University of Sydney Principles of Economics & Demand and Supply Questions

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Exam Revision 1
Topics
Demand and Supply (3 & 4)
GDP and Economic Growth (5 & 6)
Demand and Supply (20 marks)
1) Definition of key terms, laws and effects
2) Draw the demand and supply diagram
3) Explain what causes the demand/supply curve to shift
Factors that change Supply
Supply Increases (3)
Supply curve shifts Right
Supply Decreases (3)
Supply curve shifts Left
Cost of Production (1)
Decreases (2)
Increases (2)
Price of substitutes supplied
Decreases
Increases
Price of complements supplied
Increases
Decreases
State of Technology
Increases
Decreases
Supplier’s expectation of future price Decreases
Increase
Nature, random shocks and
unpredictable events
Events that Decreases supply
Events that increase supply
Class Activity 3
Suppose we are analysing the market for tea leaves. Using graphs, illustrate
the impact each of the following events would have on the demand or supply
of tea leaves. Also show how equilibrium price and quantity would change.
1) The price of coffee, a substitute of tea for consumers, increases.
2) Researchers found certain ingredients in tea leaves which can cure lung
cancer.
3) A more efficient method of producing tea leaves is introduced.
4) Due to a serious economic recession, many consumers have become
unemployed.
5) Suppliers expect an increase in the price of tea leaves next month.
6) Buyers expect the price of tea leaves to decrease next week.
GDP and Economic Growth (Topic 5 and 6)
15 marks
• Definition of key terms
• Approaches to calculating GDP
• Expenditure Approach (AD = C + I + G + (X – M))
• Income Approach (Y = rent + wages + interest + profit)
• Calculation of macroeconomic indicators
• Nominal and Real GDP
• GDP Growth Rate
• GDP per Capita
Income Approach for Measuring GDP
Compensation
of Employees
Net Operating
Surplus including
Net Interest, Rent,
Corporate Profit &
Proprietors’’
Income
GDP
Class Activity 1
The table below shows the simple economy of Dinoland. Using
2012 as the base year, calculate:
a) the nominal GDP in 2012 and 2013.
b) the real GDP in 2012 and 2013.
Quantity of
Apples (millions)
Quantity of
Price of Apples
Oranges
Price of Oranges
(millions)
2012
60
$0.50
80
$0.25
2013
160
$1
220
$2
Economic Growth Rate
• Economic Growth Rate is the rate at which a
nation’s Gross Domestic product (GDP) grows from
one year to another.
Real GDP Growth Rate
=
Real GDP (Y2) – Real GDP (Y1) X 100
——————————————Real GDP (Y1)
GDP per Capita
• GDP per capita or GDP per person is a measure of a
country’s economic output produced per citizen in
the country in a given period of time.
GDP per capita
=
GDP
———————Population
Fiscal Policy
Fiscal Policy
• The use of government expenditures and taxes to
promote particular macroeconomic goals such as,
– Full employment
– Stable prices
– Economic growth
A SET OF GOVERNMENT
MEASURES INVOLVING THE
ADJUSTMENT OF GOVERNMENT
EXPENDITURE AND TAX
RECEIPTS
KAPLAN
Types of Fiscal Policy
Implemented at
government’s
discretion.
• Discretionary Fiscal
Policy
Automatic
mechanism which
stabilises the
business cycle.
Automatic Fiscal
Policy
KAPLAN
PRINCIPLES OF ECONOMICS
Comparison of Four Market Structures
Class Activity 3 – Case Study 1
Beste Lid Bulls made of polypowe
wrong her loyal customers. However, it still faces
comiderable amount of competition from more than 30 other
firm in the reaching a very small share of the
1. Band on the above information What type of market
structure do you think Bele aparati in
2. Identity and elaborate on THREE characterial
such a market structure
3. Given the nature of such a market structure dem TWO
1)trage which firm in the market can adopt
KAPLAR
Federal
Prode
Market Struciure
KAFLAS
Overview of Market Structures
Partect Manage Gigapaly Monopolistic
Competition
Maret
KAPLAN

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demand and supply

Principles of Economics

GDP and Economic Growth

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