Concise Economics Exam Notes

  • Exam Information

    • Level 1/2 Paper 1: Microeconomics and Business Economics
    • Exam Duration: 1 hour 30 minutes
    • Total Marks: 80 (4 questions × 20 marks)

  • Key Topics

    • The Market System
    • Economic problem
    • Demand, supply, and market equilibrium
    • Elasticity
    • Mixed economy
    • Externalities
    • Business Economics
    • Production and productivity
    • Costs, revenues, and profits
    • Competition and market structures
    • Labour market
    • Government intervention

  • Definitions

    • Microeconomics: Study of individual decision-making (households and firms)
    • Macroeconomics: Study of economy-wide phenomena (inflation, employment)
    • Scarcity: Limited resources vs. unlimited wants
    • Opportunity Cost: Value of the next best alternative foregone

  • Production Possibilities

    • PPC: Shows maximum combinations of goods/services produced with available resources
    • Efficient use of resources: Points on the PPC
    • Inefficient use of resources: Points within the PPC
    • Unattainable production: Points outside the PPC

  • Demand and Supply Basics

    • Law of Demand: Higher prices lead to lower quantity demanded and vice versa
    • Supply: Amount producers are willing to sell at different price levels
    • Equilibrium: Point where quantity demanded equals quantity supplied

  • Elasticity

    • Price Elasticity of Demand (PED): Responsiveness of quantity demanded to price changes
    • Income Elasticity of Demand (YED): Responsiveness of demand when consumer income changes
    • Price Elasticity of Supply (PES): Responsiveness of quantity supplied to price changes

  • Market Structures

    • Perfect Competition: Many small firms; homogeneous products; price takers
    • Oligopoly: Few large firms; interdependent pricing; potential for collusion
    • Monopoly: Single seller; high barriers to entry; price maker

  • Government Interventions

    • Taxes, subsidies, regulations, fines, and pollution permits are tools for correcting market failures
    • Aimed at improving welfare and reducing negative externalities

  • Labour Market

    • Demand for Labour: Dependent on wage rates and demand for products produced
    • Supply of Labour: Dependent on wage rates, migration, skills, and training

  • Exam Strategies

    • Read each question carefully
    • Structure answers clearly; use diagrams where helpful
    • Manage time effectively across all questions