- The factors which determine the demand for a good or service.
- A demand curve shows the relationship between price and
- The causes of shifts in the demand curve.
- The factors which determine the supply of a good or service.
- A supply curve shows the relationship between price and
- Understand higher prices imply higher profits and that this will provide the incentive to expand production.
- The causes of shifts in the supply curve.
- How the interaction of demand and supply determines equilibrium prices in a market economy.
- The difference between equilibrium and disequilibrium.
- Why excess demand and excess supply lead to changes in price.
THE INTERRELATIONSHIP BETWEEN MARKETS
- Changes in a particular market are likely to affect other markets.
- The implications of joint demand, demand for substitute goods, composite demand, derived demand and joint supply.
- Be able to calculate price, income and cross elasticities of demand.
- The relationship between income elasticity of demand and normal and inferior goods.
- The relationship between cross elasticity of demand and
substitute and complementary goods.
- The relationships between price elasticity of demand and firms’ total revenue (total expenditure).
- The factors that influence these elasticities of demand.
- Be able to calculate price elasticity of supply.
- The factors that influence price elasticity of supply.