Microeconomics

Table of Contents

1. Topic pack - Microeconomics - introduction
2. 1.1 Competitive Markets: Demand and Supply
3. 1.1 Competitive Markets: Demand and Supply - notes
4. 1.1 Competitive markets - questions
5. 1.1 Competitive markets - simulations and activities
6. 1.2 Elasticities
7. 1.2 Elasticities - notes
8. Section 1.2 Elasticities - questions
9. Section 1.2 Elasticities - simulations and activities
10. 1.3 Government intervention
11. 1.3 Government Intervention - notes
12. 1.3 Government intervention - questions
13. 1.3 Government intervention - simulations and activities
14. 1.4 Market failure
15. 1.4 Market failure - notes
16. Section 1.4 Market failure - questions
17. Section 1.4 Market failure - simulations and activities
18. 1.5 Theory of the firm
19. 1.5 Theory of the firm - notes (HL only)
20. Section 1.5 Theory of the firm - questions
21. Section 1.5 Theory of the firm - simulations and activities
22. Print View

1.1 Competitive Markets: Demand and Supply

By the end of this section you should be able to:

• Outline the meaning of the term market.
• Explain the negative causal relationship between price and quantity demanded.
• Describe the relationship between an individual consumer's demand and market demand.
• Explain that a demand curve represents the relationship between the price and the quantity demanded of a product, ceteris paribus.
• Draw a demand curve.
• Explain how factors including changes in income (in the cases of normal and inferior goods), preferences, prices of related goods (in the cases of substitutes and complements) and demographic changes may change demand.
• Distinguish between movements along the demand curve and shifts of the demand curve.
• Draw diagrams to show the difference between movements along the demand curve and shifts of the demand curve.
• Explain the positive causal relationship between price and quantity supplied.
• Describe the relationship between an individual producer's supply and market supply.
• Explain that a supply curve represents the relationship between the price and the quantity supplied of a product, ceteris paribus.
• Draw a supply curve.
• Explain how factors including changes in costs of factors of production (land, labour, capital and entrepreneurship), technology, prices of related goods (joint/competitive supply), expectations, indirect taxes and subsidies and the number of firms in the market can change supply.
• Distinguish between movements along the supply curve and shifts of the supply curve.
• Construct diagrams to show the difference between movements along the supply curve and shifts of the supply curve.

• Explain and plot a demand curve from a linear function
• Identify the slope of the demand curve as the slope of the demand function
• Outline why, if the "a" term changes, there will be a shift of the demand curve.
• Outline how a change in "b" affects the steepness of the demand curve
• Explain and plot a supply curve from a linear function
• Identify the slope of the supply curve as the slope of the supply function
• Outline why, if the "c" term changes, there will be a shift of the supply curve.
• Outline how a change in "d" affects the steepness of the supply curve.