ECONOMICS REVISION PACK.pdf ppt ppt ppt ppt.

Nice explanation.

1. Economics Revision

2. PURE/PERFECT
COMPETITION
Explain
Pure competition is a marketing situation where many sellers offer
similar products for similar prices.
In pure competition markets, corporations have little or no control of a
product's price.
Fresh produce:
Products such as apples, bananas, lettuce and other fresh produce are
an example of similar products sold at similar price points. Whether you
purchase fresh produce at a local store or a farmer's market, you will
likely find the same offerings with only slight price variations

3. KEY CHARACTERISTICS OF
PURE COMPETITION
Explain
1- Many Buyers and Sellers: There are numerous buyers and sellers in
the market, none of whom have the ability to influence the market price
through their individual actions.
2- Homogeneous Products: All products offered by different sellers are
identical, or at least perceived as identical by consumers. This ensures
that consumers have no preference for one seller's product over
another’s.
3- Perfect Information: All participants in the market have access to
complete and accurate information about prices, products, and market
conditions. There are no informational asymmetries, and buyers and
sellers are aware of all relevant factors.
4- Free Entry and Exit: New firms can enter the market easily, and
existing firms can exit without facing significant barriers. This condition
ensures that there are no artificial constraints on the number of sellers
in the market.
UNIT 4
Competition
and Market
Structures.
Intention:
•To analyze the
importance and the key
characteristics of the
Pure/Perfect
Competition.
Success Criteria:
•I can describe the key
characteristics of pure
competition.
•I can explain how pure
competition influences
pricing and market
structures using real-
world examples.
•I can analyze the role
of pure competition in
economic efficiency and
resource allocation.

4. MONOPOLY
A monopoly refers to a market structure where a single seller or producer
dominates the entire supply of a particular good or service, and there are no
close substitutes for the product.
For Example: Microsoft's operating system, Windows, in the late 1990s. During
this period, Windows dominated the market for PC operating systems, and there
were limited viable alternatives. Microsoft had a near-monopoly, controlling the
majority of the market share.
KEY CHARACTERISTICS OF MONOPOLY
1- Single Seller or Producer: In a monopoly, there is only one company or
producer that dominates the entire market for a specific product or service.
2- Unique Product or Service: The monopolist typically offers a unique product or
service that has no close substitutes. Consumers do not have alternative options
that are similar enough to compete effectively.
3- Price Maker: The monopoly has control over the price of the product or
service. Unlike in competitive markets where prices are determined by supply
and demand forces, the monopolist can set prices to maximize its profits.
UNIT 4
Competition
and Market
Structures.
Intention:
•To analyze the
importance and key
characteristics of
Monopoly.
Success Criteria:
•I can describe the
importance of the
monopoly in the
market.
•I can explain the key
characteristics of the
monopoly in the real
world.
•I can cite examples of
the monopoly in the
different markets of the
UAE.

5. KEY CHARACTERISTICS OF
MONOPOLY
Explain
4- Profit Maximization: The monopolist aims to maximize its profits by
determining the output level and pricing strategy that yields the highest
profit. This may not align with a competitive market, where prices are
determined by supply and demand equilibrium.
5- Restricted Output: The monopoly has significant market power and
can influence market conditions. It can control the quantity of goods or
services supplied to the market, affecting both prices and availability.
UNIT 4
Competition
and Market
Structures.
Intention:
•To analyze the
importance and key
characteristics of
Monopoly.
Success Criteria:
•I can describe the
importance of the
monopoly in the
market.
•I can explain the key
characteristics of the
monopoly in the real
world.
•I can cite examples of
the monopoly in the
different markets of the
UAE.

6. ADVANTAGES OF MONOPOLY Explain
1.Economies of Scale: Monopolies often benefit from economies of
scale, leading to lower average costs of production. This efficiency
can result in cost savings, potentially leading to lower prices for
consumers
2.Research and Development: Monopolies may have the financial
capacity to invest heavily in research and development, fostering
innovation and technological advancements in their products and
services.
3.Stable Prices and Predictable Markets: Monopolies can provide
stable prices, as they have control over the market and can avoid
price wars that often occur in competitive markets. This stability can
be advantageous for both producers and consumers.
4. Infrastructure Development: Monopolies may be better positioned
to make long-term investments in infrastructure, such as building
and maintaining extensive networks for utilities or transportation.
UNIT 4
Competition
and Market
Structures.
Intention:
•To Interpret the
advantages and
disadvantages of Monopoly
in the economy.
Success Criteria:
•I can describe the
advantages and
disadvantages of Monopoly.
•I can explain the
advantages and
disadvantages of Monopoly
in the real world.
•I can analyze the
advantages and
disadvantages of
monopolies and their
impact on the UAE
economy.

7. DISADVANTAGES OF MONOPOLY
1.Higher Prices for Consumers: Monopolies can exploit their market
dominance by setting higher prices since consumers have limited
alternatives. This lack of competition reduces the incentive to lower
prices.
2.Reduced Consumer Choice: In a monopoly, consumers have limited
choices as there is only one provider for a particular product or
service. This lack of variety may limit options that cater to different
consumer preferences
3.Lack of Innovation: Without competitive pressures, monopolies may
lack the incentive to innovate or improve their products and
services. The absence of competition can lead to complacency and
a stagnant market.
4.Potential for Exploitation: Monopolies may engage in practices that
exploit consumers, such as reducing the quantity of goods or
services while maintaining high prices. This exploitation can harm
consumer welfare.
UNIT 4
Competition
and Market
Structures.
Intention:
•To Interpret the
advantages and
disadvantages of Monopoly
in the economy.
Success Criteria:
•I can describe the
advantages and
disadvantages of Monopoly.
•I can explain the
advantages and
disadvantages of Monopoly
in the real world.
•I can analyze the
advantages and
disadvantages of
monopolies and their
impact on the UAE
economy.

