Economics | 9708

Scarcity, choice and opportunity cost - fundamental economic problem of scarcity Scarcity, choice and opportunity cost - need to make choices at all levels (individuals, firms, governments) Scarcity, choice and opportunity cost - nature and definition of opportunity cost, arising from choices Scarcity, choice and opportunity cost - basic questions of resource allocation Economic methodology - economics as a social science Economic methodology - positive and normative statements (the distinction between facts and value judgements) Economic methodology - meaning of the term ceteris paribus Economic methodology - importance of the time period (short run, long run, very long run) Factors of production - nature and definition of factors of production: land, labour, capital and enterprise Factors of production - difference between human capital and physical capital Factors of production - rewards to the factors of production Factors of production - division of labour and specialisation Factors of production - role of the entrepreneur in contemporary economies: risk and organisation of the other factors of production Resource allocation in different economic systems - decision-making in market, planned and mixed economies Resource allocation in different economic systems - resource allocation in these economic systems Production possibility curves - nature and meaning of a production possibility curve (PPC) Production possibility curves - shape of the PPC: constant and increasing opportunity costs Production possibility curves - causes and consequences of shifts in a PPC Production possibility curves - significance of a position within a PPC Classification of goods and services - nature and definition of free goods and private goods (economic goods) Classification of goods and services - nature and definition of public goods Classification of goods and services - nature and definition of merit goods: under-consumption as a result of imperfect information in the market Classification of goods and services - nature and definition of demerit goods: over-consumption as a result of imperfect information in the market Demand and supply curves - effective demand Demand and supply curves - individual and market demand and supply Demand and supply curves - determinants of demand Demand and supply curves - determinants of supply Demand and supply curves - causes of a shift in the demand curve (D) Demand and supply curves - causes of a shift in the supply curve (S) Demand and supply curves - distinction between the shift in the demand or supply curve and the movement along these curves Price elasticity, income elasticity and cross elasticity of demand - definition of price elasticity, income elasticity and cross elasticity of demand (PED, YED, XED) Price elasticity, income elasticity and cross elasticity of demand - formulae for and calculation of price elasticity, income elasticity and cross elasticity of demand Price elasticity, income elasticity and cross elasticity of demand - significance of relative percentage changes, the size and sign of the coefficient of: price elasticity of demand Price elasticity, income elasticity and cross elasticity of demand - significance of relative percentage changes, the size and sign of the coefficient of: income elasticity of demand Price elasticity, income elasticity and cross elasticity of demand - significance of relative percentage changes, the size and sign of the coefficient of: cross elasticity of demand Price elasticity, income elasticity and cross elasticity of demand - descriptions of elasticity values: perfectly elastic, (highly) elastic, unitary elasticity, (highly) inelastic, perfectly inelastic Price elasticity, income elasticity and cross elasticity of demand - variation in price elasticity of demand along the length of a straight-line demand curve Price elasticity, income elasticity and cross elasticity of demand - factors affecting: price elasticity of demand Price elasticity, income elasticity and cross elasticity of demand - factors affecting: income elasticity of demand Price elasticity, income elasticity and cross elasticity of demand - factors affecting: cross elasticity of demand Price elasticity, income elasticity and cross elasticity of demand - relationship between price elasticity of demand and total expenditure on a product Price elasticity, income elasticity and cross elasticity of demand - implications for decision-making of price elasticity, income elasticity and cross elasticity of demand Price elasticity of supply - definition of price elasticity of supply (PES) Price elasticity of supply - formula for and calculation of price elasticity of supply Price elasticity of supply - significance of relative percentage changes, the size and sign of the coefficient of price elasticity of supply Price elasticity of supply - factors affecting price elasticity of supply Price elasticity of supply - implications for speed and ease with which firms react to changed market conditions The interaction of demand and supply - definition of market equilibrium and disequilibrium The interaction of demand and supply - effects of shifts in demand and supply curves on equilibrium price and quantity The interaction of demand and supply - relationships between different markets: joint demand (complements) The interaction of demand and supply - relationships between different markets: alternative demand (substitutes) The interaction of demand and supply - relationships between different markets: derived demand The interaction of demand and supply - relationships between different markets: joint supply The interaction of demand and supply - functions of price in resource allocation; rationing, signalling (transmission of preferences) and incentivising Consumer and producer surplus - meaning and significance of consumer surplus Consumer and producer surplus - meaning and significance of producer surplus Consumer and producer surplus - causes of changes in consumer and producer surplus Consumer and producer surplus - significance of price elasticity of demand and of supply in determining the extent of these changes Reasons for government intervention in markets - addressing the non-provision of public goods Reasons for government intervention in markets - addressing the over-consumption of demerit goods and the under-consumption of merit goods Reasons for government intervention in markets - controlling prices in markets Utility - definition and calculation of total utility and marginal utility Utility - diminishing marginal utility Utility - equi-marginal principle Utility - derivation of an individual demand curve Utility - limitations of marginal utility theory and its assumptions of rational behaviour Indifference curves and budget lines - meaning of an indifference curve and a budget line Causes of a shift in the budget - Causes of a shift in the budget line Efficiency and market failure - Types of efficiency: productive, allocative and dynamic Efficiency and market failure - The concept of static and dynamic efficiency Efficiency and market failure - Causes of market failure: missing markets Efficiency and market failure - merit goods and demerit goods Efficiency and market failure - public goods and private goods Efficiency and market failure - externalities: positive and negative Efficiency and market failure - imperfect information Efficiency and market failure - market dominance Private costs and benefits, externalities and social costs and benefits - distinction between private, external and social costs and benefits Private costs and benefits, externalities and social costs and benefits - distinction between social optimum and market equilibrium Private costs and benefits, externalities and social costs and benefits - the welfare loss resulting from consumption and production externalities Types of cost, revenue and profit, short-run and long-run production - Short-run and long-run production Types of cost, revenue and profit, short-run and long-run production - Short-run and long-run costs Types of cost, revenue and profit, short-run and long-run production - Internal and external economies and diseconomies of scale Types of cost, revenue and profit, short-run and long-run production - Cost-minimising choice of factor inputs Types of cost, revenue and profit, short-run and long-run production - Revenue Types of cost, revenue and profit, short-run and long-run production - Profit: normal profit, sub-normal profit and supernormal profit Types of cost, revenue and profit, short-run and long-run production - Profit maximisation as the main objective of a firm Different market structures - Characteristics of different market structures: perfect competition Different market structures - monopolistic competition Different market structures - oligopoly Different market structures - monopoly Different market structures - The efficiency of different market structures Growth and survival of firms - Reasons for the growth of firms Growth and survival of firms - The types of growth: internal growth Growth and survival of firms - external growth (mergers and acquisitions): horizontal, vertical and lateral integration Growth and survival of firms - Reasons for the survival of small firms Differing objectives and policies of firms - traditional profit-maximising objective of firms Differing objectives and policies of firms - an understanding of other objectives of firms: survival Differing objectives and policies of firms - profit satisficing Differing objectives and policies of firms - sales maximisation Differing objectives and policies of firms - revenue maximisation Differing objectives and policies of firms - price discrimination – first, second and third degree: conditions for effective price discrimination Differing objectives and policies of firms - consequences of price discrimination Differing objectives and policies of firms - other pricing policies: limit pricing Differing objectives and policies of firms - predatory pricing Differing objectives and policies of firms - price leadership Differing objectives and policies of firms - relationship between price elasticity of demand and a firm’s revenue: in a normal downward sloping demand curve Differing objectives and policies of firms - in a kinked demand curve Government policies to achieve efficient resource allocation and correct market failure - application and effectiveness of measures to tackle different forms of market failure: specific and ad valorem indirect taxes Government policies to achieve efficient resource allocation and correct market failure - subsidies Government policies to achieve efficient resource allocation and correct market failure - price controls Government policies to achieve efficient resource allocation and correct market failure - production quotas Government policies to achieve efficient resource allocation and correct market failure - prohibitions and licences Government policies to achieve efficient resource allocation and correct market failure - regulation and deregulation Government policies to achieve efficient resource allocation and correct market failure - direct provision Government policies to achieve efficient resource allocation and correct market failure - pollution permits Government policies to achieve efficient resource allocation and correct market failure - property rights Government policies to achieve efficient resource allocation and correct market failure - nationalisation and privatisation Government policies to achieve efficient resource allocation and correct market failure - provision of information Government policies to achieve efficient resource allocation and correct market failure - behavioural insights and ‘nudge’ theory Government policies to achieve efficient resource allocation and correct market failure - government failure in microeconomic intervention: definition of government failure Government policies to achieve efficient resource allocation and correct market failure - causes of government failure Government policies to achieve efficient resource allocation and correct market failure - consequences of government failure Equity and redistribution of income and wealth - difference between equity and equality Equity and redistribution of income and wealth - difference between equity and efficiency Equity and redistribution of income and wealth - distinction between absolute poverty and relative poverty Equity and redistribution of income and wealth - the poverty trap Equity and redistribution of income and wealth - policies