Theme 1 · Microeconomics · Papers 1 and 3
Markets and market failure
The foundation of the whole course. Theme 1 builds the microeconomic toolkit, demand and supply, elasticity, the price mechanism, and then asks the two questions everything else returns to: when do markets fail, and does government intervention make things better?
Topics in this theme
Work through them in order
The economic problem and the PPF
Scarcity, choice and opportunity cost; the production possibility frontier; specialisation and the division of labour; positive and normative statements.
Content coming
Demand, supply and market equilibrium
How price is determined, the conditions of demand and supply, shifts versus movements, and how markets clear. A worked example of the topic-page template.
Worked example
Elasticities of demand and supply
Price, income and cross elasticity of demand; price elasticity of supply; the link to total revenue and to who bears a tax.
Content coming
Market failure and externalities
Externalities in production and consumption, public goods, and information gaps; the divergence of social and private costs and benefits.
Content coming
Government intervention and government failure
Indirect taxes, subsidies, price controls, tradable permits and regulation; the ways intervention can itself fail.
Content coming
How each topic page is built
Every topic page follows the same shape: the idea defined precisely, the diagram to draw, a worked chain of reasoning, the evaluation that weighs it, and a table of key terms. Open Demand, supply and market equilibrium to see the template in full; the remaining topics are being written to match.