Chapter 5:Microeconomics and macroeconomics
Chapter 6:The role of markets in allocating resources
Three main economic systems
Chapter 7 and 8:Demand and Supply
Demand
Causes of changes in demand
Changes in prices of related goods
Changes in taste and fashion
Supply
Causes of changes in supply
Changes the costs of production
Improvements in technology
Chapter 9:Price determination
Chapter 11:Price elasticity of demand
PED=percentage change in quantity demanded/percentage change in price
Perfectly inelastic demand
Chapter 12:Price elasticity of supply
PES=percentage change in quantity supplied/percentage change in price
Perfectly inelastic supply
Unit price elasticity of supply
Chapter 13:Market System
Market economic system
Advantages
Choices can be made by both consumers and producers
Costs and prices may be low
The quality of products may be high
Disadvantage
Consumers and producers may only take their own costs and benefits into account
Competition may be little
Even firms want to respond to demand changes
No one will be willing to provide public good
Advertisement may distort consumer choices
Income may be unevenly distributed
Differences between income will increase overtime
Chapter 14:Market Failure
Market Failure
Public good
non-rival and non-excludable
Chapter 15:Mixed Economic system
