Economics 331: Intermediate Microeconomics; review guide for the second exam

I. ECONOMICS of PRODUCTION

    the production function, analysis and properties

    production with one variable input: short run

    total, marginal and average product

    "law" of diminishing returns

    production in the long run

    isoquants

    marginal rate of technical substitution

    returns to scale

II. COSTS of PRODUCTION

    short run costs

    total, variable, and fixed costs

    average total cost, average variable cost and average fixed cost

    marginal cost

    long run costs

    isoquants revisited

    isocost lines

    technique for producing at lowest cost

    expansion paths

    deriving long run total, average and marginal costs

    relationship between long run and short run costs

HINT: DRAW LOTS OF ACCURATELY LABELED DIAGRAMS AS YOU STUDY

III. Perfect Competition

    A. Basic assumptions

    B. Short run behavior of the firm

        1. +,-, 0 economics profits

        2. the shutdown point

        3. the short run firm supply curve

    C. Short run market behavior

        1. the market supply curve

        2. market demand

        3. market price and quantity

    D. Long run Adjustments

        1. zero profit equilibrium

        2. constant, decreasing increasing cost industry

        3. long run supply

    E. Welfare considerations

        1. producer and consumer surplus

        2. dead weight loss

        3. price ceilings, floors, etc