Microeconomics BSc Competencies

Question 1

What are the basics of the quantity price diagram?

Answer 1

Elemente
- Verkaufspreis eines Produktes
- Nachgefragte Menge des Produktes
- Angebotene Menge des Produktes
Changes:
- Je höher Preis desto geringer Nachfrage,
- Je höher Preis desto größer Angebot

Question 2

How is price and income elasticity used in economic analysis?

Answer 2

• Price elasticity of demand
  
  • Price Elasticity of demand=% Change in Qty demanded/% change in Price
    
    • if Delta in Price does not change demand –> demand is inelastic
      - e.g. water, bread, rice
  • Price Elasticity of supply=% Change in Qty supplied/% change in Price
    
    • if Delta in Price does not change supply –> supply is inelastic
      - housing

Question 3

How is welfare economics applied to market power and government regulation?

Answer 3

• welfare economics: allocation of resources and goods affects social welfare
• market power: deadweight loss because of inefficient price mechanism
• government regulation to fix it

Question 4

basics of production and cost theory to company decisions and to the analysis of markets

Answer 4

• Cost theory: fixed, variable, implicit (calc.), explicit (externe RL only), opportunity costs
• Production theory: factors of production,

Question 5

What is non-excludability and rivalry of consumption?

Answer 5

• water, public goods such as police, fire brigade

Question 6

What is principal agent theory/asymmetry of information?

Answer 6

used car market; health insurance

Question 7

What are natural monopolies

Answer 7

no market = no competition