Study Guide for Microeconomics

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  • Topic: Supply and demand, Economics, Consumer theory
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Study Guide
Taylor’s University

Undergraduate Business Programmes

BUS1604
Microeconomics

March Semester 2013

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TUTORIAL 1 (WEEK 2): INTRODUCTION - WHAT ECONOMISTS STUDY AND NATURE OF ECONOMIC REASONING (CHAPTER 1)

CLASS ACTIVITIES:

• Recap Lecture 1
• Tutorial exercises

LEARNING OUTCOMES:

• Understand the meaning and significance of economics.
• Distinguish between microeconomics and macroeconomics.
• Explain various types of economic choices and to appreciate the concept of opportunity cost. • Understand the marginal concepts and how they relate to rational choices. • Construct, interpret a production possibility curve and understand its significance within the micro and macro perspectives.

• Describe economic efficiency.
• Understand the importance of ceteris paribus assumption. • Appreciate the similarities and differences in methodology between economics and the natural sciences.
• Distinguish between positive and normative statements.

Make sure you are familiar with the following terms:

• Economics
• Microeconomics
• Macroeconomics
• Rational choice
• Marginal decision
• Production possibility frontier
• Opportunity cost
• Ceteris Paribus
• Economic efficiency
• Production efficiency
• Allocative efficiency
• Positive statement
• Negative statement

Tutorial Exercises:

You are required to attempt all questions before attending your tutorial session.

A. End of Chapter Questions

1. Refer to text book page 27. Please attempt questions 1-4, 6-8 (For question 8 – Please skip the second part of the question).

B. Additional Questions

1.

Hundreds Line up for 5 p.m. Ticket Giveaway

By noon, hundreds of Eminem fans had lined up for a chance to score free tickets to the concert.

Source: Detroit Free Press, May 18, 2009

When Eminem gave away tickets, what was free and what was scarce? Explain your answer.

2. How does the creation of a successful movie influence what, how, and for whom goods and services are produced?

. 3. Distinguish between production efficiency and allocative efficiency. Explain why many production possibilities achieve production efficiency but only one achieves allocative efficiency.

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TUTORIAL 2 (WEEK 3): DEMAND, SUPPLY, PRICE AND OUTPUT DETERMINATION (CHAPTER 2)

CLASS ACTIVITIES:

• Recap Lecture 2
• Tutorial exercises

LEARNING OUTCOMES:

• Understand how demand curves are constructed and be able to plot a demand curve from a table.
• Understand the difference between the income and substitution effects of a price change. • Distinguish the causes of shifts in and movements along the demand curve. • Express the relationship between the demand for a product and its various determinants in the form of a demand function.

• Understand how supply curves are constructed and be able to plot a supply curve from a table. • Understand why supply curves are generally upward sloping. • Distinguish the causes of shifts in and movements along the supply curve. • Express the relationship between the supply of a product and its various determinants in the form of a supply function.

• Understand the concept of equilibrium in a market.
• Explain how demand and supply determine equilibrium prices and quantities. • Use demand and supply model to make predictions about changes in equilibrium prices and quantities.

Make sure you are familiar with the following terms:

• Law of demand
• Income effect
• Substitution effect
• Law of supply
• Change in quantity demanded and quantity supplied
• Change in demand and supply
•...
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