Supply and Demand and Study Guide

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ECO11 (ver8) MICROECONOMICS 1 STUDY GUIDE ECO11 MICROECONOMICS 1 STUDY GUIDE © University of South Australia 2009 This work was printed from camera-ready copy submitted by the Unit Coordinator. The Flexible Learning Centre of the University of South Australia was not involved in its production. CONTENTS Contents 3 Introduction 5 An introduction to the economic perspective 13 Demand and supply 17 Elasticity 21 Market applications 25 The behaviour of firms and costs 31 Perfect competition 37 Monopoly 43 Monopolistic competition 47 Oligopoly 51 Economic performance, market failure and government intervention 55 Appendix: Guide to working…show more content…
Economic ideas provide a conceptual framework for understanding the forces that shape our personal and public lives. Economies (people!), faced with scarcities, have to make decisions about the way resources are allocated. First, they have to decide what goods and services have to be made and how they are to be made. Then they have to decide how much of each good and service to produce as well as who receives the proceeds of production in what proportions. These inter-connected allocation and distribution decisions must be resolved so that production and satisfaction can simultaneously occur. The complex system of human values, shared beliefs and accepted behaviour associated with the resolution of allocation and distribution decisions is known as an economic system. Economic systems have varied from the traditional systems based on beliefs and social hierarchies, to planned or command economics through to a mixture of market and planned systems of production and exchange. Economic systems are judged in terms of their efficiency and equity. Criticisms of planned systems invariably focus on aspects of inefficiency. Criticisms of market behaviour are invariably driven by equity considerations. This unit does not examine economic systems on the large scale (this is the area called macroeconomics) but rather,
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