Theme 1 Topics

• 1.1 Nature of Economics

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  Economics as a social science, positive and normative statements, the economic problem, production possibility frontiers

  • 1.1.1 Economics as a social science
  • 1.1.2 Positive and normative economic statements
  • 1.1.3 The economic problem
  • 1.1.4 Production possibility frontiers
  • 1.1.5 Specialisation and the division of labour
  • 1.1.6 Free market economies, mixed economy and command economy

• 1.2 How Markets Work

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  Rational decision making, demand, price elasticity, supply, price determination, consumer surplus

  • 1.2.1 Rational decision making
  • 1.2.2 Demand
  • 1.2.3 Price, income and cross elasticities of demand
  • 1.2.4 Supply
  • 1.2.5 Elasticity of supply
  • 1.2.6 Price determination
  • 1.2.7 Price mechanism
  • 1.2.8 Consumer and producer surplus
  • 1.2.9 Indirect taxes and subsidies
  • 1.2.10 Alternative views of consumer behaviour

• 1.3 Market Failure

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  Types of market failure, externalities, public goods, information gaps

  • 1.3.1 Types of market failure
  • 1.3.2 Externalities
  • 1.3.3 Public goods
  • 1.3.4 Information gaps

• 1.4 Government Intervention

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  Government intervention in markets, government failure

  • 1.4.1 Government intervention in markets
  • 1.4.2 Government failure