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Economics: Course outline

Economic is the branch of knowledge concerned with the production, consumption, and transfer of wealth. The condition of a region or group as regards material prosperity.

Course Outlines

The Economic Problem

The relationship between finite resources and infinite wants and the resulting issue of scarcity

The decisions made by economic agents and concepts such as choice and opportunity cost

The basic questions of “What”, “How” and “For Whom” to solve the economic problem

Normative and positive statements

Production Possibility Frontier

Production possibility frontier/boundary/curve diagrams

Positions of economic efficiency and recession

The main causes of economic growth

The Determination of the Demand for Goods and Services

Definition of a market

Effective demand and the drawing of the demand curve

The effects of price change on movement along the demand curve (extensions and contractions)

Causes of shifts (increases and decreases) in demand

Elasticity of Demand

Definitions of price, income and cross elasticity of demand

Degrees of elasticity

Interpretation of the different elasticities of demand

Factors that influence the elasticity of demand

The relationship between price elasticity of demand and total revenue

Price/Quantity diagrams to illustrate elasticity of demand

The Determination of the Supply of Goods and Services

Definition of supply and the supply curve

The effects of price change on supply

The causes of shifts (increases and decreases) in the supply curve

Price/quantity diagrams to illustrate supply

Price Elasticity of Supply

Definition of price elasticity of supply

Calculation and interpretation of different elasticities of supply

The factors (determinants) that influence the elasticity of supply

Price/Quantity diagrams to illustrate elasticity of supply

The Functions of Price

The role of the free market

Adam Smith’s “invisible hand” theory

 The 3 functions of price: rationing, signaling and incentive

Price Determination in the Market System

Equilibrium/market prices

The interaction of shifts in demand and supply and the resulting fluctuations in price and output

Shortage and surplus (excess demand and supply)

Consumer and producer surplus

Inter-relationship Between Markets

Joint demand

Competitive demand

Derived demand

Joint supply

Externalities & Market Failure

Concepts of private (internal) costs and benefits, external costs (negative externalities) and benefits (positive externalities), social costs and benefits

Merit and de-merit goods

 

Course Outlines

Methods a government might use to reduce market failure

Characteristics of public goods

Arguments for and against government provision of public and merit goods

Cost-Benefit Analysis

The process of evaluation of social costs and benefits

The advantages and disadvantages of the process

Objectives of Firms

The concepts of average and marginal revenue

The traditional neo-classical view of firms seeking to maximise their profits (MC=MR)

The difference between normal and abnormal profits

Alternative objectives of firms: revenue maximisation, sales maximisation and profit satisficing

Production in the Short-Run

Factors of production (i.e. land, labour, capital and entrepreneurship)

Types of industry (primary, secondary and tertiary)

Costs of production - fixed, variable, total, average and marginal costs

Calculation of a firm’s costs from given data and interpretation of cost curves

The concept of the short and long-run

The law of diminishing returns through the stages of returns to scale

The short-run average cost curve.

Explain the concept of marginal product

Production in the Long-Run

Average cost curves and the connection between the short and long-run

The concept of division of labour and strengths and weaknesses of the system

Internal economies of scale i.e. technical, managerial, marketing, purchasing, financial and risk bearing

External economies of scale i.e. infrastructure, communications

Causes of diseconomies of scale i.e. technical, managerial

U shaped and L shaped average cost curves

Growth of Firms

Types of mergers and takeover i.e. horizontal, vertical (backward and forward) and conglomerate

Reasons why firms seek to merge

The advantages and disadvantages of merger and takeover activity for both the firm and consumer

Perfect Competition

Characteristics of perfect competition i.e. price takers, perfect knowledge, free entry and exit, homogenous products

Diagrams to illustrate short run and long-run equilibrium

Monopoly

Characteristics of monopoly i.e. barriers to entry, price makers, imperfect knowledge

The causes of monopoly power i.e. the causes of barriers to entry

The equilibrium diagram and identification of the profit maximising and revenue maximising position

The advantages and disadvantages of monopoly markets to consumers, the firm and the economy

The concept of price discrimination

Oligopoly

Characteristics of the market. i.e. barriers to entry, interdependence, price stability, non-price competition, incentives to collude

The concept of the kinked demand curve

Simple game theory

Text Book

Relevant Books

E-Books