Introduction
Current trends in international trade, international production, international finance, and
international development
The microeconomics framework (flowchart)
Resource scarcity and resource categories:
    natural resources, physical capital, human capital, knowledge capital, and social capital
Types of economic choices societies face:
    ownership decision, resource allocation decision, product output and mix decisions, and product
    distribution decision
Definition of microeconomics

Tools of Analysis
Economic variables, economic models, and functions
Linear equations (slopes, intercepts) and their use in the resource allocation problem
Opportunity cost
Nonlinear graphs
Totals, marginals, averages
Production possibilities frontiers and increasing opportunity costs of production

Supply and Demand Model
Circular flow diagram: households, firms, output markets, input markets
Household demand in output markets:
    Quantity demanded and the "law of demand"
    Changes in demand vs. changes in quantity demanded
Firm supply in output markets:
    Quantity supplied and the "law of supply"
    Changes in supply vs. changes in quantity supplied
Market equilibrium
Excess supply and excess demand

Elasticities
Ratio of percentage changes
Price elasticity of demand
Income elasticity of demand
Cross-price elasticity of demand
Price elasticity of supply
Inelastic, unit elastic, elastic
Inferior, normal, and luxury goods
Price ceilings and price floors
The price elasticity of demand and firm revenue

Allocative Efficiency and Taxes 
Demand side
    willingness to pay, consumer surplus, and demand curve as MB curve
Supply side
    willingness to accept, producer surplus, and supply curve as MC curve
Allocative efficiency as a positive aspect of market systems
Analyzing a tax in the supply and demand model- deadweight loss

The Theory of the Firm
Perfect competition
Production function
Total, average, and marginal products of labor
The law of diminishing returns
Economic costs vs. accounting costs
The short run cost curves: TFC, AFC, TVC, MC, AVC, TC, ATC
The relationships among the short run cost curves
Revenue: total revenue and marginal revenue

The Theory of the Firm Continued
Short run:
    Short run profit maximization under perfect competition: MR = MC or P = MC
    MC as short run supply curve
    Break-even and shut-down points
Long run:
    Returns to scale: constant, increasing, decreasing
    Long-run average costs
    Long run profit maximization and the entry/exit decision
        Two long-run rules: P = LMC and P = LAC
See sample question below.

Limits of the Market System
Imperfect competition- monopoly
    MR curve of monopoly
    Profit maximization of monopoly
    Inefficiency of monopoly
    Natural monopoly
    Policy responses
Externalities
    Definition and types
    Inefficiency in presence of externalities
    Policy responses- taxes, tradable permits
Public goods
    Definitions
        excludability and rivalry
        private good, pure public good, club good, common property resource
    Free-rider problem
    Kaul et al. reading on global public goods

Absolute Advantage, Comparative Advantage, and Intra-Industry Trade
Introducing international trade into the supply and demand diagram:
    absolute advantage, the resulting pattern of trade, and the gains from trade
Comparative advantage (either import or export in a sector)
    Sources of biases in PPFs- differences in technology and resource (factor) endowments
    Diagrammatic analysis of movement from autarky to inter-industry trade
    Specialization in production and the gains from trade
Intra-industry trade (both import and export in a sector)
    Horizontal vs. vertical (fragmentation)
    Diagrammatic analysis based on product differentiation
    The easier adjustment to increased trade than in the case of inter-industry trade

Trade Politics and Policy
Heckscher-Ohlin theory based on factor endowments
The Stolper-Samuelson theorem
North-South trade and wages
Role of specific factors in trade politics
Analysis of a tariff, including the terms-of-trade effect
Analysis of a quota, including difference between domestic-allocated and foreign-allocated quota rights

The WTO and Regional Trade Agreements
Nondiscrimination: most-favored nation (border) and national treatment (behind border)
Agreement on Agriculture
Agreement on Textiles and Clothing
General Agreement on Trade in Services
Agreement on Trade-Related Aspects of Intellectual Property Rights
Dispute Settlement
Regional trade agreements (RTAs)   
    Free trade areas and customs unions
    Trade creation and trade diversion

Foreign Direct Investment
Definition of FDI
Modes of foreign market entry
Motivations for FDI
Value chains and multinational value networks
Firm-specific assets, firm-level economies, and internalization
Intra-firm trade
Global production networks and fragmentation
OLI Framework

Sample Question for the Theory of the Firm

This question concerns a profit-maximizing firm operating in
the short run in a perfectly-competitive industry.

a. Use four graphs (ATC, AVC, MC, and MR) to depict the firm
in the case of positive economic profits. Label the profit rectangle.

b. Use four graphs (ATC, AVC, MC, and MR) to depict the firm in
the case of profits on operation. Label the profit-on-operation rectangle.

c. Please state the profit maximization rule that you used in the above
two diagrams.