towards equity and equality, for example: negative income tax Equity and redistribution of income and wealth - universal benefits and means-tested benefits Equity and redistribution of income and wealth - universal basic income Labour market forces and government intervention - demand for labour as a derived demand Labour market forces and government intervention - factors affecting demand for labour in a firm or an occupation Labour market forces and government intervention - causes of shifts in and movement along the demand curve for labour in a firm or an occupation Labour market forces and government intervention - marginal revenue product (MRP) theory: definition and calculation of marginal revenue product Labour market forces and government intervention - derivation of an individual firm’s demand for labour using marginal revenue product Labour market forces and government intervention - factors affecting the supply of labour to a firm or to an occupation: wage and non-wage factors Labour market forces and government intervention - causes of shifts in and movement along the supply curve of labour to a firm or to an occupation Labour market forces and government intervention - wage determination in perfect markets: equilibrium wage rate and employment in a labour market Labour market forces and government intervention - wage determination in imperfect markets: influence of trade unions on wage determination and employment in a labour market Labour market forces and government intervention - influence of government on wage determination and employment in a labour market using a national minimum wage Labour market forces and government intervention - influence of monopsony employers on wage determination and employment in a labour market Labour market forces and government intervention - determination of wage differentials by labour market forces Labour market forces and government intervention - transfer earnings and economic rent: definition of transfer earnings Labour market forces and government intervention - definition of economic rent Labour market forces and government intervention - factors affecting transfer earnings and economic rent in an occupation The circular flow of income - the multiplier process: definition of the multiplier The circular flow of income - formulae for and calculation of multiplier in a closed and open economy, with and without a government sector The circular flow of income - calculation of: average and marginal propensities to save (aps and mps) The circular flow of income - average and marginal propensities to consume (apc and mpc) The circular flow of income - average and marginal propensities to import (apm and mpm) The circular flow of income - average and marginal rates of tax (art and mrt) The circular flow of income - national income determination using AD and income approach with the multiplier process The circular flow of income - calculation of effect of changing AD on national income using the multiplier The circular flow of income - components of Aggregate Demand (AD) and their determinants: consumption function: autonomous and induced consumer expenditure The circular flow of income - savings function: autonomous and induced savings The circular flow of income - autonomous and induced investment; the accelerator The circular flow of income - government spending The circular flow of income - net exports (exports minus imports) The circular flow of income - full employment level of national income and equilibrium level of national income: inflationary and deflationary gaps Economic growth and sustainability - actual growth versus potential growth in national output Economic growth and sustainability - positive and negative output gaps Economic growth and sustainability - business (trade) cycle: phases of the cycle Economic growth and sustainability - causes of the cycle Economic growth and sustainability - role of automatic stabilisers Economic growth and sustainability - policies to promote economic growth and their effectiveness Economic growth and sustainability - inclusive economic growth: definition of inclusive economic growth Economic growth and sustainability - impact of economic growth on equity and equality Economic growth and sustainability - policies to promote inclusive growth Economic growth and sustainability - sustainable economic growth: definition of sustainable economic growth Economic growth and sustainability - using and conserving resources Economic growth and sustainability - impact of economic growth on the environment and climate change Economic growth and sustainability - policies to mitigate the impact of economic growth on the environment and climate change Employment/unemployment - definition of full employment Employment/unemployment - equilibrium and disequilibrium unemployment (including hysteresis) Employment/unemployment - voluntary and involuntary unemployment Employment/unemployment - natural rate of unemployment: definition Employment/unemployment - determinants Employment/unemployment - policy implications Employment/unemployment - patterns and trends in (un)employment Employment/unemployment - mobility of labour: forms of labour mobility: geographical and occupational Employment/unemployment - factors affecting labour mobility Employment/unemployment - policies to reduce unemployment and their effectiveness Money and banking - definition, functions and characteristics of money Money and banking - definition of money supply Money and banking - quantity theory of money (MV = PT) Money and banking - functions of commercial banks: providing deposit accounts (demand deposit account, savings account) Money and banking - lending money (overdrafts, loans) Money and banking - holding or providing cash, securities, loans, deposits, equity Money and banking - reserve ratio and capital ratio Money and banking - objectives of commercial banks: liquidity, security, profitability Money and banking - causes of changes in the money supply in an open economy: commercial banks as sources of credit creation and the bank credit multiplier Money and banking - role of a central bank Money and banking - government deficit financing Money and banking - quantitative easing Money and banking - changes in the balance of payments Money and