ECON20023 T1 2008 Lecture 12

ECON20023 T1 2008 Lecture 12 - ECON20023 ECONOMICS FOR...

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Based on slides from Layton et al (2005) 1 ECON20023 ECONOMICS FOR BUSINESS T1 2008 LECTURE 12 Galina Ivanova, CQU
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Revision lecture Summary of the topics covered Key principles Some of the models that we have covered Exam structure
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The semester in review What is economics Production possibilities and opportunity cost Supply and demand Microeconomics Elasticity of demand and supply Production costs Market structures Perfect competition Monopoly Monopolistic competition Oligopoly Labour markets Market failure and the role of government
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The semester in review (cont) Macroeconomics How to measure the size of the economy Business cycle and economic growth Unemployment and inflation Monetary and fiscal policies
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Some basic principles Economic agents typically maximise outcomes subject to constraints The cost of a choice is the best opportunity foregone – opportunity cost Specialisation and exchange is a key way of improving production Identifying where markets for different items would reach equilibrium gives powerful insights
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Basic principles 2 Policy options normally involve tradeoffs – it is hard to improve one thing without sacrificing something else To understand decision making, it is best to focus on the marginal changes Markets behave differently in the short run compared to the long run It is important to focus on real values rather than nominal values
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The power of simple models Build simple models to help understand reality Limited number of variables Often only direct relationships considered Some models are a little simplistic But the models can generate very powerful understanding about how factors interact
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Demand and supply Key models for explaining how market forces interact Demand model – relates the quantity demanded to the price of an item Supply model – relates the amount of supply offered to the price If price changes, there is a move along each function If any other factor changes, then one or both of the functions will shift Equilibrium is where supply and demand intersect
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ECON20023 T1 2008 Lecture 12 - ECON20023 ECONOMICS FOR...

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