Micro

Question 1

What is market failure?

Answer 1

Market failure is when the price mechanism leads to a misallocation of resources.

Question 2

What are the 4 reasons that could lead to the price mechanism failing?

Answer 2

Negative externalities
Positive externalities
Public goods
Information gaps

Question 3

What are the characteristics of an oligopoly?

Answer 3

Few large sellers
High barriers to entry/exit
Differentiated goods/services
Interdependence

Question 4

What are the characteristics of a perfect competition?

Answer 4

Many buyers and sellers
No barriers to entry/exit
Homogeneous goods
Perfect information

Question 5

What are the characteristics of a monopoly?

Answer 5

A single seller
High barriers to entry/exit
A lack substitute goods

Question 6

Define Marginal Physical Product of Labour (MPP)

Answer 6

Marginal Physical Product of labour is the amount of output produced by each additional worker

Question 7

Define Marginal Revenue Product of labour (MRP)

Answer 7

Marginal Revenue Product of labour is the amount of extra revenue that an additional worker will bring into the firm.

Question 8

How to calculate Marginal Revenue Product of labour (MRP)?

Answer 8

Marginal Revenue(MR)×Marginal Physical Product(MPP)