AP Micro-economics Test 1 *This list is incomplete. Ch. 20 Elasticity of demand (and inelasticity) Unit elasticity Midpoint formula Total revenue vs. elasticity/inelasticity Price elasticity of supply Market period vs. short-run Cross-elasticity of demand Income elasticity of demand Price ceilings and black markets Price floors and surpluses Ch.22 Economic cost Opportunity cost Accounting cost Explicit cost Implicit cost Economic profit Normal profit Total Product (TP) Marginal Product (MP) Average Product (AP) Law of diminishing marginal returns Fixed Costs (TFC) Variable Costs (TVC) Total Costs (TC) Average costs: AVC AFC ATC Marginal Cost (MC) (Curve shapes, meanings, equations and relationships) Long-run cost curve (LATC) Economies of scale (and reasons) Constant returns of scale Diseconomies of scale (and reasons) Ch.23 Pure competition Characteristics of pure competition (including no long-run economic profits) TR vs. (D=MR)…see p.440 MR Profit maximization (see p.442) Break-even point MR = MC rule (three characteristics) Use an average cost model to calculate total profit or loss Shutdown case (p.446) The MC curve and short-run supply MC as short-run supply + ATC + perfectly elastic demand (see p.449-450) Long-run supply curve Constant-cost industry Increasing-cost industry Decreasing-cost industry Pure comp. and productive efficiency (P=min.ATC; see p.456) Pure comp. and allocative efficiency (P=MC; see p.457) Consumer surplus (Last Word, p.459) Ch. 24 Pure monopoly Legal barriers to entry: Patents Licenses Natural Monopoly and LATC Monopoly Demand Monopoly Marginal Revenue (less than price) MR = MC rule Price discrimination Monopoly power Market segregation No resale …and monopolist profit Socially optimal price (P=MC; see p.480) Fair return price (P=ATC; see p.480) Ch. 25 Monopolistic competition Excess capacity (p.491-492) Product differentiation Non-price competition Oligopoly (homogenous vs. differentiated) Collusion/incentives and disincentives to cheat Kinked demand curve Entry barriers Mutual interdependence Concentration ratio Herfindahl index Oligopolistic game theory Cartel Tacit understandings Price leadership (Know about both types of efficiency, and longrun vs. short-run profit/loss realities facing all four market structures.) *This list is incomplete.