Markets and demand

Markets and demand

One of the first topics that we look at in the Microeconomics section of the syllabus is markets and how they function.  We have already seen that there are a limited number of resources available to satisfy the unlimited wants and needs that we have.  As a result we have to answer the question of …

Price discrimination

Price discrimination

The final topic of the HL Theory of the Firm section is Price discrimination.  This is where the producer charges different consumers (or different groups of consumers) different prices for the same product (but not for reasons of cost differences).  There are 3 types (or degrees) of price discrimination, the imaginatively titled 1st, 2nd and 3rd …

The simple prisoner’s dilemma

The simple prisoner’s dilemma

Game theory is an area of Economics that is increasingly used to explain many situations where strategic thinking and action is involved.  It is “the formal study of decision-making where several players must make choices that potentially affect the interests of the other players”  (von Stengel & Turocy).  It is an area study which has led to …

Supply-side policies

Supply-side policies

We have already looked at demand-side policies, but governments also have the option to use supply-side policies.  These are policies that are designed to increase the productive capacity of a country.  As with demand-side policies there are two types: Interventionist policies and Market-based policies.  It is important not just to understand the difference between these, …

Monetary policy

Monetary policy

We have already looked at one aspect of demand-side policy, fiscal policy, and it is important that we also understand the other type, monetary policy.  Monetary policy is the use of the interest rate, and money supply, in order to affect the level of aggregate demand in an economy.  We also need to appreciate that …