14. A _ indicates the intervention of a party not to enforce a certain
provision of a contract against the other party.
a. Guarantee b. impediment c. discord d. Waiver
15. Mary has a cont
Overview Economics analyses what, how and for whom society produces. The key
economic problem is to reconcile the conflict between peoples virtually unlimited
desires and the scarcity of available resources and means of production. The PPF
shows the maxim
even in a basic course such as this you will encounter more than one version. In
microeconomics we are about to look at the concept of equilibrium market price,
later when we introduce game theory we will encounter the concept of a Nash
equilibrium and in
Block 1: Economics, the economy and tools of economic analysis
the effects of changes in the economic environment on outcomes of interest
(quantity demanded, hours worked, inflation, unemployment, etc.). Econometrics
is a central and well developed asp
Block 3: Elasticity
Introduction The concept of elasticity is very important in microeconomics here
we devote a whole block to it! Elasticity has to do with responsiveness, for
example: how much does the quantity demanded of a good respond to a change
also see the movement along the other curve, resulting in the new equilibrium
price and quantity. The first line has been completed for you.
Block 2: Demand, supply and the market
The market for sushi
Event Which curve shifts? Supply or demand?
the consumer surplus will be: a. 0 or slightly less b. 10 or slightly less c. 30 or
slightly less d. 45 or slightly less. NB: It may help to calculate the price first.
Assume it is an open auction where each bidder calls the price out aloud. 2.
change. a. Increasing the price from 6 to 7 will lead to a fall in sales from
10,000 to 8,000. b. Increasing the price from 8 to 10 will lead to a fall in sales
from 15,000 to 12,500. c. Decreasing the price from 20 to 18 will lead to an
increase in sales
Incidence of a tax
BVFD: read section 4.9.
The key point of this section is that the incidence of the tax is not related to the
person who physically pays the money to the government. Rather, whichever
party (consumers or producers) is less price sensitiv
Activity SG3.6 Multiple choice question A Bordurian lawyer explains: Smoking is a
Bordurian tradition. If you had coffee, you had cigarettes; if you had cigarettes,
you had coffee. According to this statement, the cross-price elasticity of the
BVFD: read section 4.1 of Chapter 4.
The formula for calculating price elasticity of demand (PED) is important and also
quite intuitive: Price elasticity of demand = [% change in quantity] / [% change in
price] As explained in Maths 4.2 this can be expre
There are various ways of calculating elasticity. Arc elasticity (Maths 4.1) is used to
find the elasticity between two different points of a demand curve, in such a way
that it is equal whether you analyse the change in price as an increase or a
markets optimise consumer and producer surplus. You need to be able to calculate
consumer and producer surplus and the loss involved due to price controls.
Reminder of learning outcomes Now go back to the list of learning outcomes at
the start of the bloc
typical indifference curve gets steadily flatter as we move to the right, there is an
important gem of information: The marginal rate of substitution is simply the
slope of the indifference curve. On the graph below, the tangent T shows the slope
of the i
below? Has there also been a transfer of surplus between consumers and
Free Market Equilibrium
Figure 2.3: Loss of producer and consumer surplus d
variables build a simple theoretical model plot data and interpret scatter
diagrams use other things equal to ignore, but not forget, some aspects of a
problem in order to focus on core issues.
Block 1: Economics, the economy and tools of economic analysi
good A is also linear and is upward sloping: a. Goods A and B are complements. b.
Goods A and B are substitutes. c. Goods A and B are unrelated in consumption. d.
The demand curve for good A is upward sloping. 6. The demand curve for good A
is given by: Q
As noted above, economics can be defined as the study of how societies make
choices on what, how and for whom to produce. As such, economics is concerned
with the organisation of economic activities in a society and the institutional
arrangements that wil
Inputs to production: the labour market: the factors of production, demand and
supply of labour (profit maximisation and the demand for labour, utility
maximisation and the supply of labour), economic rent, monopsony, factors
affecting labour market equil
examination questions .283
Appendix 1: Syllabus .285
Appendix 2: Outline of readings.287
EC1002 Introduction to economics
Introduction to the subject area Every
two individuals, Jennifer and John, making the two goods, T-shirts (T) and cakes
(C). We can write, for Jennifer: Number of T-shirts produced = (T-shirts produced
per hour) * hours spent on T-shirt production (LT). Or T=4LT LT = T 4 Similarly for
very important in economics and you will need to become very comfortable with
drawing demand and supply curves and using them to demonstrate changes in
various influential factors. You will hopefully find this a very useful tool of analysis.
Note: Students registered for Laws courses also receive access to the dedicated
Laws VLE. Some of these resources are available for certain courses only, but we
are expanding our provision all the time, and you should check the VLE regularly
This has been done in the table below see if you can complete the last column:
Product Weights Price year 1 Index year 1 Weighted index year 1 Price year
2 Index year 2
Weighted index year 2 Bread 4 80p 100 400 120p 150 600 Cheese 2 260p 100 200
examination is as follows: Part I worth 50 marks 30 multiple choice questions
covering the entire syllabus in microeconomics and macroeconomics. Candidates
should answer all 30 multiple choice questions.
EC1002 Introduction to economics
Part II, Sectio
Data can indicate a relationship that will later be theorised about, and can also be
used to quantify relationships and test existing theories. A key approach of
economic analysis is to abstract from various factors by holding them constant
this is known
concepts and skills such as index numbers, nominal and real variables, measuring
change, diagrams, lines and equations. Chapter 2 concludes by briefly addressing
some popular criticisms of economics and economists.
BVFD: read Chapter 1. Sections 1.1 and 1
Activity SG2.2 The direct demand function and direct supply function can be used
to easily find the equilibrium quantity and price. Use the following curves to find
the equilibrium price and quantity for noodles: QD= 30 3/4P QS= 5 + 1/2P
Long-response question: 1. a. Discuss the meaning of elasticity and the various
determines the price elasticity of demand for a certain good? Who
is likely to find this information useful? b. Assume that the market demand for
barley is given b