How market works
The allocation of resources: how the market works; market failure
Candidates should be able to:
- describe the allocation of resources in market and mixed economic systems; describe the terms primary, secondary and serivce (tertiary) sector in an economy
- demonstrate the principle of equilibrium price and analyse simple market situations with changes in demand and supply
- describe the causes of changes in demand and supply conditions and analyse such changes to show effects in the market
- define price elasticity of demand and supply and perform simple calculations
- demonstrate the usefulness of price elasticity in particular situations such as revenue changes, consumer expenditure
- evaluate the merits of the market system
- describe the concept of market failure and explain the reasons for its occurrence
- define private and social costs and benefits and discuss conflicts of interest in relation to these costs and benefits in the short-term and long-term through studies of the following issues:
- conserving resources versus using resources
- public expenditure versus private expenditure.