- This question will be discussed in economics tuition in the third week of term 2. The production of petrol should be left to market forces. In spite of this, some governments subsidise petrol while others impose a tax on it. Discuss. [25] Answer Introduction The demand for a good is the quantity of the good that consumers are able and willing to buy at each price over a period of time, ceteris paribus. The supply of a good is the quantity of the good that firms are able and willing to sell at each price over a period of time, ceteris paribus. The question on why some governments subsidise petrol while others impose a tax on it can be discussed with reference to the concepts of the market forces of demand and supply, allocative efficiency, negative externalities, tax revenue, market dominance and affordability. Market Forces of Demand and Supply The market forces of demand and supply determine the allocation of resources in a market economy. An equilibrium is a state where there is no tendency to change. If consumers demand more of a good, the quantity demanded will exceed the quantity supplied at the initial price, assuming the market is in equilibrium. The resultant shortage wil[...]
Author archives: Edmund Quek
- This question will be discussed in economics tuition in the eighth week of term 1. Findings from a variety of studies show that routine consumption of artificial sweeteners such as aspartame, saccharin and sucralose may lead to higher likelihood of heart disease, stroke, diabetes and high blood pressure. Some countries such as the United States and France have imposed a tax on non-diet soft drinks to fight obesity. A rise in the price of sugar has led to an increase in the demand for artificial sweeteners and this has pushed up the prices. Discuss how the above events would affect consumer expenditure on diet soft drinks and non-diet soft drinks. [25] Answer Introduction Consumer expenditure on a good is the amount of money that consumers spend on the good which is the product of the price and the quantity. The effects of the above events on consumer expenditure on diet soft drinks (DSDs) and non-diet soft drinks (NDSDs) can be discussed with reference to the concepts of demand, supply, price elasticity of demand, cross elasticity of demand and price elasticity of supply. Demand and Price Elasticity of Supply (DSDs) The above events are likely to lead to a decrease in the demand [...]
- This question will be discussed in economics tuition in the seventh week of term 1. After reaching a rate of 8.3 percent in 2010, GDP growth in Asia is projected to average nearly 7 percent in both 2011 and 2012, according to the IMF. Due to the growing unrest in the Middle East sparked by the Egyptian Revolution that began on 25 January 2011, oil prices have started to rise. Discuss how the market for private cars and its related markets in Asia may be affected by the above events. [25] Answer Introduction The effects of the above events on the market for private cars and its related markets in Asia can be discussed with reference to the concepts of demand, supply, price elasticity of demand, income elasticity of demand, cross elasticity of demand and price elasticity of supply. Demand and Price Elasticity of Supply An increase in Gross Domestic Product in Asia will lead to an increase in the demand for private cars. The demand for a good is the quantity of the good that consumers are willing and able to buy at each price over a period of time, ceteris paribus. An increase in Gross Domestic Product occurs when firms increase production. When this happens, they wil[...]
- This question will be discussed in economics tuition in the fifth week of term 1. (a) Distinguish between the concepts of price elasticity of demand, income elasticity of demand and cross elasticity of demand. [10] (b) Discuss the usefulness of the concepts of elasticity of demand to a firm that produces a fashionable product. [15] Answer Introduction (a) The elasticity of demand for a good is a measure of the degree of responsiveness of the quantity demanded or the demand to a change in a determinant of demand, ceteris paribus. There are three concepts of elasticity of demand each relating to one of the determinants of demand: price elasticity of demand (PED), income elasticity of demand (YED) and cross elasticity of demand (XED). Definitions and Formulas There are different definitions and formulas for PED, YED and XED. The PED for a good is a measure of the degree of responsiveness of the quantity demanded to a change in the price, ceteris paribus. Mathematically, it can be expressed as % Δ Quantity Demanded PED = ------------------------------------- % Δ Price The YED for a good is a measure of the degree of re[...]
- Are all the economics tuition classes at Economics Cafe taught by Mr. Edmund Quek? Yes. Mr. Edmund Quek, who is the Principal Economics Tutor at Economics Cafe, teaches all the economics tuition classes. This is to ensure that students receive top quality education in economics. Mr. Edmund Quek holds a Master’s Degree in Economics (MSSc) from the National University of Singapore (NUS). He has also obtained a distinction in Macroeconomics (EC6102) and Microeconomics (EC6101) at the Doctor of Philosophy (PhD) level. These academic achievements make him the most highly qualified economics tutor in Singapore. Note: When you are looking for an economics tutor, it is important to ensure that the tutor has a good degree in economics from a recognised university. Although many economics tutors in Singapore do possess a good degree in economics from a recognised university, there are some who do not. Therefore, parents and students who are looking for an economics tutor should conduct a vigorous background check on the credentials of the tutor. What is the economics tuition fee? The economics tuition fee is $360 for 4 lessons payable on the first lesson of every month. Fee payment can be [...]
- INTERNATIONAL ECONOMICS will be covered in economics tuition in the first, second, third and fourth weeks of term 3. Students can refer to Economics - A Singapore Perspective for the diagrams. The book is available in the major bookstores in Singapore. 1 INTRODUCTION The people in a country consume a large number of goods and services. However, no country produces all the goods and services that its people consume. Instead, countries generally produce the goods and services in which they are good at producing and import the goods and services in which they are not good at producing. In other words, countries engage in international trade. One of the major factors why international trade takes place is differences in comparative advantage. Although international trade has been occurring for thousands of years, it has increased substantially only over the last century and this has expanded the world economy substantially. This chapter provides an exposition of international economics. 2 BASIS OF SPECIALISATION AND INTERNATIONAL TRADE 2.1 [...]
