Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.
Understanding
- I can say whether a policy changes marginal cost, marginal revenue or only fixed cost, and predict whether price and output change. (Guide: “One question for every policy”; Practice Q1)
- I can explain who bears a per-unit tax in a competitive market, using elasticity. (Guide: “Per-unit taxes and subsidies”; Practice Q2)
- I can describe the three pricing options for a natural monopoly and the profit and deadweight loss at each. (Guide: “Regulating a natural monopoly”; Practice Q6)
- I can state the aim of antitrust policy and when it is a poor choice. (Guide: “Antitrust policy”; Practice Q4, Q6(e))
Calculation and graphing
- I can calculate a monopoly’s price, output, tax revenue and deadweight loss with a per-unit tax, and compare a lump-sum tax that raises the same revenue. (Guide: Worked example 2; Practice Q3)
- I can find a monopoly’s output and shortage under a price ceiling and calculate the deadweight loss. (Guide: Worked example 3; Practice Q7)
- I can calculate the unregulated, fair-return and socially optimal outcomes for a natural monopoly, including the lump-sum subsidy needed. (Guide: Worked example 1; Practice Q6)
- I can find employment and the wage at a monopsony with and without a minimum wage. (Guide: “Price controls in different market structures”; Practice Q5)
- I can draw a monopoly graph with a price ceiling and a natural monopoly graph with U, F and S labelled. (Guide: Figures 1 and 2; Practice Q6(a))
Reasoning
- I can explain why a price ceiling can raise a monopoly’s output but always cuts output in a competitive market. (Guide: “Price controls in different market structures”; Practice Q7(e))
- I can explain why a minimum wage can raise employment at a monopsony but not in a competitive labour market. (Practice Q5(d))
- I can explain why the natural monopoly subsidy must be lump-sum, not per-unit. (Guide: “Regulating a natural monopoly”; Practice Q6(d))
- I can judge whether a policy raises efficiency by asking whether it corrects the incentive behind the market failure. (Guide: “When intervention increases efficiency”)
All ticked? Move on to Topic 6.5, Inequality, or return to the course roadmap.