MATHEMATICS AND SCIENCE DEPARTMANT
ECONOMICS 2AECO - Year 11 – Course Outline
This handout tells you a number of important features of this semester: what I will teach during the semester; the course
content as described by the Student Curriculum and Standards Authority (of Western Australia); the assessments you
will have to do; and the weights given to each assessment. The course is the first semester of the year, and extends from
January to May.
Assessment
2AECO is assessed separately from 2BECO, which you will do in the second semester. The assessment for 2AECO
covers all three outcomes (economic inquiry, the operation of the economy, and economic policy and action) and is
comprised of short answer assessment (35 per cent of the total mark), long answer assessment (35 per cent) and the end
of semester exam (30 per cent).
Grades are awarded based on the grade descriptors rather than on particular scores. These grade descriptions are kept by
SIC and are available for you to read. They can also be found on the Student Curriculum and Standards Authority
website, at http://www.scsa.wa.edu.au/ . The following table gives more detail on the assessments this semester.
Task weight (%)
Assessment Item
Economic
Operation
Economic
inquiry
of the
policy and
economy
action
20 (long answer)
Assignment – Analysis of a market


5 (5 short)
Test 1 – Economic concepts


15 (10 short, 5 long)
Test 2 – The market system


15 (10 short, 5 long)
Test 3 – Elasticity


15 (10 short, 5 long)
Test 4 – Efficiency and market failure



30 (exam)
Semester 1 exam




Study Schedule for 2AECO
2AECO will be taught over the first 15 weeks of the first semester, followed by two weeks for exams. The final week of
the semester will be used to begin 2BECO. The following table outlines how 2AECO will be taught and when the
assessment tasks will be handed out.
Week
Unit content
Assessment /
Resources
1
2
6 Jan
13 Jan
Introduction to Microeconomics
Discovering
The economic problem, scientific approach, opportunity cost
Economics (DE),
PPF model
chap 1
Introduction to Microeconomics
DE chap 1 and 4
The nature of a market economy
How the price system answers the 4 economic questions
Types of markets: factor / product, competitive / uncompetitive
3
20 Jan
Test 1
DE chap 2
Markets and prices – Demand
Test 1 –
Explain the law of demand, and derive market demand curve from
Economic
individual demand curves
concepts
Explain effect of price on quantity demanded
Outline the factors of demand for individuals
Effect of changing factors of demand
4
Tết
Three weeks off for Tết holiday
4
17 Feb
Markets and prices – Supply
DE chap 2
Explain the law of supply, and derive market supply curve from
individual supply curves
Explain effect of price on quantity supplied
Outline the factors affecting supply
Effect of changing factors of supply
Equilibrium
The price mechanism, shortages, surpluses, market clearing
Changes in demand and / or supply and new equilibrium
5
6
24 Feb
3 Mar
Markets and prices – Equilibrium (continued)
DE chap 2
Changes in demand and / or supply and new equilibrium
Test 2 – The
Review and Test 2
market system
Markets and prices – Elasticity
DE chap 3
Concept, definition (price elasticity), calculation, midpoint formula
Hand out
Elastic / inelastic goods, Determinants of elasticity
Assignment –
analysis of a
market
7
10 Mar
Markets and prices – Elasticity
DE chap 5
link to total revenue
income elasticity, normal and inferior goods
2
8
17 Mar
Markets and prices – Elasticity
cross price elasticity, substitutes and complements
significance of elasticity for consumers, business and government
supply elasticity, goods that are elastic and inelastic in supply
determinants of elasticity of supply
importance of elasticity for consumers, firms and governments
9
24 Mar
Review and Test 3
10
31 Mar
Market efficiency and equity
Test 3 – elasticity
DE chap 5
general concept of efficiency
concept of consumer surplus
marginal cost, producer surplus
11
7 Apr
Market efficiency and equity
DE chap 5
efficiency of market equilibrium
deadweight losses, how they arise from under and over production
equity, and the trade off between efficiency and equity
12
14 Apr
Market failure and intervention
DE chap 6
analysis of price and quantity restrictions using supply and demand
concept of market failure, inefficiency
Types of market failure – market power
13
21 Apr
Market failure and intervention – Types of market failure (continued):
DE chap 6
Externalities, positive and negative
Public goods
Common resources
14
28 Apr
Market failure and intervention
DE Chap 6
How the Government intervenes in a market:
Taxes and subsidies, property rights, regulation, providing public
goods
15
5 May
Review and Test 4
Test 4 –
Efficiency and
market failure
16
12 May
Review, and start of EXAMS
17
19 May
EXAMS
18
26 May
Review of exam and start of 2BECO
3
DE Chap 7
2AECO – Unit description (from the Student Curriculum and Standards Authority)
The focus for this unit is markets. This unit is an introduction to microeconomics and the role that markets play in
determining the wellbeing of individuals and society, as well as the limitations of markets. It explores the workings of
real world markets with an emphasis on the Australian economy.
Students learn in theory, markets are an efficient way to allocate scarce resources. However, there are many
examples of market failure that occur when the forces of demand and supply do not allocate and price resources in a
way that society would regard as efficient, equitable or sustainable. Students examine examples of market failure
along with a range of government policy options that can be applied to achieve more desirable outcomes.
Unit content
This unit includes knowledge, understandings and skills to the degree of complexity described below. This is the
examinable content of the course.
Prescribed learning context
The context of this unit is markets, with a focus on the Australian economy. Within this context students apply their
economic knowledge, reasoning and interpretation skills.
Economic knowledge
Markets and prices

