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Theme 1 ...................................................................................................................... 3
Economics as a Social Science .......................................................................................... 3
Positive and Normative Statements .................................................................................... 4
The Economic Problem ...................................................................................................... 5
Specialisation and the Division of Labour ........................................................................... 6
Free Market, Mixed and Command Economies ................................................................... 9
Price, Income and Cross Elasticities of Demand ............................................................... 13
Consumer and Producer Surplus ...................................................................................... 19
Indirect Taxes and Subsidies ............................................................................................ 23
Market Failure and Externalities ....................................................................................... 31
Information Gaps ............................................................................................................. 38
Government Failure ......................................................................................................... 43
Theme 2 .................................................................................................................... 48
Inflation ........................................................................................................................... 48
Aggregate Demand........................................................................................................... 54
Aggregate Supply ............................................................................................................. 58
Monetary Policy ............................................................................................................... 65
Fiscal Policy ..................................................................................................................... 70
Supply Side Policies ......................................................................................................... 75
Conflicts and Tradeoffs Between Objectives and Policies ................................................. 81
Theme 3 .................................................................................................................... 85
Sizes and Types of Firms .................................................................................................. 85
Business Growth .............................................................................................................. 87
Revenue .......................................................................................................................... 91
Costs ............................................................................................................................... 96
Perfect Competition.......................................................................................................... 101
Monopoly ....................................................................................................................... 106
Monopolistic Competition ................................................................................................. 112
Oligopoly ....................................................................................................................... 119
Price Discrimination ...................................................................................................... 127
Monopsony .................................................................................................................... 131
Contestability ................................................................................................................ 134
Demand for Labour ........................................................................................................ 137
Labour Supply .................................................................................................................. 142
Minimum Wage ............................................................................................................... 148
Theme 4 .................................................................................................................. 155
Specialisation and Trade ................................................................................................ 155
Restrictions on Free Trade .............................................................................................. 162
Balance of Payments ..................................................................................................... 169
Exchange Rates ............................................................................................................. 176
Inequality ...................................................................................................................... 182
Factors Influencing Growth and Development ................................................................ 187
Development Strategies Part 2: Other Strategies............................................................. 192
Role of Financial Markets ............................................................................................... 197
Market Failure in the Financial Sector ............................................................................. 201