Demand and supply in product markets Content Amplification Define a product market Explain the objectives of economic agents: that firms seek to maximise profits and consumers seek to maximise satisfaction/utility Understand the importance of marginal utility in the derivation of Factors influencing demand curves demand and Identify the main influences on demand and supply in product supply in markets product Understand why demand curves normally slope downward from markets left to right Understand why supply curves will normally slope upward from left to right, for example, producers will be able to make higher profits at higher prices and that higher levels of output mean increased marginal costs in the short run The Illustrate, using diagrams, equilibrium price and output determination situations in product markets of equilibrium price and output in a Explain effects on price and output of shifts in demand and freely supply curves competitive market Consumer and Define, explain and illustrate, using diagrams, consumer producer surplus and producer surplus surplus Understand the meaning of the terms price, income and cross price elasticities of demand and price elasticity of supply Price, income Explain the relationship between price elasticity of demand and and cross price total revenue elasticities of Use the concept of income elasticity to distinguish between demand, price normal and inferior goods elasticity of Apply the concept of elasticity to economic contexts for supply example, in the incidence of taxation and the incidence of subsidies
Demand and supply in product markets Content Amplification Factors influencing demand and supply in product markets Define a product market Explain the objectives of economic agents: that firms seek to maximise profits and consumers seek to maximise satisfaction/utility Understand the importance of marginal utility in the derivation of demand curves Identify the main influences on demand and supply in product markets Understand why demand curves normally slope downward from left to right Understand why supply curves will normally slope upward from left to right, for example, producers will be able to make higher profits at higher prices and that higher levels of output mean increased marginal costs in the short run The determination of equilibrium price and output in a freely competitive market Illustrate, using diagrams, equilibrium price and output situations in product markets Explain effects on price and output of shifts in demand and supply curves Consumer and producer surplus Define, explain and illustrate, using diagrams, consumer surplus and producer surplus Price, income and cross price elasticities of demand, price elasticity of supply Understand the meaning of the terms price, income and cross price elasticities of demand and price elasticity of supply Explain the relationship between price elasticity of demand and total revenue Use the concept of income elasticity to distinguish between normal and inferior goods Apply the concept of elasticity to economic contexts for example, in the incidence of taxation and the incidence of subsidies