1. What does it mean for a firm to have an economic profit/loss? (different than accounting profit, normal=$0)
2. How is economic profit related to market power?
3. In a perfectly competitive industry, what happens when the price is above an average firm's ATC? What happens next?
4. What should a firm do if the marginal revenue of producing one more unit exceeds the marginal cost of producing the unit? Why?
5. Why should a manager aim to align goals of the firm and the employee? (internal coordination costs, principal agent problem, prisoner's dilemma)
6. Why is it important to understand market structure when thinking about the long run profit potential of a firm?
7. Why are prices important? (shows value of resources, information provided.)
8. How do we measure the effects of market intervention on market participants? (Do price ceilings always help consumers? Do price floors always help producers? With a tax, who has more tax burden?)
9. How do externalities create market failure? (Market failure means equilibrium quantity is not optimal for society.)
10. As elasticity of demand increases, what do we expect to happen to the price? How is this related to market power?
11. What are the main determinants of price elasticity of demand?
12. What is the goal of price discrimination?
13. What are the three factors a firm must consider when considering price discrimination?
14. How does a firm find the optimal prices for each segment in third degree price discrimination?
15. What happens to DWL in perfect first degree price discrimination?
16. What is 2nd degree price discrimination and why would a firm use it?
17. How does a perfectly competitive firm come up with the price for their goods?
18. How are quantity and price for a firm affected by market power or the lack thereof?

Can you draw...

1. A perfectly competitive firm making a normal profit? (two graphs: Mkt and Firm)
2. A firm with market power making an economic profit?
3. Two graphs that show what happens in a perfectly competitive industry after an increase in demand? (Mkt and Firm)
4. A graph that shows the loss of efficiency with market power compared to perfect competition
5. A firm with Market power making an economic loss that should continue operating in the short run.
6. A price ceiling that makes consumers (as a group) better off while also negatively affecting some individual consumers and all producers?
7. A tax shared unequally by consumers and producers in the short run. What makes consumers have a larger tax burden?
8. Market clearing given different shocks.
9. A positive externality which justifies market intervention that increases quantity traded.