H2 Economics Flashcards

What is 'ceteris paribus' in economics?

Answer: All other things being equal or held constant

'Ceteris paribus' is a Latin phrase meaning 'all other things being equal'. It is used to analyse the effect of one variable by assuming all other variables remain constant.

What happens to the demand curve for a normal good when consumer income rises?

Answer: Demand curve shifts right

For a normal good, demand increases as income rises. This shifts the entire demand curve to the right (an increase in demand), not a movement along the curve.

What is price elasticity of demand (PED)?

Answer: The percentage change in quantity demanded divided by the percentage change in price

PED = (% change in quantity demanded) / (% change in price). It measures the responsiveness of quantity demanded to a change in the price of the good.

In Singapore, which market structure best describes the mobile telecommunications industry?

Answer: Oligopoly

Singapore's mobile telecommunications market is an oligopoly — a few large firms (Singtel, StarHub, M1, and TPG) dominate, with high interdependence, barriers to entry, and strategic pricing.

What is a 'public good' in economics?

Answer: A good that is non-excludable and non-rival in consumption

A pure public good is non-excludable (cannot prevent anyone from consuming it) and non-rival (one person's consumption doesn't reduce availability to others), e.g., national defence.

What is 'consumer surplus'?

Answer: The difference between the maximum price a consumer is willing to pay and the actual price paid

Consumer surplus is the difference between the price consumers are willing and able to pay (as shown by the demand curve) and the price they actually pay. It represents consumer welfare benefit.