簡介:IGCSE?/OLEVELECONOMICS,11THEBASICECONOMICPROBLEM,S1,FACTORSOFPRODUCTION,NATURALRESOURCESLANDMANMADERESOURCESCAPITALHUMANSKILLSANDEFFORTLABOURBUSINESSKNOWHOWENTERPRISE,PRODUCTION,USINGINPUTSRESOURCESTOMAKEOUTPUTSGOODSANDSERVICESTOSATISFYTHENEEDSANDWANTSOFCONSUMERS,CONSUMPTION,USINGUPGOODSANDSERVICESPRODUCTSTOSATISFYCONSUMERS’NEEDSANDWANTS,THEBASICECONOMICPROBLEM,HUMANWANTSAREUNLIMITEDBUTRESOURCESARESCARCE,SO,WEALLHAVETOMAKECHOICES,,THEREISALIMITEDAMOUNTOFRESOURCESSUCHASRAWMATERIALS,MACHINES,FACTORIESANDSKILLEDWORKERSBUTTHEREAREANUMBEROFDIFFERENTWAYSINWHICHTHEYCANBEUSED,,RESOURCEALLOCATIONTHEREFOREINVOLVESDECIDINGHOWBESTTOUSESCARCERESOURCESTOSATISFYASMANYNEEDSANDWANTSASPOSSIBLE,,,CHOICE,CHOICE,CHOICE,SIMILARLY,PEOPLEANDGOVERNMENTSONLYHAVEALIMITEDAMOUNTOFMONEYBUTHAVEMANYNEEDSANDWANTSTOSATISFY,100,,,,FOODENTERTAINMENTCLOTHING,DEFENCEHEALTHCAREROADS,,,,100BN,OPPORTUNITYCOST,OPPORTUNITYCOSTISTHECOSTOFCHOICEWHATWOULDYOUBUYWITHUS10HOWSHOULDTHEGOVERNMENTSPENDUS250MILLIONOR,SHOULDTHEGOVERNMENTCUTTAXESBYUS250MILLIONWHATOCCUPATIONWILLYOUCHOOSEWHENYOUFINISHYOURSTUDIESHOWSHOULDANEWBUSINESSINVESTUS20MILLIONSHOULDWECONSERVEMORENATURALRESOURCESANDWHATARETHENEXTBESTALTERNATIVESFOREGONE,PRODUCTIONPOSSIBILITYCURVES,,AFIRMPRODUCINGCARSANDTRUCKSWHATISTHEOPPORTUNITYCOSTOFPRODUCING20MORETRUCKS,,ANECONOMYPRODUCINGCONSUMERGOODSANDCAPITALGOODSWHATISTHEOPPORTUNITYCOSTOFPRODUCING15MORETONNESOFCONSUMERGOODS,,PRODUCTIONPOSSIBILITYCURVES,PRODUCTIONPOSSIBILITYCURVES,PRODUCTIONPOSSIBILITYCURVESPPCSSHOWTHEMAXIMUMCOMBINEDOUTPUTOFTWOORMOREPRODUCTSAFIRMORANENTIREECONOMYCANPRODUCEWITHITSAVAILABLERESOURCESRESOURCESAREBEINGUSEDEFFICIENTLYIFTHEYAREPRODUCINGTHEIRMAXIMUMOUTPUTBUT,BECAUSERESOURCESARELIMITED,PRODUCINGMOREOFONEPRODUCTMEANSPRODUCINGLESSOFANOTHERPPCSARETHEREFOREAUSEFULWAYOFSHOWINGTHEOPPORTUNITYCOSTOFPRODUCINGMOREOFONEPRODUCTINTERMSOFHOWMUCHOFANOTHERMUSTBEGIVENUP,IGCSE?/OLEVELECONOMICS,21ECONOMICSYSTEMS,S2,RESOURCEALLOCATION,BECAUSEPRODUCTIVERESOURCESARESCARCERELATIVETOHUMANWANTSWEMUSTDECIDE,ECONOMICSYSTEMS,WHOINANECONOMYDECIDESWHATGOODSANDSERVICESTOPRODUCE,HOWTOPRODUCETHEMANDWHOTOPRODUCETHEMFOR,ANDHOWARETHESEDECISIONSAREMADE,ECONOMICSYSTEMS,,,CHINACUBA,,NORTHKOREA,,DENMARKFRANCEITALYSWEDENUKMANYDEVELOPEDECONOMIES,,ARGENTINAMAURITIUSNEPALPARAGUAY,,BAHAMASSINGAPORE,,THEMARKETECONOMICSYSTEM,,,,,,PRIVATESECTORPRODUCERS,,CONSUMERS,GOODSANDSERVICES,MONEY,PRODUCTION,EXCHANGE,CONSUMPTION,INAFREEMARKETECONOMICSYSTEMALLDECISIONSARETAKENBYPRIVATESECTORORGANIZATIONSANDINDIVIDUALSTHEREISLITTLEORNOROLEFORGOVERNMENTORAPUBLICSECTORANDTHEREFORELITTLEORNOTAXATIONORPUBLICSPENDING,,,THEPRICEMECHANISM,,AMARKETISANYSETOFARRANGEMENTSTHATBRINGSTOGETHERALLTHEPRODUCERSANDCONSUMERSOFAGOODORSERVICESOTHATTHEYCANENGAGEINEXCHANGE,PRIVATEFIRMSPRODUCEGOODSANDSERVICESTOMAXIMIZETHEIRPROFITS,CONSUMERSCONSUMEGOODSANDSERVICESTOMAXIMIZETHEIRUTILITYSATISFACTION,ASCONSUMERDEMANDFORAPRODUCTRISES,,PRODUCTIONBECOMESMOREPROFITABLE,SOPRODUCERSINCREASEOUTPUT,,PRODUCTIONBECOMESLESSPROFITABLE,SOPRODUCERSREDUCEOUTPUT,,,MARKETPRICEANDQUANTITYTRADED,MARKETPRICERISES,MARKETPRICEFALLS,ASCONSUMERDEMANDFORAPRODUCTFALLS,WHAT’SGOODABOUTTHEMARKETSYSTEM,,AWIDEVARIETYOFGOODSANDSERVICESWILLBEPRODUCEDTOSATISFYCONSUMERWANTSFIRMSRESPONDQUICKLYTOCHANGESINCONSUMERWANTSANDSPENDINGPATTERNSTHEPROFITMOTIVEOFFIRMSENCOURAGESTHEMTODEVELOPNEWPRODUCTSANDUSETHEMOSTEFFICIENTMETHODSOFPRODUCTIONTHEREARENOTAXES,,,PROFITSCANBEINCREASEDBYINCREASINGSALESAND/ORREDUCINGCOSTSOFPRODUCTION,IFCONSUMERDEMANDISRISING,PRICESWILLRISEANDPRODUCTIONBECOMESMOREPROFITABLEENTREPRENEURSWILLALLOCATERESOURCESTOTHEIRMOSTPROFITABLEUSES,,THEREISNOPUBLICSECTORINATOTALLYFREEMARKETECONOMICSYSTEM,,HOWTHEMARKETSYSTEMCANFAIL,,MARKETFAILUREWHENFREEMARKETSFAILTOPRODUCEGOODSANDSERVICESTHATAREWORTHWHILEORWHENTHEDECISIONSOFPRODUCERSORCONSUMERSRESULTINWASTEFULORHARMFULACTIVITIES,,NATIONALPARK,,HOWTHEMARKETSYSTEMCANFAIL,,MARKETFAILUREWHENFREEMARKETSFAILTOPRODUCEGOODSANDSERVICESTHATAREWORTHWHILEORWHENTHEDECISIONSOFPRODUCERSORCONSUMERSRESULTINWASTEFULORHARMFULACTIVITIES,,,,THEMIXEDECONOMICSYSTEM,,INAMIXEDECONOMYAGOVERNMENTCANINTERVENEINDIFFERENTMARKETSINANATTEMPTTOCORRECTTHEWORSTMARKETFAILURESITCANPROVIDEUSEFULANDESSENTIALGOODSANDSERVICESITCANPROVIDEGOODSANDSERVICESFORPEOPLEINTHEGREATESTNEEDITCANEMPLOYPEOPLEINPUBLICSECTORORGANIZATIONSANDPROVIDEFINANCIALSUPPORTTOPRIVATESECTORFIRMSTOBOOSTOUTPUTANDEMPLOYMENTITCANOUTLAWTHEPRODUCTIONOFHARMFULGOODSANDDANGEROUSACTIVITIESITCANOUTLAWBUSINESSPRACTICESTHATRESTRICTCOMPETITIONORMISLEADCONSUMERS,THEMIXEDECONOMICSYSTEM,,AMIXEDECONOMYTHEREFORECOMBINESTHEADVANTAGESOFAMARKETECONOMICSYSTEMWITH,,HOWMIXED,,GOVERNMENTINTERVENTIONSOMEPROBLEMS,,BYCORRECTINGFAILURESINSOMEMARKETS,AGOVERNMENTMAYDISTORTTHEALLOCATIONOFRESOURCESANDCAUSEPROBLEMSINOTHERSHIGHTAXESONPEOPLEANDFIRMSCANDISTORTMARKETPRICESIGNALSANDREDUCEWORKINCENTIVESLANDREGULATIONSCANINCREASEPRODUCTIONCOSTSANDTHEREFOREREDUCETHEPROFITABILITYANDSUPPLYOFSOMEGOODSANDSERVICESPUBLICSECTORORGANIZATIONSMAYBEINEFFICIENTANDPRODUCEPOORQUALITYGOODSANDSERVICESBECAUSETHEYDONOTHAVETOMAKEAPROFITSOMEGOVERNMENTSPENDINGMAYBEFORPOLITICALOREVENPERSONALGAIN,IGCSE?/OLEVELECONOMICS,22HOWMARKETSWORK,S3,,,WHATISAMARKET,THEMARKETFORAGOODORSERVICECONSISTSOFALLTHOSEPRODUCERSWILLINGANDABLETOSUPPLYITANDALLTHOSECONSUMERSWILLINGANDABLETODEMANDIT,DEMANDGOODSANDSERVICESTOSATISFYTHEIRNEEDSANDWANTS,SUPPLYGOODSANDSERVICESTOEARNPROFITS,HOWMANYFIZZYDRINKS,IFCANSWERE5EACH,MANYPRODUCERSFEWCONSUMERS,IFCANSWERE10CENTSEACH,FEWPRODUCERSMANYCONSUMERS,DEMAND,THEWANTORWILLINGNESSOFCONSUMERSTOBUYAPRODUCTTOBEANEFFECTIVEDEMANDACONSUMERMUSTHAVEENOUGHMONEYTOBUYTHEPRODUCTASPRICERISES,THEQUANTITYDEMANDEDBYCONSUMERSCONTRACTSASPRICEFALLS,THEQUANTITYDEMANDEDBYCONSUMERSEXTENDSADEMANDCURVESLOPESDOWNWARDS,SUBSTITUTESANDCOMPLEMENTS,SUBSTITUTESCANSATISFYTHESAMEWANT,COMPLEMENTSAREINJOINTDEMAND,OR,OR,OR,MARKETDEMAND,THESUMOFALLINDIVIDUALCONSUMERDEMANDSFORAPARTICULARPRODUCT,ARISEINDEMANDTHEMARKETDEMANDCURVESHIFTSOUTWARDSPOSSIBLECAUSESAREANINCREASEINDISPOSABLEINCOMESAFTERTAXARISEINTHEPRICEOFSUBSTITUTESAFALLINTHEPRICEOFACOMPLEMENTTASTESANDFASHIONFAVOURTHEPRODUCTANINCREASEINADVERTISINGARISEINTHEPOPULATIONOTHERFACTORS,EGHOTWEATHERINCREASESDEMANDFORCOLDDRINKSANDSUNCREAMS,MARKETDEMAND,THESUMOFALLINDIVIDUALCONSUMERDEMANDSFORAPARTICULARPRODUCT,AFALLINDEMANDTHEMARKETDEMANDCURVESHIFTSINWARDSPOSSIBLECAUSESAREAFALLINDISPOSABLEINCOMESAFTERTAXAFALLINTHEPRICEOFSUBSTITUTESARISEINTHEPRICEOFACOMPLEMENTTASTESANDFASHIONFAVOUROTHERPRODUCTSAREDUCTIONINADVERTISINGAFALLINTHEPOPULATIONOTHERFACTORS,EGHOTWEATHERREDUCESTHEDEMANDFORWINDERCOATS,NO,IFTHEPRODUCTISANINFERIORGOODASINCOMERISES,CONSUMERSBUYLESSASTHEYSWITCHTHEIRDEMANDTOOTHERMOREPREFERABLEPRODUCTS,YES,IFTHEPRODUCTISANORMALGOODASINCOMERISES,CONSUMERSAREWILLINGANDABLETOBUYMORE,INCOMEANDDEMAND,BUTWILLARISEINCONSUMERINCOMEALWAYSLEADTOANINCREASEINDEMANDFORAPRODUCT,,,,,SUPPLY,THEWILLINGNESSANDABILITYOFFIRMSTOMAKEAPRODUCTAVAILABLETOCONSUMERSASPRICERISES,THEQUANTITYSUPPLIEDBYPRODUCERSEXTENDSBECAUSEPRODUCTIONBECOMESMOREPROFITABLEASPRICEFALLS,THEQUANTITYSUPPLIEDBYPRODUCERSCONTRACTSBECAUSEPRODUCTIONBECOMESLESSPROFITABLEASUPPLYCURVESLOPESUPWARDS,MARKETSUPPLY,THESUMOFALLINDIVIDUALPRODUCERS’DECISIONSABOUTTHESUPPLYOFAPARTICULARPRODUCT,ARISEINSUPPLYTHEMARKETSUPPLYCURVESHIFTSOUTWARDSPOSSIBLECAUSESAREOTHERPRODUCTSBECOMELESSPROFITABLETOPRODUCEAFALLINTHECOSTOFFACTORSOFPRODUCTIONANINCREASEINTHESUPPLYOFRESOURCESTECHNICALPROGRESSANDIMPROVEMENTSINPRODUCTIONPROCESSESANDMACHINERYANINCREASEINBUSINESSOPTIMISMANDEXPECTATIONSOFPROFITTHEGOVERNMENTSUBSIDIZESPRODUCTIONAND/ORCUTSTAXESONPROFITSOTHERFACTORS,EGGOODWEATHERBOOSTSCROPHARVESTS,MARKETSUPPLY,AFALLINSUPPLYTHEMARKETSUPPLYCURVESHIFTSINWARDSPOSSIBLECAUSESAREOTHERPRODUCTSBECOMEMOREPROFITABLETOPRODUCEARISEINTHECOSTOFFACTORSOFPRODUCTIONAFALLINTHESUPPLYOFRESOURCESTECHNICALFAILURES,SUCHASACUTINPOWERSUPPLIESORMECHANICALBREAKDOWNSAFALLINBUSINESSOPTIMISMANDPROFITEXPECTATIONSTHEGOVERNMENTWITHDRAWSSUBSIDIESAND/ORINCREASESTAXESONPROFITSOTHERFACTORS,EGWARSANDNATURALDISASTERS,THESUMOFALLINDIVIDUALPRODUCERS’DECISIONSABOUTTHESUPPLYOFAPARTICULARPRODUCT,MARKETEQUILIBRIUM,,,,,PRICEPERUNIT,QUANTITYTRADEDPERPERIOD,D,D,S,S,,,EQUILIBRIUMQUANTITYTRADEDQE,MARKETPRICEPE,0,AMARKETISINEQUILIBRIUMWHEREMARKETDEMANDEQUALSMARKETSUPPLYATTHEEQUILIBRIUMMARKETPRICETHEQUANTITYCONSUMERSWISHTOBUYISEXACTLYEQUALTOTHEQUANTITYPRODUCERSWISHTOSELLIFAMARKETISINEQUILIBRIUMTHEREARENOPRESSURESTOCHANGETHEMARKETPRICE,MARKETDISEQUILIBRIUM,,,,,PRICEPERUNIT,QUANTITYTRADEDPERPERIOD,D,D,S,S,,PE,0,AMARKETISINDISEQUILIBRIUMIFTHEQUANTITYCONSUMERSWISHTOBUYISNOTMATCHEDBYTHEQUANTITYPRODUCERSWISHTOSELL,,,P1,P2,,,,ATPRICEP1THEREISANEXCESSSUPPLYPRICEWILLNEEDTOFALLTOPERSUADECONSUMERSTOBUYMOREANDFORPRODUCERSTOCONTRACTTHEIRSUPPLY,ATPRICEP2THEREISANEXCESSDEMANDPRICEWILLNEEDTORISETOREDUCECONSUMERDEMANDANDTOENCOURAGEPRODUCERSTOSUPPLYMORE,ANINCREASEINMARKETPRICE,IFMARKETDEMANDRISESORIFMARKETSUPPLYFALLS,,,,,,,,,,,PRICEPERUNIT,QUANTITYTRADED,,0,D,S,D,D1,D1,S,P1,P,Q,Q1,,,,,,,,,,,,QUANTITYTRADED,0,D,S,D,S,P1,Q1,Q,,,PRICEPERUNIT,,S1,S1,,P,ADECREASEINMARKETPRICE,IFMARKETDEMANDFALLSORIFMARKETSUPPLYRISES,,,,,,,,,,,PRICEPERUNIT,QUANTITYTRADED,,0,D1,S,D1,D,D,S,P,P1,Q1,Q,,,,,,,,,,,,QUANTITYTRADED,0,D,S1,D,S1,P,Q,Q1,,,PRICEPERUNIT,,S,S,,P1,,HOWRESPONSIVEISDEMANDTOCHANGESINPRICE,,1PERCAN,NOWONLY90CENTS,AFTER,BEFORE,,IFDEMANDISRELATIVELYELASTIC,ASMALLCHANGEINPRICECAUSESARELATIVELYLARGECHANGEINQUANTITYDEMANDED,HOWRESPONSIVEISDEMANDTOCHANGESINPRICE,,AFTER,BEFORE,ASMALLCHANGEINPRICECAUSESONLYARELATIVELYSMALLCHANGEINQUANTITYDEMANDED,NOWONLY2,,220,IFDEMANDISRELATIVELYINELASTIC,,,PRICEELASTICITYOFDEMAND,HOWRESPONSIVECONSUMERDEMANDISTOACHANGEINPRICE,ANDTHEREFOREHOWREVENUESMAYRESPONDFOLLOWINGACHANGEINPRICE,,PERCENTAGECHANGEINPRICE1/520PERCENTAGECHANGEINPASSENGERNUMBERS5/1005PRICEELASTICITYOFDEMAND20/54,PERCENTAGECHANGEINPRICE05/20025PERCENTAGECHANGEINPASSENGERNUMBERS10/5020PRICEELASTICITYOFDEMAND20/2508,ELASTIC,INELASTIC,DEMANDFORAPRODUCTWILLBEPRICEELASTICIFWHYBECAUSETHEPRODUCTHASMANYCLOSESUBSTITUTESCONSUMERSCANBUYINSTEADIFTHEPRICERISES,EGDIFFERENTWASHINGDETERGENTSTHEPRODUCTISEXPENSIVE
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