Micro Exam Consolidation Flashcards
Normative and positive
Supply and demand
Supply and demand
Extra analysis point: decrease in cost of production increases the incentive to produce
Normative and positive
Market failure
- Annotate given diagram with welfare loss/ gain. Add socially efficient equilibrium and market equilibrium
- Define market failure
- Define positive/negative externality
- Application : identify if a positive consumption/ negative production externality and explain why this is
- Explain how there in under consumption/ over production since MSB>MSC or MSC>MSB
Welfare loss/gain
- Annotate given diagram with welfare loss/ gain. Add socially efficient equilibrium and market equilibrium
- Define welfare loss/gain
- Define positive/negative externality
- Application : identify if a positive consumption/ negative production externality and explain why this is (SUPER SPECIFIC)
- Explain how there is reduction/ increase in quantity will affect welfare loss/gain
Consumer / producer surplus
Always define consumer /producer surplus
Mention the original consumer/producer surplus
Mention the new consumer/producer surplus
Mention the increase / decrease area in the consumer/producer surplus
Consumer /producer surplus
Consumer/producer surplus
- Define producer /consumer surplus
- Draw diagram , evidently highlight/mention the producer/consumer surplus
- Mention why increase/ decrease in producer surplus —> price change
4.
Subsidy
Extend the definition to include by decreasing production costs, will get you the next mark
Subsidy
Extend the definition to include by decreasing production costs, will get you the next mark
Subsidy points
Irrational behaviour/ information gaps
PPF & Opportunity cost
Opportunity cost /PPF
Indirect Tax Points
Minimum price points
Maximum price points
Tradable pollution permits points
State provision points
