159 Micro Economics a2 Level: Revision Notes (2022-2023)

Micro Economics As Level Revision Notes Series Book 3 TABLE OF CONTENTS UNIT 1 THEORY OF CONSUMER BEHAVIOUR CARDINAL APPROACH Law of Diminishing Marginal Utility: Law of Equi-marginal Utility ORDINAL APPROACH: Budget line Indifference Curves Consumer Equilibrium through the Ordinal Approach: PAST PAPER QUESTIONS UNIT 2 PRODUCTION AND COST THE LAW OF DIMINISHING RETURNS (LAW OF VARIABLE PROPORTIONS): LEAST-COST INPUTS COMBINATION IN THE LONG RUN: ISOCOST AND ISOQUANT APPROACH: SCALE OF PRODUCTION AND RETURNS TO SCALE: SHORT-RUN COSTS: RELATIONSHIP BETWEEN SHORT-RUN COSTS & LAW OF DIMINISHING RETURNS ECONOMIES AND DISECONOMIES OF SCALE: SMALL FIRMS: PAST PAPER QUESTIONS UNIT 3 RULES OF FIRM’S BEHAVIOUR 1 ECONOMIC THEORY OF PROFIT MAXIMIZATION 2 BUSINESS CONTINUITY RULES 3 TYPES OF PROFITS PAST PAPER QUESTIONS UNIT 4 PERFECT COMPETITION PRICE AND OUTPUT DETERMINATION IN SHORT RUN SHORT-RUN PRICE AND OUTPUT DETERMINATION: Types and Determination of Profit The Shutdown case of a perfectly competitive firm Derivation of the supply curve of a perfectly competitive industry in the short run PRICE AND OUTPUT DETERMINATION IN LONG RUN IS PERFECT COMPETITION A REALISTIC MODEL? UNIT 5 MONOPOLY PRICE AND OUTPUT DETERMINATION IN SHORT RUN Types of profits:(Micro Economics As Level book 3) Types of losses PRICE AND OUTPUT DETERMINATION IN LONG RUN BARRIERS TO ENTRY UNIT 6 MONOPOLISTIC COMPETITION PRICE AND OUTPUT DETERMINATION IN SHORT RUN PRICE AND OUTPUT DETERMINATION IN LONG RUN UNIT 7 OLIGOPOLY PRICE AND OUTPUT DETERMINATION IN OLIGOPOLY Kinked Demand Curve Price Leadership Cartel: Game Theory MERGER AND INTEGRATION (MCQS ONLY) UNIT 8 COMPARISON OF MARKET STRUCTURES UNIT 9 OBJECTIVES, DISCRIMINATION,& CONTESTABILITY OBJECTIVES OF FIRMS PRICE DISCRIMINATION CONTESTABLE MARKETS THEORY OF EXCESS CAPACITY PAST PAPER QUESTIONS UNIT 10 ECONOMIC EFFICIENCY AND MARKET FAILURE PRODUCTIVE EFFICIENCY (PE) ALLOCATIVE EFFICIENCY (AE) MARKET FAILURE: 1-allocation of resources: 2-allocation of resources: 3 Markets of Public Goods: 4 knowledge 5 immobility 6 termism

(Micro Economics As Level book 3) GOVERNMENT MICROECONOMIC OBJECTIVES: POLICIES TO CORRECT MARKET FAILURE OF NEGATIVE EXTERNALITIES AND DEMERIT GOODS 1 Taxes 2 and Regulation 3 bodies 4 in property rights 5 of Information 6 Permits POLICIES TO CORRECT MARKET FAILURE OF POSITIVE EXTERNALITIES AND MERIT GOODS 1 2 and Regulation 3 of Information 4 Direct Provision of Goods and Services POLICIES TO CORRECT MARKET FAILURE OF PUBLIC GOODS POLICIES TO CORRECT THE MARKET FAILURE OF IMPERFECT MARKETS COST-BENEFIT ANALYSIS (CBA): ARE MONOPOLIES ALWAYS BAD FOR CONSUMERS? PAST PAPERS QUESTIONS UNIT 11 LABOUR MARKET THE SUPPLY CURVE 1 Curve for an Individual Worker 2 Market Supply Curve for Labour 3 of Labour for a Perfectly Competitive Firm: 4 of Labour in a Monopsony 5 of labour with a Trade Union: DEMAND FOR LABOUR OR MARGINAL REVENUE PRODUCT (MRP) THEORY: WAGE DETERMINATION IN PERFECT MARKET MONOPSONY TRADE UNION WAGE DIFFERENTIALS TRANSFER EARNINGS& ECONOMIC RENT PAST PAPER QUESTIONS UNIT 12 INEQUALITY AND POLICIES TO REDISTRIBUTE INCOME MEASURING INEQUALITY 1 curve 2 coefficient 3 curve GOVERNMENT POLICIES TO REDISTRIBUTE INCOME AND WEALTH 1 benefits (transfer payments) 2 the tax system 3 policies