- MACROECONOMIC POLICIES will be covered in economics tuition in the first, second, third and fourth weeks of term 2. Students can refer to Economics - A Singapore Perspective for the diagrams. The book is available in the major bookstores in Singapore. 1 INTRODUCTION Recall that the government has four macroeconomic goals: high economic growth, low unemployment, low inflation and a balance of payments equilibrium. However, these goals may not be achieved due to domestic factors, external factors or both. In the event that the macroeconomic goals of the government are not achieved, macroeconomic problems will occur which include low or negative economic growth, high unemployment, high inflation and a persistent balance of payments disequilibrium. As these problems have adverse consequences for the economy, the government will use macroeconomic policies to solve the problems. This chapter provides an exposition of macroeconomic policies. 2 DEMAND-SIDE POLICIES: FISCAL POLICY 2.1 Objectives of Fiscal Policy Demand-side policies are policies that are used to influence aggregate demand. There are two demand-side policies: fiscal policy and monetary policy. Fisc[...]
- MACROECONOMIC PERFORMANCE will be covered in the eighth and ninth weeks of term 1 in economics tuition. Students can refer to Economics - A Singapore Perspective for the diagrams. The book is available in the major bookstores in Singapore. 1 INTRODUCTION The performance of an economy is often measured in terms of economic growth, unemployment, inflation and the balance of payments. An economy with high economic growth, low unemployment, low inflation and a balance of payments equilibrium is generally considered well performing. In contrast, an economy with low or negative economic growth, high unemployment, high inflation and a persistent balance of payments disequilibrium is generally considered poor performing. As the performance of a government is often measured in terms of the performance of the economy, all governments aim to achieve high economic growth, low unemployment, low inflation and a balance of payments equilibrium. This chapter provides an exposition of economic growth, unemployment, inflation and the balance of payments. 2 ECONOMIC GROWTH 2.1 Sources of Economic Growth Economic growth refers to an increase in real national output. The econom[...]
- INTEREST RATE AND EXHANGE RATE will be covered in the sixth and seventh weeks of term 1 in economics tuition. Students can refer to Economics - A Singapore Perspective for the diagrams. The book is available in the major bookstores in Singapore. 1 INTRODUCTION Interest rate and exchange rate are two economic variables which influence a large number of other economic variables such as national output and hence national income, unemployment, inflation and the balance of payments. In some economies such as the United States, the central bank chooses to control interest rates to manage the economy. However, in some economies such as Singapore, the central bank chooses to control exchange rates to manage the economy. The difference in the choice of policy instrument to manage the economy is largely due to the difference in the sizes and hence the composition of the economies. Therefore, it is important to have a good understanding of interest rate and exchange rate before proceeding further. This chapter provides an exposition of interest rate and exchange rate. 2 [...]
- NATIONAL OUTPUT/NATIONAL INCOME DETERMINATION will be covered in the third, fourth, and fifth weeks of term 1 in economics tuition. Students can refer to Economics - A Singapore Perspective for the diagrams. The book is available in the major bookstores in Singapore. 1 INTRODUCTION In Chapter 8, we learnt that national output/national income is an important economic variable which is used for several purposes such as measuring the size of an economy and the standard of living. However, the determination of national output/national income is omitted from the chapter. In order to have a good understanding of national output/national income, we need to understand how national output/national income is determined. Different schools of economic thought such as the Classical school, the Keynesian school and the Neoclassical school have different views of how national output/national income is determined. This chapter provides an exposition of the determination of national output/national income. 2 THE CLASSICAL THEORY VERSUS THE KEYNESIAN THEORY ‘Classical economists’ is a term [...]
- NATIONAL OUTPUT/NATIONAL INCOME ACCOUNTING will be covered in the first and second weeks of term 1 in economics tuition. Students can refer to Economics - A Singapore Perspective for the diagrams. The book is available in the major bookstores in Singapore. 1 INTRODUCTION There are two main branches of economics: microeconomics and macroeconomics. Microeconomics deals with the analysis of individual parts of the economy. It concerns factors determining the behaviour of a consumer, the behaviour of a firm, the demand for a good, the supply of a good, the price of a good, the quantity of a good, the performance of a market, etc. Thus far, we have been dealing with microeconomics. Macroeconomics deals with the analysis of the whole economy. It concerns factors determining aggregate variables such as aggregate demand, aggregate supply, national output, national income, unemployment, inflation, the balance of payments, etc. As opposed to microeconomics which focuses on the individual parts of the economy, macroeconomics looks at the big picture of the economy. In order to understand macroeconomics, we first need to understand the concepts of national output and national income[...]
- MARKET FAILURE will be taught in the first, second, third and fourth weeks of term 3 in economics tuition. Students can refer to Economics - A Singapore Perspective for the diagrams. The book is available in the major bookstores in Singapore. 1 INTRODUCTION In the free market, the equilibrium of a market is determined by the market forces of demand and supply. However, the equilibrium price and the equilibrium quantity of a good may not be the optimal price and the optimal quantity. For example, tobacco and alcohol will be over-consumed and education and healthcare will under-consumed in the absence of government intervention. Market failure occurs when the free market fails to allocate resources efficiently. Allocative efficiency is achieved when it is impossible to change the allocation of resources in the economy in a way that will increase the welfare of society. This occurs when marginal social benefit is equal to marginal social cost where marginal social benefit is the sum of marginal private benefit and marginal external benefit and marginal social cost is the sum of marginal private cost and marginal external cost. External costs and benefits, or externalities, [...]