banking - policies to reduce inflation and their effectiveness Money and banking - demand for money: liquidity preference theory Money and banking - interest rate determination: loanable funds theory and Keynesian theory Government macroeconomic policy objectives - objectives in terms of inflation, balance of payments, unemployment, growth, development, sustainability and redistribution of income and wealth Links between macroeconomic problems and their interrelatedness - relationship between the internal value of money and the external value of money Links between macroeconomic problems and their interrelatedness - relationship between the balance of payments and inflation Links between macroeconomic problems and their interrelatedness - relationship between growth and inflation Links between macroeconomic problems and their interrelatedness - relationship between growth and the balance of payments Links between macroeconomic problems and their interrelatedness - relationship between inflation and unemployment: traditional Phillips curve Links between macroeconomic problems and their interrelatedness - expectations-augmented Phillips curve (short- and long-run Phillips curve) Effectiveness of policy options to meet all macroeconomic objectives - effectiveness of different policies in relation to different macroeconomic objectives: fiscal policy including Laffer curve analysis Effectiveness of policy options to meet all macroeconomic objectives - monetary policy Effectiveness of policy options to meet all macroeconomic objectives - supply-side policy including market-based and interventionist policies Effectiveness of policy options to meet all macroeconomic objectives - exchange rate policy Effectiveness of policy options to meet all macroeconomic objectives - international trade policy Effectiveness of policy options to meet all macroeconomic objectives - problems and conflicts arising from the outcome of these policies Effectiveness of policy options to meet all macroeconomic objectives - existence of government failure in macroeconomic policies Policies to correct disequilibrium in the balance of payments - components of the balance of payments accounts: current account, financial account and capital account Policies to correct disequilibrium in the balance of payments - effect of fiscal, monetary, supply-side, protectionist and exchange rate policies on the balance of payments Policies to correct disequilibrium in the balance of payments - difference between expenditure-switching and expenditure-reducing policies Exchange rates - measurement of exchange rates: distinction between nominal and real exchange rates Exchange rates - trade-weighted exchange rates Exchange rates - determination of exchange rates under fixed and managed systems Exchange rates - distinction between revaluation and devaluation of a fixed exchange rate Exchange rates - changes in the exchange rate under different exchange rate systems Exchange rates - the effects of changing exchange rates on the external economy using Marshall-Lerner and J curve analysis Economic development - classification of economies in terms of their level of development Economic development - classification of economies in terms of their level of national income Economic development - indicators of living standards and economic development: monetary indicators including real per capita national income statistics (GDP, GNI, NNI) and purchasing power parity Economic development - issues of comparison using monetary indicators Economic development - non-monetary indicators Economic development - composite indicators: Human Development Index (HDI) Economic development - Measure of Economic Welfare (MEW) Economic development - Multidimensional Poverty Index (MPI) Economic development - the Kuznets curve Economic development - comparison of economic growth rates and living standards: over time Economic development - between countries Characteristics of countries at different levels of development - population growth and structure: measurement and causes of changes in birth rate, death rate, infant mortality and net migration Characteristics of countries at different levels of development - optimum population Characteristics of countries at different levels of development - level of urbanisation Characteristics of countries at different levels of development - income distribution: calculation of Gini coefficient and Lorenz curve analysis Characteristics of countries at different levels of development - economic structure: employment composition: primary, secondary and tertiary sectors Characteristics of countries at different levels of development - pattern of trade at different levels of development Relationship between countries at different levels of development - international aid: forms of aid Relationship between countries at different levels of development - reasons for giving aid Relationship between countries at different levels of development - effects of aid Relationship between countries at different levels of development - importance of aid Relationship between countries at different levels of development - trade and investment Relationship between countries at different levels of development - role of multinational companies (MNCs): definition of MNC Relationship between countries at different levels of development - activities of MNCs Relationship between countries at different levels of development - consequences of MNCs Relationship between countries at different levels of development - Foreign Direct Investment (FDI): definition of FDI Relationship between countries at different levels of development - consequences of FDI Relationship between countries at different levels of development - external debt: causes of debt Relationship between countries at different levels of development - consequences of debt Relationship between countries at different levels of development - role of the International Monetary Fund (IMF) Relationship between countries at different levels of development - role of the World Bank Globalisation - meaning of globalisation and its causes and consequences Globalisation - distinction between a free trade area, a customs union, a monetary union and full economic union Globalisation - trade creation and trade diversion