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Latitudesurfer

Things You Need To Know For Evaluations
(For PP1 part b and PP2 part d)

Microeconomics
Unit 4: Elasticity
- Usefulness for Firms and Governments
- Firms:
Pricing Strategy
- Government:
Determine What and How Much to Tax
Unit 5: Govt’ Intervention
- Tax
- Black Market
- Dependance on PED
- Identifying who and how much to tax
- Regressiveness (See later Chapters)
- Impact on Young Ppl
- Unemployment
- Might be ineffective at reducing quantity consumed if inelastic
- Can be favourable to govt’ revenue if inelastic demand
- High revenue with low unemployment as a result
- Limited, Tradable Permit
- Limit production and doesn't solve root problem
- Increase Production Cost
- Unemployment etc
...

- Minimum Price / Price Floor
- Opportunity Cost in Enforcement
- Excess Supply
- Government Buying Excess Goods and:
- Storage
- Opportunity Cost
- Impossible to store some goods for a long time (grain)
- Destroy the Excess Goods
- Opportunity Cost
- Discontent in Citizens
- Export or Dumping
- Strain in International Relations

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Unit 6 - 10: Theory of The Firm (Monopoly, Oligopoly, Monopolistic, Perfect Comp)
- Perfect Competition vs Monopoly
Monopoly

Perfect Competition (List disadvantages of Monopoly)

-

Larger Economies of
Scale (More Produced
at lower price)

-

Seen as unfair by competitive firms and those who are
on low income

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More R&D as a result of
that extra scale

-

Productively and Allocatively Inefficient

-

Can Charge a higher price for a lower level of output
- Unable to gain more economies of scale when
compared to perfect comp
...

- The inefficiency is due to consumer
desire for variety
...
5 for other info)
Production
N
...


Consumption
P
...
Ext

P
...
Ext of Production
Worsening Working
Conditions

Unit 17: Unemployment
- Unemployment, Solution, Consequence
- Dis-Equilibrium Unemployment
- Demand Deficient
- Rise AD
- Real Wage (Trade Unions and Minimum Wage)
- Reduced Union Power
- Difficulty
- Potentially Damaging to Lower Class
- Equilibrium Unemployment
- Frictional
- Limit Unemployment Benefits
- Increase flow of information
- Seasonal
- Flow of Information

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-

-

Structural (Can be caused by demand deficient as economies pick up, LD
changes)
- Interventionist Policy (Consider Op
...

- Source of Foreign Exchange
-

Forms of Protectionism
- Supply Side
- Tariff
- Subsidy
- Quota
- Admin
...
Costs of converting into / joining a monetary union

Latitudesurfer

Developmental Economics
Unit 30: International Trade and Economic Development
- Advantages and Disadvantages of Different Trade Strategies
Advantage
Import
Substitution

-

Export
Promotion

-

Disadvantage

Protect jobs in domestic
markets from foreign
competition
Preserve local customs and
cultures
Avoids MNC domination

-

Everything that goes with
economic development
Benefit from comparative
advantages and
specialization

-

-

Trade
Liberalization

-

Preferential
Trade
Agreement

-

Diversification

-

-

-

Protects Jobs in short run only
- Lack of domestic spending
Does not benefit from comparative
advantages and specialization
Lack Innovation
Inflationary, AS constrained
Retaliatory Tariffs
Tariff Escalation
Lowering Revenue from Primary
Goods
- Increase Supply
- Increasing Substitutes
Vulnerable to Protectionism
MNC Overpower
Inequality

Lowered government
intervention
- Lowered allocative
efficiency caused by
the government
- Increased incentive
for profit creation as
taxes decrease
- Lowered barriers to
profit creation,
Lowered paperwork
and bureaucracy

-

Everything that goes with
economic development
Benefit from comparative
advantages and
specialization

-

Does not guarantee growth
- Even if there is a lowered
barrier to access market in
another country, domestic
environments might not be
favourable to utilize it

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