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Essay Approaches-- Micro-economics

Questions on PED/YED/CED applications
1. PED: short term
Demand for good is price inelastic
Give reasons
Therefore, should increase price to increase total revenue
Mid-term (near future): demand for good may become more price elastic.
Give reasons
Therefore, should reduce price to increase total revenue.
Long term:…

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Greater competition results in dynamic efficiency
2. However, greater competition will also lead to wastage of resources.
Example: natural monopoly.

Questions on price discrimination
Define price discrimination
Outcome of price discrimination
Earn by revenue & hence profits.

1. First degree price discrimination
2. Second degree price…

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Establish stability in the market
Eliminate wasteful competition

Questions on differences between perfect competition & monopoly
Define perfect competition & give examples
Define monopoly & give examples

Characteristics used to distinguish the 2 market structures
1. Number of sellers & nature of products
Perfect competition: many firms, homogeneous…

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Briefly explain why market failure arises with an aid of a diagram.

Forms of government intervention
1. Cash grant (subsidies to consumers)
2. Subsidy (to producers)
Subsidize the training of doctors
External benefit: healthy population.
3. Public provision
Primary health care: health education
Supplement of healthcare: increase supply, reduce…

Page 5

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Essay approaches--macro economics

Questions on whether fiscal policy alone is sufficient to promote economic growth in Singapore
Define economic growth

Explain how expansionary fiscal policy helps to promote economic growth.
Stimulate AD
Stimulate AS
Evaluation (as a supply side policy)
Other policies needed
Exchange rate policy.


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Draw diagram & explain.

Questions on importance of low unemployment, low inflation, stable economic growth to be a successful
Explain what is a successful economy
Benefits of achieving the above aims:
Efficient allocation of resources
Higher standard of living
Better income distribution
Greater choice for consumers


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1. Positive impact from FTA.
Specialization, theory of comparative advantage
More varieties increase consumer welfare
Increase trade links
2. Negative impact from FTA
Higher level of structural unemployment
Higher income disparities

Questions on impact of globalization on developing & developed countries
Opportunities/benefits of globalization
Lower domestic inflation rates…

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