Principles of Microeconomics
(Stone's text)

Review Guideline for Final Exam

Chapter 9. Monopoly

1. The sources for monopolist to arise: owner of a key resource; gov't created barriers; technological superiority, or economies of scale.

2. Monopoly's demand and marginal revenue.

3. How a monopolist maximize profit.

5. Profitable, breakeven, and loss for a monopolist.

6. Shut down condition and exit condition.

7. Deadweight loss of monopoly and inefficicy.

8. Price discrimination.

9. Antitrust Policy

Chapter 10. Monopolistic Competition, Oligopoly and Game Theory

1. Characteristics of monopolistic competition (many sellers, entry and exit are easy, differentiated products)

2. Demand for a firm in monopolistic competitive industry.

3. Profit analysis and shut down condition.

4. Long run economic profit is zero for the firms in monopolistic competitive industry.

5.Characteristics of oligopoly (a few firms, mutual interdependence, significant barriers to entry)

6. Cartel (definition, collusion, how a cartel maximize profit, unstable organization)

7. Game theory: prisoner's dilemma, payoff matrix, dominant strategy for each player, and Nash equilibrium.

8. Non-cooperative equilibrium, cooperative equilibrium, Tit-for-tat strategy, Grim Trigger strategy, and Trembling Han Trigger strategy.

9. Summary of all 4 market structures