Theme 1 Price Mechanism and its Applications
Concepts and Tools of Analysis
• Price mechanism
• Ceteris paribus
• Demand and its determinants
• Change in demand versus change in quantity demanded
• Supply and its determinants
• Change in supply versus change in quantity supplied
• Market equilibrium
– Equilibrium price and quantity
• Market disequilibrium
– Shortage and surplus
• Price elasticity of demand
• Income elasticity of demand
– Normal and inferior goods
• Cross elasticity of demand
– Complements and substitutes
• Price elasticity of supply
• Consumer expenditure and producer revenue
• Consumer surplus and producer surplus
• Taxes and subsidies
• Price controls
– Maximum and minimum prices
• Quantity controls
– Quotas

Theme 2 Firms and Decisions
Concepts and Tools of Analysis
• Profit maximisation condition: MR=MC, where MC is rising
• Revenue maximisation, profit satisficing, market share dominance
• Total cost, average cost, marginal cost
• Total revenue, average revenue, marginal revenue
• Internal and external economies and diseconomies of scale
• Third degree price discrimination
• Shut-down condition
• Product differentiation
• Barriers to entry
• Competition versus collusion
• Efficiency
– Allocative, productive and dynamic efficiency
• Consumer welfare

Theme 3 Microeconomic Objectives and Policies
Concepts and Tools of Analysis
• Allocative efficiency
• Equity
• Market failure
• Deadweight loss
• Marginal private benefit and cost
• Marginal external benefit and cost
• Marginal social benefit and cost
• Social versus private (market) optimum
• Public goods
– Non-excludability and non-rivalry
• Positive and negative externalities
• Information failure
• Market dominance
• Factor immobility

Theme 4 Introduction to Macroeconomics
Concepts and Tools of Analysis
Circular flow of income
• Aggregate demand
• Determinants of C, I, G and (X – M)
• Aggregate supply
• Determinants of aggregate supply
• National output
• General price level
• Multiplier effect

Theme 5 Macroeconomic Objectives and Policies
Concepts and Tools of Analysis
• Standard of living
– Material and non-material well-being
– Gross Domestic Product (GDP) and Gross National Income (GNI)
– Human Development Index (HDI)
– Income inequality
– Gini coefficient
• Economic growth
– Actual and potential growth
– Sustainable growth
– Inclusive growth
• Full employment and unemployment
– Demand-deficient unemployment
– Structural unemployment
– Frictional unemployment
• Price stability
– Demand-pull inflation
– Cost-push inflation
– Deflation
– Consumer Price Index (CPI)
• Nominal and real concepts
• Balance of trade surplus and deficit
• Short-term capital flows
• Long-term capital flows
– Foreign direct investment
• Discretionary fiscal policy
• Government budget surplus and deficit
• Monetary policy
– Interest rates
– Exchange rates
• Supply-side policies

Theme 6 Globalisation and the International Economy
Concepts and Tools of Analysis
• Globalisation
• Free trade
• Protectionism
– Tariffs and non-tariff measures
• International and regional economic co-operation


The above 6 themes make up the “Higher 2 Economics” syllabus in the Singapore-Cambridge GCE Advanced Level. I would like you to set a test paper for me for “Paper 2: Essays”. For each theme, you are to set 1 essay question. Each question should include a preamble on a real-world context with real-life examples and statistics, followed by parts (a) and (b). In part (a), the question should start with the word “Explain” and in part (b), the question should start with the word “Discuss”. When you create each sub-question, you must take into account that the answer must have 2 main points. For part (a), there are two thesis points. For part (b), there is 1st thesis point, 1 antithesis to the 1st thesis point, 2nd thesis point, 1 antithesis to the 2nd thesis point, and an overall evaluation with insightful comments and a sound judgement. Hence, you must frame your question such that it allows for these requirements from the candidate. The questions that you set should encompass as many sub-themes under each theme as possible. The questions set should not be merely seeking theoretical regurgitation from the textbook, but it should focus on applying the content listed above to answer questions in the real world context and real life examples given in the preamble.