pay principle
Vertical equity
Proportional, regressive, and progressive taxes
Horizontal equity
Chapter 12
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Marriage taxes and subsidies
Tax incidence and tax equity
Who pays the corporate income tax?
Flat taxes
The efficiency/equity tradeoff
Chapter 13
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Profit is total revenue minus total cost
Total revenue is price times quantity
Total cost is the sum of all production costs
Implicit vs. explicit costs
Accounting vs. economic profit
Fixed costs
Variable costs
Chapter 13
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Production function
Marginal product
Total vs. marginal product
Marginal productivity of labor
Why MPL diminishes
Total vs. marginal cost
MC, AFC, AVC, ATC
Graphing cost curves (REMEMBER THIS BY
HEART!)
Chapter 13
• Costs in the short run and in the long run
• LRATC at different scales of operation
• The Envelope Theorem