explain the concepts of the economic problem, scarcity, opportunity cost and the production possibility
frontier

discuss the functions of an economic system in addressing the key questions of what, how, how much and for
whom to produce

describe the characteristics of a market economy

distinguish between product and factor markets

distinguish between competitive and non-competitive markets

explain the law of demand

demonstrate and explain the relationship between individual and market demand schedules and curves

discuss the main factors affecting demand i.e. price, income, population, preferences, prices of substitutes
and complements, expected future prices

demonstrate and explain how changes in price lead to an expansion or contraction in the quantity demanded

demonstrate and explain how changes in non-price factors lead to an increase or decrease in demand

explain the law of supply

demonstrate and explain the relationship between individual and market supply schedules and curves

discuss the main factors affecting supply i.e. factors of production, costs of production, expected future prices,
number of suppliers, technology
4

demonstrate and explain how changes in price lead to an expansion or contraction in the quantity supplied

demonstrate and explain how changes in non-price factors lead to an increase or decrease in supply

explain the concept of market equilibrium

demonstrate and explain how shifts in demand and supply curves cause changes in market equilibrium

explain the concepts of market clearing, shortages and surpluses

demonstrate and explain how the price mechanism clears market surpluses and shortages

explain the concept of price elasticity of demand

calculate price elasticity of demand

distinguish between goods that are price elastic and price inelastic in demand

outline the determinants of price elasticity of demand

demonstrate and explain the link between price elasticity of demand and total revenue

explain the concepts of income elasticity of demand, normal goods and inferior goods

explain the concept of cross elasticity of demand

discuss the significance of substitute and complementary goods in relation to price, income and cross
elasticities of demand

explain the concept of price elasticity of supply

distinguish between goods that are price elastic and price inelastic in supply

outline the determinants of price elasticity of supply

discuss the significance of price and income elasticity for consumers, business and government.
Market efficiency and equity

explain the concept of efficiency

demonstrate and explain the benefits to consumers from participating in a market by applying marginal
benefit and consumer surplus

demonstrate and explain the benefits to producers from participating in a market by applying marginal cost
and producer surplus

demonstrate and explain the efficiency of market equilibrium i.e. maximising total surplus

demonstrate and explain how under and overproduction results in a deadweight loss

explain the concept of equity (fairness)

discuss the trade-off between efficiency and equity.
Market failure and government policies

demonstrate and explain the effects of price and quantity restrictions in markets by applying consumer and
producer surplus i.e. price ceilings and price floors, quotas and licences

explain the concept of market failure

analyse market failure i.e. positive and negative externalities

analyse market failure in terms of public goods and common resources (tragedy of the commons)

analyse market failure in terms of market power including:

outline the factors that affect the level of competition in a market i.e. number of buyers, number of
sellers, barriers to entry, product differentiation

5
compare the impact of market structures including competitive markets, monopolies and oligopolies

discuss the link between market failure and the role of government

discuss government policy options to correct market failure i.e. the use of taxes and subsidies, assigning
property rights and regulating the use of common resources, providing public goods and services.
Economic reasoning and interpretation
Analysis

select and organise sources of economic information and data on markets e.g. newspapers, business
magazines, Australian Stock Exchange (ASX) website

apply effective methods for identifying relevant information within sources e.g. skimming and scanning

apply appropriate methods of recording and organising economic information or data on market performance
e.g. tables to show costs of production, graphs which show positive/inverse relationships

apply mathematical techniques relevant to market analysis including constructing demand and supply curves,
the production possibility frontier, calculating elasticities, calculating consumer and producer surplus.
Communication

apply appropriate economic methods and models in analysing market behaviour and performance including
demand and supply analysis

evaluate evidence from collected economic information and data when communicating findings and justifying
a conclusion

select and use appropriate formats when communicating economic understandings e.g. written reports, oral
presentations, video presentations

complete the requirements for an effective investigation of an economic event, issue or decision e.g. the need
to plan a process, acknowledge all sources of information used, to self-reflect on an inquiry and suggest
improvements.
6