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Economics is the study of how society provides for itself by making the most efficient use of scarce resources so that both private and social welfare may be improved. The subject, therefore, covers the study of individuals, households, firms, government and international economic institutions as they attempt to make better use of scarce resources.
The study of Economics enables individuals to develop a better understanding of the economic issues which affect them and the world in which they live. It will also enable students to offer informed comments on economic matters. The knowledge gained from this course in Economics will be of lifelong value to the student. The influence of the subject on all areas of activity should stimulate the individual to continue reading and conducting research in Economics.
This course aims to:
- promote understanding of the basic principles and concepts of economics which are accepted in large measure by economists while recognising that the field is changing continuously;
- develop an appreciation of the various methods used by economists in analysing economic problems;
- develop an understanding of the global economy and of the relationships between rich and poor nations with respect to international trade and finance and the most important international financial institutions;
- encourage students to apply economic principles, theories and tools to everyday economic problems, for example, inflation, unemployment, environmental degradation, sustainable development and exchange rate instability and to contribute meaningfully to any dialogue on these issues;
- encourage students to apply economic theory to the critical issues which affect the small open Caribbean-type economy;
- encourage students to evaluate contentious economic issues so that decision-making may be informed by logical and critical thinking;
- sensitise students to the need for ethical behaviour in the conduct of economic transactions.
CAPE Economics SBA
MODULE 1: METHODOLOGY: DEMAND AND SUPPLY (Central Problem of Economics) On completion of this Module, students should: 1. appreciate the main problem of economics namely, the allocation of scarce resources and the inevitability of choice; 2. understand the laws, principles and theories governing demand and supply; 3. understand the basic tools of economic analysis.
- Explain the concept of scarcity;
- Apply the concept of opportunity cost in a variety of real-life situations;
- Explain the concept of production possibilities frontier (PPF);
- Use the production possibilities frontier to indicate constant returns, diminishing returns and increasing returns;
- Account for shifts in the production possibilities frontier (PPF);
- Differentiate between positive and normative economics;
- Outline the advantages and disadvantages of the alternative mechanisms by which resources are allocated.
MODULE 1: METHODOLOGY: DEMAND AND SUPPLY (Theory of Consumer Demand)
- Explain the concept of utility;
- Explain the law of diminishing marginal utility and the limitation of marginal utility theory;
- Explain the meaning of indifference curves and budget lines;
- Explain consumer equilibrium using the marginal utility approach;
- Explain consumer equilibrium using the indifference curve approach;
- Isolate the income and substitution effects of a price change;
- Explain effective demand;
- Derive the demand curve using both the marginal utility and indifference curve approaches;
- Differentiate among normal, inferior and Giffen goods;
- Distinguish between shifts of the demand curve and movements along the curve;
- Identify the factors that affect demand;
- Explain the meaning of consumer surplus;
- Explain price elasticity, income elasticity and cross elasticity of demand;
- Calculate numerical values of elasticity;
- Interpret numerical values of elasticity;
- Assess the implications of price elasticity of demand for total spending and revenue;
- State the factors that determine the price elasticity of demand.
MODULE 1: METHODOLOGY: DEMAND AND SUPPLY (Theory of Supply)
- Identify the factors of production;
- Explain the term production function;
- Differentiate between the short run and long run;
- Explain the law of diminishing returns;
- Calculate total, average and marginal physical product;
- Explain the relationships among total, average and marginal physical product;
- Identify the stages of production as they relate to total, average and marginal product;
- Calculate total, average, marginal and other costs;
- Explain the relationship among total, average and marginal costs;
- Explain why supply curves are usually positively sloped;
- Explain the concept of producer surplus;
- Explain the shape of the short run and long run supply curves;
- Explain returns to scale and the concepts of economies and diseconomies of scale;
- Distinguish between a movement along the supply curve and a shift in the supply curve;
- Explain the concept of elasticity of supply;
- Calculate elasticity of supply;
- Interpret elasticity of supply.
MODULE 1: METHODOLOGY: DEMAND AND SUPPLY (Market Equilibrium)
MODULE 2: MARKET STRUCTURE, MARKET FAILURE AND INTERVENTION (Market Structure) On completion of this Module, students should: 1. appreciate the distinction between the different types of market structures; 2. develop awareness of the causes of market failure; 3. appreciate the measures that can be adopted to reduce or eliminate market failure; 4. appreciate the arguments which suggest that government intervention may not necessarily improve economic performance.
MODULE 2: MARKET STRUCTURE, MARKET FAILURE AND INTERVENTION (Market Failure)
- Explain the concept of economic efficiency;
- Distinguish among private goods, public goods and merit goods;
- Distinguish between social costs and private costs and social benefits and private benefits;
- Explain the concept of market failure;
- Explain what is meant by deadweight loss;
- Outline the causes of market failure.
MODULE 2: MARKET STRUCTURE, MARKET FAILURE AND INTERVENTION (Intervention)
MODULE 3: DISTRIBUTION THEORY (The Demand for and Supply of Factors) On completion of this Module, students should: 1. understand what accounts for the returns that accrue to the owners of the factors of production; 2. appreciate the issues surrounding poverty and the measures used to alleviate poverty; 3. develop skills in applying microeconomic analysis to critical social issues involving income inequality.
- Explain the rewards of the factors of production;
- Explain the concept of derived demand;
- Outline the marginal productivity theory;
- Apply the marginal productivity theory to the demand for land, capital and labour;
- Analyse the factors affecting the supply of land, capital and labour;
- Analyse the factors determining rent, interest and wages;
- Distinguish between transfer earnings and economic rent.
MODULE 3: DISTRIBUTION THEORY (Wage Differentials)
MODULE 3: DISTRIBUTION THEORY (Income inequality, Poverty and Poverty Alleviation)
- Differentiate between size and functional distribution of income;
- Explain the concept of income inequality;
- Explain the measures of income inequality;
- Explain the measures used to reduce income inequality;
- Distinguish between absolute and relative poverty;
- Outline factors that contribute to poverty;
- Explain why certain categories of people are more susceptible to poverty than others;
- Evaluate the different ways used to measure poverty;
- Outline strategies used by Governments to alleviate poverty;
- Analyse the economic costs of poverty;
- Assess the economic benefits of government intervention to alleviate poverty.