Price and Output Determination

Equilibrium price and output (2)

 response to shortages and surpluses

 significance of ‘equilibrium’

Demand and supply curves (5)

effect of price being above equilibrium

surplus → price falls

effect of price being below equilibrium

shortage → price rises

equilibrium: where D = S

demand and supply example

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Effects of shifts in the demand curve

 movement along the supply curve and the new demand curve

Effects of shifts in the supply curve

 movement along demand curve and new supply curve

Incentives in markets (2)

 incentives to respond to price signals

 do incentives necessarily lead to desirable outcomes?

Identifying the position of demand & supply curves

Problems in identifying the position and shape of the demand curve: shift in supply curve

Case study: the housing market

the determinants of house prices: (6)

incomes

number of households

cost and availability of mortgages

speculation

taxation

supply-side factors

Case study: the housing market

effects of the COVID-19 pandemic (2)

effects on demand and supply

effects on house prices

Case study: the stock market (5)

 fluctuations in share prices

 factors influencing demand

 factors affecting supply

 share prices and business

 effects of the COVID-19 pandemic on stock market prices

Case study: the stock market

 fluctuations in share prices (2)

historical changes

importance of demand and supply

Case study: the stock market

 factors influencing demand (4)

the dividend yield

the price of and/or return on substitutes

incomes and wealth

expectations