Microeconomic Topics to Revise (Analysis)

1. Application of Price Theory

• Demand & Supply factors - Change in Equilibrium Price & Quantity (in given markets, e.g. car, labour, oil, housing, hotel - See 2005 Tutorial 7 Essays 1 & 2)
• Oil prices - See 2005 Tutorial 7 Case Study
• Elasticity of Demand & Supply - Extent of Changes in Eqm Price & Qty - See 2005 Tutorial 6 Data Response
• Assess burden of tax and benefits of subsidies (Producers & Consumers)
• Assess effectiveness and impact of government intervention (taxes, subsidies, quota, minimum/maximum prices --> to affect equilibrium price & quantity)

2. Elasticity of Demand & Supply

• Nature of goods - PED (Elastic & Inelastic), YED (Normal & Inferior) & CED (Complements & Substitutes)
• Explain strategy/decision/impact (Pricing, Output & Marketing strategies)
• See 2005 Tutorial 5 Essays 1, 2 & 3

3. Production & Cost

• Explain and Distinguish SR & LR Production & Cost Behaviour - Law of Diminishing Returns, Economies of Scale
• How do firms grow large? - Rev & Cost
• Why do firms grow large? (Is Big Always Beautiful?) - Advantages and Disadvantages of Large vs. Small firms
• 2005 Tutorial 9 Essays 2 & 3

4. Market Structures

• Characteristics - No. of firms, Size of firms, No. of buyers and sellers, Nature of Product
• Behaviour - Price & Output Policy, Revenue (TR, AR, MR) Curves, Price vs. Non-price competition, Collusion vs. Competition (for Oligopoly), Profit Maximising Behaviour & Shut Down Condition
• Performance - SR & LR Profitability, Allocative & Productive Efficiency, R&D, Equitability
• PC vs. Monopoly - The classic argument of Advantages & Disadvantages of Increased Competition in an industry
• Government Regulation of Monopoly (How? - MC or AC pricing, Taxation; and Why? )
• Privatisation vs. Nationalisation (Pros & Cons)
• Price Discrimination

5. Wage Theory - Wage Differentials

• Demand factors - MRP theory (MPP x MR)
• Supply factors - Immobility, Talents & Skills etc
• Market Imperfections - Government Intervention, Trade Unions (Bilateral Monopoly)
• Non- Economic Arguments