S and D
Curve vs. quantity
Movements and shifts
Complements and substitutes
Ceiling and floor; shortage surplus
Market and individual’s curves- horizontal addition
Elasticity
Consumer theory
Consumption bundle
Preferences
Budget line
Indifference curves
Slope down
Don’t cross
Moon shaped
Tangency of budget line and indifference curve
Normal and inferior
Derivation of demand curve
Stated and Revealed Preference
Use and Non-use value
Revealed preference
Averting
Hedonic

Travel cost
Stated Preference
Referendum “would you vote Y/N if it cost you $X”
Need to have specific project
Need to emphasize alternative uses of money
Lying possible when open ended (how much…) Hypothetical bias
Problems of Scope (big and little project worth same.)
Conjoint analysis
Production and the firm: the cost curve
Isoquant
Isoexpenditure or isocost
Chosen inputs
Derive cost curve
Isopleth, equal pollution lines.
TBES
Show how pollution charge gets right input bundle
TBES and Pollution charge differ in cost
Production: choosing Q
Opportunity cost
Economic v. business profit
Marginal cost
Area under mc is VC
C = fc + vc
AC is U shaped drawing and explanation
Supply curve: price taker

P = mc
Mc above avc
Long and short run supply
Long run compet. Equilibrium
Profits are zero
P = mc
S = D
Case where polluter pays = consumer pays
How standard and tax lead to different long run Q
Welfare
Total Willingness to Pay
Consumer surplus
EV and CV
For a public and private good.
Competition maximizes profits plus surplus
Specific Tax
Incidence
Deadweight loss
Farm Programs
Loan program
Target price-deficiency payment
DWL
Output tax or quota to solve pollution
MC of pollute and total MC
DWL from doing nothing

Tax revenue and quota rents
Monopoly
MR
Why in competition MR = P
MR=MC implies Q
D(Q) = P
Profits
DWL
Regulating Polluting input (done as we go along)
MCA = MBA or MBemit = MCemit
DWL if wrong
(could be clean air services itself, e.g. pollution)
TBES defined
Tax and standard, compared
Cost difference
Effect on AC, hence of LR compet equilibrium
Pollute tax changes pollute/output and output
Public Good
TWTP
Why compet doesn’t max TWTP – costs
Coase
MCA (Marginal cost of abatement)
Firm and Consumer MCA = Marginal Benefit
Two firm diagram: why trading good
Case where initial allocation doesn’t matter for pollution

What to do when transaction costs are high
Clean Air Act
Clean air act
NAAQS National goals
State plans
CA: Reclaim
New source TBES
Rules for cars, trucks etc TBES
National
CA exemption
Toxics
Acid Rain trading program