Topics Covered in Unit 2. The role of markets and money
2.1 The role of markets
- explain what is meant by a market
- explain the features of the primary, secondary and tertiary sectors, including the difference between the production of products and services
- explain the difference between factor and product markets, including their interdependence
- evaluate the costs and benefits of specialisation and exchange in markets including for producers, workers, regions and countries
2.2 Demand
- explain what is meant by demand
- draw and explain a demand curve using data, including individual and market demand
- draw shifts of, and movements along, the demand curve
- analyse the causes and consequences for consumers and producers, of shifts of, and movements along, the demand curve
- explain price elasticity of demand
- draw demand curves of different elasticity
- evaluate the importance of price elasticity of demand for consumers and producers
2.3 Supply
- explain what is meant by supply
- draw and explain a supply curve using data, including individual and market supply
- draw shifts of, and movements along, the supply curve
- analyse the causes and consequences for consumers and producers, of shifts of, and movements along, the supply curve
- explain price elasticity of supply
- draw supply curves of different elasticity
- evaluate the importance of price elasticity of supply for consumers and producers
2.4 Price
- explain price as a reflection of worth and its role in determining an efficient distribution of resources
- explain what is meant by equilibrium price and quantity
- draw and analyse the interaction of demand and supply
- explain the role of markets in the determination of price and the allocation of resources
- analyse how the market forces of demand and supply affect equilibrium price and quantity
2.5 Competition
- explain competition between producers in a market economy, including the reasons why producers compete
- analyse how competition affects price
- evaluate the economic impact of competition on producers and consumers
- explain the meaning of monopoly and oligopoly and how they differ from competitive markets
2.6 Production
- explain the role of producers, including individuals, firms and the governmentÂ
- evaluate the importance of production and productivity for the economy
- calculate and explain total cost, average cost, total revenue, average revenue, profit and loss
- evaluate the importance of cost, revenue, profit and loss for producers, including how costs and revenues affect profit and supply
- explain what is meant by economies of scale
2.7 The labour market
- explain the role and operation of the labour market, including the interaction between workers and employers
- analyse the determination of wages through supply and demand, including factors affecting the supply and demand of labour
- explain and calculate gross and net pay, including deductions through income tax, national insurance and pension contributions
2.8 The role of money and financial markets
- explain the role of money as a medium of exchange
- explain the role of the financial sector for the economy, including financial institutions such as banks, building societies and insurance companies
- evaluate the importance of the financial sector for consumers, producers and government
- analyse how different interest rates affect the levels of saving, borrowing and investment
- calculate the effect on savings and borrowings of changes in the rate of interest