01Utility Theory
Definition and calculation of total utility and marginal utility · Diminishing marginal utility · The equi-marginal principle · Derivation of an individual demand curve …
Indifference Curves and Budget Lines
Meaning of an indifference curve and a budget line · Causes of a shift in the budget line · Income, substitution and price effects for normal, inferior and Giffen goods · Limitations of the model of indifference curves
Efficiency and Market Failure
Definitions and conditions for productive efficiency and allocative efficiency · Pareto optimality · Definition of dynamic efficiency · Definition of market failure and the reasons for it …
Externalities, Social Costs and Benefits
Social costs as the sum of private and external costs, including MSC, MPC and MEC · Social benefits as the sum of private and external benefits, including MSB, MPB and MEB · Definition of positive and negative externalities · Positive and negative externalities of consumption and of production …
Short-Run and Long-Run Production
Short-run production function: fixed and variable factors of production · Definition and calculation of total product, average product and marginal product · Law of diminishing returns (law of variable proportions) · Long-run production function and returns to scale
Costs of Production
Definition and calculation of fixed costs and variable costs · Definition and calculation of TC, AC and MC, including ATC, TFC, AFC, TVC and AVC · Explanation of the shape of short-run average cost and marginal cost curves · Explanation of the shape of the long-run average cost curve …
Revenue and Profit
Definition and calculation of total, average and marginal revenue (TR, AR, MR) · (Legacy) - Economist's versus accountant's definition of costs and profits · Definition of normal, subnormal and supernormal profit · Calculation of supernormal and subnormal profit
Market Structures
Perfect competition and imperfect competition: monopoly, monopolistic competition, oligopoly and natural monopoly · Structure of markets: number of buyers and sellers, product differentiation, freedom of entry and information · Barriers to entry and exit: legal, market, cost and physical · Definition and calculation of the concentration ratio
Performance of Firms in Different Market Structures
Revenues and revenue curves in different market structures · Output and profits in the short run and the long run · Shutdown price in the short run and the long run · Derivation of a firm's supply curve in a perfectly competitive market …
Growth and Survival of Firms
Reasons for different sizes of firms · (Legacy) - Survival of small firms · Internal growth: organic growth and diversification · External growth through integration: mergers and takeovers …
Objectives and Pricing Policies of Firms
Traditional profit-maximising objective of firms · Other objectives: survival, profit satisficing, sales maximisation and revenue maximisation · (Legacy) - Strategic objectives of the firm · Price discrimination: first, second and third degree …
Government Policies to Correct Market Failure
Specific and ad valorem indirect taxes, and subsidies · Price controls and production quotas · Prohibitions, licences, regulation and deregulation · Direct provision of goods and services …
Equity, Poverty and Redistribution
Difference between equity and equality · Difference between equity and efficiency · Distinction between absolute poverty and relative poverty · The poverty trap …
Demand for and Supply of Labour
Demand for labour as a derived demand · Factors affecting demand for labour in a firm or an occupation · Shifts in and movements along the demand curve for labour · Marginal revenue product (MRP) theory: definition, calculation and derivation of labour demand …
Wage Determination and Labour Market Intervention
Wage determination in perfect markets: equilibrium wage rate and employment · Influence of trade unions on wages and employment · Influence of a national minimum wage on wages and employment · Influence of monopsony employers on wages and employment …
The Multiplier and National Income Determination
Definition of the multiplier · Formulae for and calculation of the multiplier in a closed and open economy, with and without government · Calculation of average and marginal propensities to save, consume and import · Calculation of average and marginal rates of tax (art, mrt) …
Components of Aggregate Demand
Consumption function: autonomous and induced consumer expenditure · Savings function: autonomous and induced savings · Autonomous and induced investment; the accelerator · Government spending as a component of AD …
Economic Growth and Sustainability
Actual growth versus potential growth in national output · Positive and negative output gaps · The business (trade) cycle: phases and causes · Role of automatic stabilisers …
Employment and Unemployment
Definition of full employment · Equilibrium and disequilibrium unemployment, including hysteresis · Voluntary and involuntary unemployment · Natural rate of unemployment: definition, determinants and policy implications …
Money and Banking
Definition, functions and characteristics of money · Definition of money supply · (Legacy) - Broad and narrow money supply · Quantity theory of money (MV = PT) …
Macroeconomic Objectives and Policy Conflicts
Objectives: inflation, balance of payments, unemployment, growth, development, sustainability and redistribution · Relationship between the internal and external value of money · Relationship between the balance of payments and inflation · Relationship between growth and inflation, and between growth and the balance of payments …
Effectiveness of Macroeconomic Policies
Effectiveness of fiscal policy, including Laffer curve analysis · Effectiveness of monetary policy · Effectiveness of supply-side policy: market-based and interventionist · Effectiveness of exchange rate policy and international trade policy …
Balance of Payments and Policies to Correct Disequilibrium
Components of the balance of payments: current account, financial account and capital account · Effect of fiscal, monetary, supply-side, protectionist and exchange rate policies on the balance of payments · Difference between expenditure-switching and expenditure-reducing policies
Exchange Rate Systems
Distinction between nominal and real exchange rates · Trade-weighted exchange rates · Determination of exchange rates under fixed and managed systems · Distinction between revaluation and devaluation of a fixed exchange rate …
Economic Development and Living Standards
Classification of economies by level of development and by level of national income · Monetary indicators: real per capita GDP, GNI and NNI, and purchasing power parity · (Legacy) - Gross National Product (GNP) as a monetary indicator · (Legacy) - The GDP deflator …
Characteristics of Countries at Different Levels of Development
(Legacy) - Characteristics of developed, developing and emerging (BRICS) economies · Measurement and causes of changes in birth rate, death rate, infant mortality and net migration · Optimum population and the level of urbanisation · Income distribution: calculation of the Gini coefficient and Lorenz curve analysis …
Relationships Between Countries at Different Levels of Development
International aid: forms, reasons for giving, effects and importance · Trade and investment between countries at different levels of development · Role of multinational companies (MNCs): activities and consequences · Foreign Direct Investment (FDI): definition and consequences …
Globalisation and Economic Integration
Meaning of globalisation and its causes and consequences · Distinction between a free trade area, a customs union, a monetary union and full economic union · Trade creation and trade diversion