1. What is a cartel?
2. Why are cartels not successful almost all of the time?
3. What characteristics of a market would be MORE conducive to forming a successful cartel?
4. Using a pay-off matrix, explain why cartels break down.
5. What is the theory of "natural monopoly" and which view of competition agrees with it and which does not (and why)?
6. What is a firm?
7. Why do firms exist?
8. Explain the process of the emergence of the firm.
9. What are the three categories of transactions costs?  What causes them?
10. Why do firms internalize?
11. Explain the concepts of asymmetric information, incomplete information, and incorrect
information.
12. Explain the agency problem and a solution to it.
13. What is opportunism?  Bounded rationality?
14.  What is asset specificity?
15. When you have all three (from questions 8 & 9) why does this lead to integration? (explain the
hold-up potential).
16. Explain the difference between accounting profit and economic profit.
17. What does zero economic profit mean with respect to opportunity cost?
18. What are TC?
19. What are VC, FC, AVC, AFC, MC?
20. What is the short run?  The long run?
21. Be able to find MC and ATC from changes in TC.
22. Explain the law of diminishing marginal returns.
23. What are TR, AR, MR, MP?
24. At what level of Q will a firm choose to operate to maximize profit (or minimize loss) and why?
25. Explain the shapes of the ATC and MC curves.
26. Show economic profit and economic loss on a graph with MC, MR and ATC curves.
27. What will happen in a market with economic profit?  Economic loss?  Explain.
28. What are economies of scale and scope?  Why are they long run concepts?
29. What are sunk costs?
30. Explain the short run shut down decision.
31. What do public choice economists study?  What do they assume?
32. Explain four problems with democratic government using public choice analysis.
33. What is rent seeking and why do economists view it as wasteful?
34. Why do governments grow?
35. What is an externality?
36. How can we internalize externalities?
37. Why aren’t cats, dogs and cattle extinct?
38.  Who gains and who loses from tariffs and quotas?

BE SURE TO READ THE CHAPTERS ASSIGNED IN THE BOOK IF YOU HAVE NOT ALREADY DONE SO !!!

39.  Your compehensive question will be from the handout "What Do Markets Do?"