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Program
1. Economic principles
2. Supply and demand
3. Elasticities
4. Firm behaviour
5. Production, pricing and market structures
6. Macroeconomic aggregates
7. Aggregate demand and aggregate supply
8. Unemployment
9. Inflation
10.Fiscal, monetary and supply-side policies
11.Revision
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Monopoly: One seller (who sets the price) or one buyer (ex: local
water company)
Oligopoly: A few sellers not always aggressively competing with
each other (ex: airlines)
Monopolistic competition: Many sellers each offering a slightly
different product (ex: magazines)
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Input prices
Technology
More advanced technology increases productivity with fewer input
=> cost decreases => S
Expectations
Expectations for an increase in prices in the future => product in
stock and S
N. of sellers
More sellers= S
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=> Q
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Income
Normal goods: Income => D
Inferior: Income => D
Prices of related goods, a and b
Substitutes: if Pa => Db
Complements : if Pa => Db
Tastes
Expectations
Size and structure of the population:
a larger population will mean a higher demand for good and
services
A change in the age distribution of the population influences
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demand
Equilibrium is a situation where the price has reached the level where quantity
supplied equals quantity demanded. This price is called the equilibrium price
Drawing a horizontal line from the equilibrium point where the supply and
demand curves intersect provides the equilibrium price
Drawing a vertical line from where the supply and demand curves intersect
provides the equilibrium quantity bought and sold
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If the market price was above the equilibrium price there would be
a surplus (higher supply compared to demand)
If the market price was set below the equilibrium price there would
be a shortage (lower supply compared to demand)
The law of supply and demand claims that price adjusts so that
the equilibrium point is reached
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