Economic Analysis

… one of the core Subjects in Public Management

microeconomicsSubject description

This public management subject, within the Analysis
and Skills domain, covers the principles and techniques of microeconomic theory that are most useful in analyzing public policy.

The selection of topics and concepts for this subject, and its accompanying Atlas course, Atlas102 Economic Analysis, closely follow that in the open access course entitled Principles of Microeconomics presented by Tyler Cowen and Alex Tabarrok on the Marginal Revolution University (MRU) online education platform (, accessed 20 April 2016).

The core topics and concepts of Economic Analysis are listed below. Readings and assessment questions associated with each topic can be found at Atlas102 Economic Analysis.

Core topics
The Study of Economics

Supply, Demand, and Equilibrium

Consumer Theory and Elasticity of Demand and Supply

Commodity Taxes and Subsidies

The Price System and Price Regulation

Trade, Adjustment, and Protectionism


Producer Theory and Competition

Monopoly and Price Discrimination

Labour Markets, Transfers, and Personal Taxes

Public Goods and Commons Problems

Asymmetric Information, Signaling, and Game Theory

Concepts to be learned listed under topics
The Study of Economics

Behavioural Economics


Economic Efficiency

Economic Liberalism

Economic Model


Economics and Ideology


Incentives and Introduction to Economics

International Economics


Marginal and Marginalism

Market Failure


Opportunity Cost

Political Economy

Public Finance

Public Choice Theory


There Ain’t No Such Thing As A Free Lunch – TANSTAAFL

Unintended Consequences


Utility Function

Welfare Economics

Supply, Demand, and Equilibrium

Change in Demand vs. Change in Quantity Demanded

Change in Supply vs. Change in Quantity Supplied

Consumer Surplus

Demand Curve

Demand Curve Shifts

Gains from Trade

Market Equilibrium

Normal Good vs. Inferior Good

Producer Surplus

Supply Curve

Supply Curve Shifts

Consumer Theory and Elasticity of Demand and Supply

Elasticity of Demand

Elasticity of Demand and Total Revenue

Elasticity of Supply

Midpoint Formula for Elasticity

Commodity Taxes and Subsidies

Benefit of a Subsidy – Economic vs. Legal Incidence

Burden of a Tax – Economic vs. Legal Incidence

Commodity Taxes


Tax Revenue and Deadweight Loss

Wage Subsidies vs. Minimum Wage

The Price System and Price Regulation

Price as Signal and Incentive

Markets Link Geographically

Markets Link Different Goods

Markets Link Over Time – Speculation


Prediction Markets

Price Ceilings

Rent Control

Price Floors

Minimum Wage

Airline Regulation and Wasteful Quality

Why Do Governments Enact Price Controls?

Price Controls and Communism 

Trade, Adjustment, and Protectionism

Comparative Advantage

Trade and Differing Preferences

Trade and Specialization

Trade and Comparative Advantage

Supply and Demand Effects of Tariffs

Comparative Advantage

Trade and Differing Preferences

Trade and Specialization

Trade and Comparative Advantage

Supply and Demand Effects of Tariffs

Free Trade



Absolute Advantage

Division of Labour

Division of Knowledge

Pareto Efficiency






Command and Control Solutions vs. Taxes and Subsidies

Coase Theorem

Tradable Allowances

Private Cost

External Cost

Social Cost

Private Benefit

External Benefit

Private Benefit

Social Surplus

Bystanders Surplus

Efficient Equilibrium

Deadweight Loss

Pigouvian Tax

Pigouvian Subsidy

Transaction Costs

Producer Theory and Competition

Maximizing Profit under Competition

Entry, Exit, and Sunk Costs

Increasing Cost Industries

Constant Cost Industries

Industry Clusters and Decreasing Cost Industries

Minimization of Total Industry Costs of Production

Balance of Industries and Creative Destruction

Producer Theory

Producer Theory Calculus

Average Cost

Marginal Cost

Total Cost

Fixed Costs

Variable Costs

Total Revenue


Sunk Costs

Break-even Price

Normal Profit

Above-normal Profit

Perfect Competition

Production Possibility Frontier

Marginal Revenue

Creative Destruction

Monopoly and Price Discrimination

Maximizing Profit under Monopoly

Monopoly Pricing and Elasticity of Demand

Costs and Benefits of Monopoly

Price Discrimination



Monopoly Markup

Barriers to Entry



Market Power

Economies of Scale


Static Efficiency

Dynamic Efficiency


Perfect Price Discrimination

Labour Markets, Transfers, and Personal Taxes

Marginal Product of Labour

Human Capital and Signaling

Compensating Differentials

Unions and Wages

Derived Demand

Human Capital

Sheepskin (or Credential) Effects

Marginal Revenue Product of Labour

Public Goods and Commons Problems

Public Good

Club Good

Common Resource

Free Riding

Forced Rider

Excludable Good

Non-excludable Good

Rival Good

Non-rival Good

Tragedy of the Commons

Asymmetric Information, Signaling, and Game Theory

Asymmetric Information

Asymmetric Information and Insurance

Moral Hazard


Principal-Agent Problem

Adverse Selection

Propitious Selection

Game Theory

Prisoners’ Dilemma

Other concepts and terms

These concepts were not used directly in the MRU lessons reviewed to date but have been identified from courses and have short descriptions on the Old Atlas. Some may be added to the core and be elaborated in a page in this Atlas.

Diminishing Marginal Product

Diminishing Marginal Rate of Substitution

Diminishing Technical Rate of Substitution

Discount Rate

Dominant Strategy

Economic Rent

Endogenous Variable

Equilibrium Principle

Exogenous Variable

Extensive Margin

Factor Demand Curve

Factors of Production

Fixed Exchange Rate

Floating Exchange Rate

Income Offer Curve

Increasing Returns to Scale

Indifference Curve

Inverse Demand Function


Isowelfare Curve

Jensen’s Theory of the Firm

Kaldor-Hicks Criterion

Law of Demand

Marginal Utility

Market Demand Curve

Monotonic Property of Technology

Monotonic Transformation

Natural Monopoly

Necessary Good

Net Capital Outflow (NCO)

Net Demand

Net Exports


Open Economy

Optimal Choice

Optimization Principle

Ordinary Good

Pareto Efficient Allocations

Pareto Improvement

Perfect Complements

Perfect Substitutes

Quasi-Fixed Factor of Production

Rent Control


Reservation Price

Social Welfare Function

Technical Rate of Substitution

Technological Change

Technological Constraints

Trade Deficit

Trade Surplus

Ultimatum Game


Page created by: Ian Clark, last modified on 14 February 2017.

Image: Triple A Learning, at, accessed 1 April 2016.