Practise demand, supply, equilibrium, elasticity and surplus analysis to explain price changes, revenue, market adjustment and microeconomic choices using diagrams and…
What ensures that demand for a product is effective?
The consumer must have the ability to buy the product.
The consumer must purchase in the private sector of the economy.
The consumer must receive consumer surplus.
The consumer must want to buy the product.
A
What can be measured by cross-elasticity of demand?
a change in real income as a result of a change in the price of consumer goods
a change in the demand for a good in response to a change in the price of a complement
a change in the price of a good in response to a change in the demand for a substitute
a change in the price of a good when the demand for it changes
B
What is price elasticity of supply?
the change in the quantity supplied when a price changes
the change in the quantity supplied when demand changes
the comparison of the proportionate change in supply to the proportionate change in demand
the comparison of the proportionate change in supply to the proportionate change in price
D
Distinguish between the concepts of market equilibrium and disequilibrium and show what happens in a free market for a good when disequilibrium exists.
Market equilibrium means that there is no tendency for price and quantity to change. Dis equilibrium means that excess demand or excess supply exists and as a result price and quantity will change as a result of market forces.
For clear knowledge and understanding of the terms equilibrium and disequilibrium.
(up to 4 marks)
For knowledge and understanding of the meaning of equilibrium in a free market.
(up to 2 marks)
For knowledge and understanding of the meaning of disequilibrium in a free market.
(up to 2 marks)
If the candidate shows where equilibrium and/or disequilibrium occurs, but does not explain what this means.
For application showing how equilibrium is re-established in a free market when disequilibrium exists.
(up to 4 marks)
For showing how market forces operate to re-establish equilibrium when an excess demand exists.
(up to 3 marks)
For showing how market forces operate to re-establish equilibrium when an excess supply exists (up to 3 marks) (4 marks maximum)