Functions of The Price Mechanism The price mechanism is the interaction of demand and supply in a free market This interaction?determines prices?which are the means by which?scarce resources are al...
Price Determination & Equilibrium Price Determination In a?free market?economy, prices are determined by the?interaction of demand and supply?in a?market A?market?is any place that brings?buyer...
Price Elasticity of Supply (PES) The?law of supply?states that when there is an increase in price (ceteris paribus), producers will increase the quantity supplied and vice versa Economists are inte...
Supply Supply?is the amount of a good/service that a producer is willing and able to supply at a given price in a given time period A?supply curve?is a graphical representation of the?price?and?qua...
Price Elasticity of Demand (PED) The?law of demand?states that when there is an increase in price, there will be a fall in quantity demanded Economists are interested?by how much?the?quantity deman...
Demand Demand?is the amount of a good/service that a consumer is willing and able to purchase at a given price in a given time period If a consumer is willing to purchase a good, but cannot afford ...
Rational Decision Making When analysing markets, a?range of assumptions?are made about the?rationality?of?economic agents involved in the transactions In classical economic theory, the word?...
Free Market, Mixed & Command Economies In order to solve the basic economic problem of?scarcity, economic systems emerge or are created by different economic agents within the economy Th...
Specialisation & The Division of Labour Scotsman?Adam Smith?is often referred to as the 'father of Economics' He published?'The Wealth of Nations'?in March 1776 and explained many fundam...
