Questions from Micro (excluding Theory of the Firm) to review taken from the Oxford textbook)
Part a only:
1. Distinguish between a shift of the demand curve for a product and a movement along the product's demand curve.
2. With reference to two different determinants of demand, explain why the demand curve for bicycles might increase. Use a diagram to support your answer
3. Distinguish between a shift of the supply cure for a product and a movement along the product's supply curve.
4. With reference to two different determinants of supply, explain why the supply of coffee beans might decrease. Use a diagram to support your answer.
5. Using a demand and supply diagram, explain why the price of consumer goods might rise.
6. With the help of examples, explain the determinants of price elasticity of demand.
7. A businessperson wants to increase her revenues. Using appropriate diagrams, explain why knowledge of price elasticity of demand would be useful.
8. With the help of examples, explain the concept of cross price elasticity of demand.
9. With the help of examples, explain the determinants of price elasticity of supply.
10. Using income elasticity of demand, explain the difference between luxury, necessity, and inferior goods.
11. With the help of a diagram, explain why cigarette smoking is an example of market failure.
12. Using a diagram, explain why the provision of health care in an economy is likely to require government intervention.
13. Using real world examples, explain how the use of bio-fuels can reduce the market failure caused by overconsumption of fossil fuels.
Part a AND b
1. a. Explain the concept of elasticity of demand.
b. Discuss why it may be important for a firm to have a knowledge of price elasticity of demand.
2. a. Explain the possible effect on consumers and producers when a specific tax is imposed on cigarettes.
b. Evaluate the possible outcomes of imposing such a tax.
3. a. Explain why a government might grant a subsidy to producers of wheat.
b. Discuss the consequences of such a subsidy.
4. a. Explain the role of prices in allocating resources in an economy.
b. Discuss the consequences of setting a maximum price in a market of your choice.
5. a. Explain the concept of negative externalities of consumption.
b. Evaluate two policies that may be used by governments to reduce external costs of production.
6. a. Using diagrams, explain how airplane flights may create either a negative externality of consumption or a negative externality of production.
b. Discuss the view that government policies are the best way to reduce the market failure caused by airline flights.
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Command Terms and what they are asking you to do
Important Terms: Microeconomics