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 …
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 …
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 …
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 …
One area of Microeconomics that we refer to throughout the course is the concept of elasticity. It is important to understand the overall concept of elasticity being how responsive the quantity, either demanded or supplied, is to a change in something else; this can be the price of the good or one of the non-rice …
During our studies of market structures we have come across oligopolies. We have found that in this form of structure there can be both collusive and non-collusive markets. It is important to remember that this means that we also have more than one model to help us explain and analyse this form of structure. We …
The issue of tradable permits, or cap-and-trade schemes is a important one at the moment, and it is a relevant solution to negative externalities of production in the microeconomics section of the course. The basic idea is to set a limit (cap) on the amount of pollution and then divide this up into permits that …
In the higher level course, it is important to understand that barriers to entry are an important source of monopoly power and that they can occur for a number of reasons. Some ways they can occur are through anti-competitve behaviour (mis-using your market dominance), cartels and collusion, and through patents. In the news they are …
At the moment in Malawi they are arguing about whether or ‘passing wind’ should be banned. Some of those in the government are effectively claiming that it is a form of market failure, and as such are proposing government legislation as a solution to this. The questions then arise as to how this could be …
In Economics there are many terms which you need to learn, understand and be able to define. In our classroom there are many of these terms in posters on the wall. Below are the posters in pdf form at A4 size. Introductory Economics Microeconomics Macroeconomics International trade Theory of the firm (Higher level only) Clicking …