EJC_H2Econs_Topic5

1 © Eunoia Junior College Economics Department Topic 5: Government’s Microeconomic Objectives Theme 2.3 Microeconomic Objectives and Policies How to use this set of lecture notes? 1) BEFORE LECTURES – UNDERSTANDING CONTENT - Reference your notes against your H2 syllabus. Mark out the key concepts so that you know what you MUST know - Read your notes ahead so that you can focus on listening and capturing additional notes during lectures 2) During lectures – APPLYING CONTENT - Bring your hard copy notes along, and use your PLDs to refer to the lecture slides concurrently - Capture additional notes, especially the real -world examples where you can note down how concepts are applied and how economic analysis are developed in varying contexts - You should make use of a notetaking/consolidation tool to take notes during lessons and to consolidate your learning at timely junctures. Examples are MIRO, Notion, Goodnotes, Notability, Microsoft One Note, KAMI, etc. The choice is yours! 3) After Lectures – TUTORIAL PREPARATION to use content flexibly to show application, analysis and evaluation skills - Revise concepts relevant for the case study and essay questions - Refer to the notes and use it flexibly to prepare your answers to meet question requirements. Pure memorisation will not work as it does not involve deep understanding. - Do share your notes with your friends to multiply learning!

2 © Eunoia Junior College Economics Department Essential Questions: 1. Under what circumstances would price s fail to s erve as signals between producers and consumers in the allocation of resources? 2. How may each cause of market failure lead to inefficiency in allocation of resources in a free market economy? 3. Why might government need to intervene when there is inefficiency in resource allocation? 4. How does the government intervene to correct inefficient resource allocation? 5. Why does government intervention not always bring about allocative efficiency and equity? Introduction 1. Price Mechanism and Efficient Allocation of Resources 2. Governments’ Microeconomic Objectives 3. Market Failure and its Causes and Government Intervention 3.1 Public goods 3.2 Externalities 3.3 Information failure 1: Perceived vs. Actual cost/benefit 3.4 Information failure 2: Asymmetric information 3.5 Factor immobility 3.6 Market dominance 4. Inequity and Government Intervention 4.1 Income inequality 4.2 Market dominance 5. Government Failure (as an assessment of effectiveness of government intervention) Annex CONTENTS

3 © Eunoia Junior College Economics Department Introduction Have you ever questioned whether there are too many cars on Singapore’s roads, or if cigarette consumption is excessively high? If so, you may be suggesting that there is an optimal number of cars the roads can