essay outlines

essay outlines for both micro & macro.

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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: should seek to make the demand of good more price inelastic.
2. YED
Economic boom
Increase output level
Economic recession
Decrease output level.
3. CED
Near future
Must exhibit rival consciousness & be aware to changes in rival's prices & respond
Negative CED value for complements: should increase output level.
General (in reality)
Specific to PED/CED.
Questions on competition among firms in an oligopolistic market
Define oligopoly
Characteristics of oligopoly
1. Kinked demand curve
Do not engage in price competition
Draw diagram
Adjustment process based on diagram
2. Price rigidity
Engage in non-price competition
Product differentiation (real & imaginary)
Questions on whether there should be greater competition in the market
1. Yes
Because greater competition results in an increase in consumer welfare.
Lower price, higher output.
Greater competition results in greater allocative efficiency (P=MC)

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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 discrimination
3.…read more

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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 product
Monopoly: 1 single firm, unique product.
2.…read more

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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 cost, and increase consumption of
4. Rules & regulations
Questions on price mechanism on allocating resources
Criteria: allocative efficiency
Economic welfare is maximized.…read more

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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.
Questions on causes of unemployment in Singapore
Define unemployment + formula
Explain causes of cyclical unemployment
3 periods of high unemployment in 5 years (1998-2003)
Explain causes of structural unemployment.…read more

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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
1. Benefits of low unemployment
Efficient use of nation's resources
Low benefit payment
Low crime rate
2. Benefits of low inflation
Business confidence
Ease of exports
Shoe-leather cost
Menu cost
3.…read more

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1. Positive impact from FTA.
Specialization, theory of comparative advantage
More varieties increase consumer welfare
Increase trade links
2.…read more

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