8. Oligopoly
“Oligopoly is a market structure characterized by a small number of large firms
that dominate an industry.”
In an oligopolistic market, there are typically only a few major players, and they have significant
market power, influencing the market price and overall market conditions.
Example: In many countries, the automobile industry is characterized by a few major companies
that control a significant share of the market. Examples include General Motors, Ford, Toyota,
Volkswagen, and Honda.
Explain

9. Key Characteristics of Oligopoly
Few Large Firms: Oligopolies consist of a limited number of large firms that control a
substantial portion of the market share. The exact number of firms can vary, but they are
generally small enough for each to have a noticeable impact on the market.
Interdependence: One of the defining features of oligopoly is the interdependence among
the firms. The actions of one firm have a direct effect on the others, and each firm must
consider the potential reactions of its competitors when making business decisions,
especially regarding pricing and production.
Barriers to Entry: Oligopolistic markets often have high barriers to entry, making it difficult for
new firms to enter and compete. These barriers can include significant startup costs,
economies of scale that favor larger firms, and established brand loyalty.
Product Differentiation: Oligopolistic firms may engage in product differentiation strategies to
distinguish their products or services from those of their competitors. This can be through
branding, innovation, or other means to create a perceived uniqueness.
Price Rigidity: Prices in oligopolistic markets tend to be relatively stable and may not change
as frequently as in more competitive markets. Firms are cautious about initiating price
changes, as they are aware of the potential reactions of their competitors.

10. Inflation is the rate at which the general level of prices for goods and services in an economy is
rising, leading to a decrease in the purchasing power of money.
Causes of Inflation
Demand-pull inflation: This occurs when the demand for goods and services exceeds their
supply. When demand outstrips supply, sellers can increase prices without losing customers,
leading to inflation.
Cost-push inflation: This type of inflation happens when the costs of production increase for
businesses. When the costs of raw materials, labor, or other factors of production rise,
producers often pass these higher costs on to consumers in the form of higher prices,
causing inflation.
Built-in inflation: Also known as wage-price inflation, this occurs when workers demand higher
wages to keep up with rising prices. When wages increase, businesses often raise prices to
cover the higher labor costs, leading to a cycle of increasing prices and wages.
Monetary factors: Inflation can also be caused by monetary factors, such as when central
banks increase the money supply at a rate faster than the growth of the economy.
Inflation

11. Economic Growth
Economic growth refers to the increase in the production and consumption of
goods and services within an economy over time.
Economic growth signifies an improvement in the standard of living and economic
well-being of a society. It's driven by various factors, including increases in
productivity, technological advancements, population growth, investment in
physical and human capital, and efficient allocation of resources.

12. Measuring the Economic Growth
Gross Domestic Product (GDP): GDP is one of the primary indicators used to measure
economic growth. It represents the total monetary value of all goods and services
produced within a country's borders over a specific period.
Gross National Product (GNP): Similar to GDP, GNP measures the total monetary value of
all goods and services produced by a country's residents, whether within the country's
borders or abroad, over a specific period.
Real GDP/GNP: Real GDP/GNP adjusts for inflation by measuring the value of goods and
services produced in constant prices, allowing for more accurate comparisons of
economic growth over time.
Gross National Income (GNI): GNI measures the total income earned by a country's
residents, including both domestic production and income earned abroad, minus income
earned by foreigners domestically.

13. Business Cycle Phases
The business cycle refers to the fluctuations in economic activity that an economy
experiences over time.
Expansion: This phase marks a period of economic growth, characterized by rising output, employment,
and income levels. During an expansion:
•businesses are optimistic
•consumers are spending more
•investment tends to increase
Peak: The peak represents the highest point of the business cycle. It's the moment when the economy
reaches its maximum level of output and growth.
Contraction: Also known as a recession, this phase involves a decline in economic activity. Output,
employment, and income levels start to fall, and businesses become more cautious.
Trough: The trough is the lowest point of the business cycle, representing the end of the contraction
phase. It's when economic activity reaches its lowest levels before starting to recover.

14. GDP(Gross Domestic Production) Types
GDP is the total monetary value of all goods and services produced within a
country’s borders in a specific period, usually a year. It is a key measure of a
country’s economic performance and size.
Types of GDP
Nominal GDP:
Measures the economic output using current market prices, without
adjusting for inflation.
Useful for comparing the size of economies but not their growth over time.
Real GDP:
Adjusts for inflation, providing a more accurate measure of economic growth
by showing changes in the quantity of goods and services produced.

15. Factors affecting GDP
Explain
1. Political Stability and Policies:
Stable governments attract investments and boost economic activity.
Favorable trade policies, tax incentives, and regulatory frameworks support GDP growth.
2. Inflation and Deflation:
Moderate inflation can stimulate spending, but high inflation reduces purchasing power.
Deflation may discourage investment and consumption.
3. Natural Resources:
Availability and use of natural resources like oil, gas, or minerals contribute to GDP growth,
especially in resource-rich nations.
4. Government Spending:
Public expenditures on infrastructure, defense, education, and health services.
Too much or too little government spending can affect GDP negatively.
5. Investment :
Business spending on capital goods like machinery, factories, and infrastructure.
Encourages productivity and long-term growth.