I.          Market Failures and the Public Sector.

A.                 Welfare analysis

a.       Define and calculate Consumer Surplus, Producer Surplus and Total Surplus

b.       Find the values in step functions and linear functions.

c.       Note allocative efficiency through maximization of total surplus

d.       Explain the relationship between marginal benefit and marginal cost in welfare analysis

e.       Examine the assumptions underlying welfare maximization in markets.

f.        Note how the market system results in efficiency using supply/demand analysis and the production possibilities model

B.                 Types of market failures.

a.       Public Goods and common resources

b.       Externalities.

c.       Equity

d.       Market Power

e.       Stability

C.                 Market Failures and Ideology

a.       Recognize the three major ideologies within economics

                                                               i.      Neoclassical

                                                             ii.      Keynesian

                                                            iii.      Structuralist

b.       Read and recognize other economic frameworks

                                                               i.      Behavioral Economics

                                                             ii.      Institutional Economics

                                                            iii.      Feminist Economics

c.       Be able to recognize arguments made from each of the major frameworks

d.       Note the role of ideology in descriptive and prescriptive models.

e.       Be able to summarize the three frameworks in regards to:

                                                               i.      Key unit of social analysis

                                                             ii.      Market outcomes

                                                            iii.      Role of government

D.                 Public Goods and Common Resources

a.       Define excludability and rivalry

b.       Note the importance of property rights in these market failures

c.       Use the above to identify:

                                                               i.      Public Good

                                                             ii.      Common Resource

                                                            iii.      Natural Monopoly

                                                           iv.      Private Good

d.       Note the impact of common resources and public goods on economic efficiency using welfare analysis.

                                                               i.      Include cost benefit analysis

e.       Be able to frame each failure with ideological perspective

E.                 Externalities

a.       Define and recognize positive and negative externalities

b.       Note the impact of externalities on economic efficiency

c.       Demonstrate economic inefficiency using market, welfare, and production possibilities models.

d.       Calculate the impact externalities on total surplus

e.       Summarize the policy options regarding externalities:

                                                               i.      Property rights/Coase Theorem 

                                                             ii.      Regulation

                                                            iii.      Corrective tax and subsidies

                                                           iv.      Tradable Rights

f.        Discuss the strengths and weaknesses of each of the policy options

F.                  Equity

a.       Note the possible market failures associated with non-equitable income distribution and demonstrate it using the production possibilities model

b.       Examine changes in income distribution over the past 40 years

c.       Explain those changes from each ideological perspective

d.       Summarize the explanations for income differences

                                                               i.      Human capital

                                                             ii.      Natural Ability

                                                            iii.      Effort

                                                           iv.      Chance

                                                             v.      Unions

                                                           vi.      Discrimination

e.       Define absolute poverty rates and explain the shortcomings of this definition

f.        Examine the impact of the four basic tax systems on income distribution

                                                               i.      Lump tax

                                                             ii.      Progressive tax

                                                            iii.      Regressive tax

                                                           iv.      Proportional tax

g.       Summarize and understand the three basic arguments presented in text regarding income distribution

                                                               i.      Utilitarianism

                                                             ii.      Liberalism

                                                            iii.      Libertarianism