Economics Year 11 - Mark

Microeconomics and macroeconomics

Microecnoimcs \

• focuses on economcis relateing to the firms market

Macroeconmics

• refers to economics in terms of the whole economy

What is oppurtnity cost and hwo you’d represent in a diagram and eocnomic problem

Oppurtnity Cost

• what you forego for one eocnomi cdecision repreented by a PPF

econoimc problem

• infinite neds and wants but finite resources to meet htose needs and wants

law of supply

• as price incrases, quantity supplied also increase so it’s a positive relationshi

Reasons why supply curve is upward sloping

Profit Motive

• as price increases suppleirs recieve more profit and therefore supply more

Why demand curve is donward slopng

income Effect

• as price rises the consumers can buy less with their inocme so they buy less

Subsitution effect

• as price rises the ocnsumers will substitute the goodw ith a cheaper alterrnative so quantity demanded wil fall

Diminishing marginal utilityl

• the benefit of each additional unit is decreasing

When does a shortage happen and when does a surplus happen

Shortage

• When price falls, consumers want more but sppliers will supply less as they get less money

Surplus

• When price rises, so quantity supplied is increasing then quantiy supplie dincreases and get more profit but consuemrs will want less as it’s too expensive at a higher price.