IB Economics SL Syllabus Content Review Section 2: Microeconomics

Markets Markets Definition of markets with relevant local, national and international examples Brief descriptions of perfect competition, monopoly and oligopoly as different types of market structures, and monopolistic competition, using the characteristics of the number of buyers and sellers, type of product and barriers to entry. Importance of price as a signal and as an incentive in terms of resource allocation

Demand Definition of demand Law of demand with diagrammatic analysis Determinants of demand Fundamental distinction between a movement along a demand curve and a shift of the demand curve Exceptions to the law of demand (the upward-sloping demand curve) Ostentatious (Veblen) goods Role of expectations Giffen goods

Supply Definition of supply Law of supply with diagrammatic analysis Determinants of supply Effects of taxes and subsidies on supply Fundamental distinction between a movement along a supply curve and a shift of the supply curve

Interaction of demand and supply Equilibrium market clearing price and quantity Diagrammatic analysis of changes in demand and supply to show the adjustment to a new equilibrium Price controls Maximum price: causes and consequences Ceiling (upside down house) Minimum price: causes and consequences Floor (upside down house) Price support/buffer stock schemes Commodity agreements

Supply and Demand Supply Supply Review Quiz: con_supplyelasticity_1.htm Review Quiz: con_supplyelasticity_1.htm con_supplyelasticity_1.htm con_supplyelasticity_1.htm Demand Demand Online presentation: Online presentation:

Elasticity Price elasticity of demand (PED) Formula Definition Possible range of values Varying elasticity along a straight-line D curve Determinants of price elasticity of demand Cross-elasticity of demand Definition Formula Significance of sign with respect to complements and substitutes Income elasticity of demand Definition Formula Normal goods Inferior goods

Elasticity Price elasticity of supply Definition Formula Possible range of values Determinants of price elasticity of supply Applications of concepts of elasticity PED and business decisions: the effect of price changes on total revenue PED and taxation Cross-elasticity of demand: relevance for firms

Elasticities: Price, Income, Cross Price elasticity Price elasticity Review Quiz: asticity_1.htm Review Quiz: asticity_1.htm asticity_1.htm asticity_1.htm Definitions and calculations Definitions and calculations Review quiz: Review quiz: Income and cross elasticity Income and cross elasticity Definitions and calculations Definitions and calculations

Online presentation: Online presentation: Review quiz: Review quiz: con_crosspriceelasticity_1.htm con_crosspriceelasticity_1.htm con_crosspriceelasticity_1.htm con_crosspriceelasticity_1.htm IB Review Questions: Markets and Elasticity: /page4.htm IB Review Questions: Markets and Elasticity: /page4.htm /page4.htm /page4.htm Normal goods Normal goods Inferior goods Inferior goods PED and total revenue PED and total revenue Effect of elasticities on business Effect of elasticities on business

The Firm: Micro Economics definitions: definitions: Revenue Revenue total profit total profit gross profit gross profit fixed costs fixed costs variable costs variable costs total costs total costs marginal cost marginal cost Shut down point Shut down point

Market Structure IB Review Questions: IB Review Questions: Imperfect competition v perfect competition Imperfect competition v perfect competition Review Quiz: petition_1.htm Review Quiz: petition_1.htm petition_1.htm petition_1.htm Price determination Price determination Review Quiz: icetheory_1.htm Review Quiz: icetheory_1.htm icetheory_1.htm icetheory_1.htm

Imperfect Competition Monopolistic competition Monopolistic competition Oligopoly Oligopoly Monopoly Monopoly onopoly_1.htm onopoly_1.htm onopoly_1.htm onopoly_1.htm IB Review Questions: IB Review Questions: Product differentiation Product differentiation

The Firm: Production IB Review Questions: IB Review Questions: Producer – consumer sovereignty Producer – consumer sovereignty Productive and allocative efficiency Productive and allocative efficiency producer_surplus_1.htm producer_surplus_1.htm producer_surplus_1.htm producer_surplus_1.htm Economies of scale: Economies of scale:

The Firm: costs and cost curves IB Review Questions: IB Review Questions: The Firm: Equilibrium (mc, vc, tc curves) The Firm: Equilibrium (mc, vc, tc curves) IB Review Questions: IB Review Questions:

Micro review: Review Quiz: st_as_micro_1.htm Review Quiz: st_as_micro_1.htm st_as_micro_1.htm st_as_micro_1.htm Review Quiz: st_as_micro_2.htm Review Quiz: st_as_micro_2.htm st_as_micro_2.htm st_as_micro_2.htm IB Review Questions: IB Review Questions: