Unit 1 – Markets in Action

You can find notes for Unit 1 here:

• Contextual Analysis

The Nature of Economics

• a) Scarcity
• b) Production possibility frontiers (PPFs)
• c) Specialisation, the division of labour, and the role of money
• d) Free market and mixed economies
• e) Positive and normative economics

Demand and Consumer Behaviour

• a) The demand curve
• b) Price, Income and Cross Elasticities of Demand
• c) Consumer behaviour

Supply

• a) The Supply Curve
• b) Price elasticity of supply

Price Determination

• a) Determination of market equilibrium
• b) Consumer and producer surplus
• c) Functions of the price mechanism
• d) Indirect taxes and subsidies

Wage Determination in Labour Markets

• ab) The demand for and the supply of labour
• c) Determination of wage rates

Market Failure

• a) Market failure

Government Intervention in Markets

• a) Methods of government intervention
• b) Government failure