ECO206Y1 Study Guide - Final Guide: Vehicle Insurance, Resource Depletion, Adverse Selection
Document Summary
Four main topics will be covered: distortions, externalities, information asymmetry, and public goods. Based on a study of past finals in 2011 and 2012, the number of questions on these topics is very minimal. There is a greater emphasis on utility maximization and profit maximization, and several other topics before the third midterm. Note: the graphs within the knowledge summary sections and the answers to practice questions are handwritten and are attached as separate, scanned files. When discussing distortions we are referring to the effect of a policy (e. g. tax, subsidy, price floor/ceiling) on the market. Specifically, we look at changes in consumer and producer surplus and total deadweight loss faced by the market. These policies can distort the market by creating inefficiencies in the form of deadweight loss. For the most of our models, we are discussing inefficiencies resulting from taxes/subsidies in the context of competitive setting in which there are no other distortions.
