Market Economy
Need to KnowAt the end of this section the student should be able to:
• Explain, with examples, economic goods • Outline the assumptions that economists make about consumers • State the Law of Diminishing Marginal Utility • Recognise, given data, when DMU has set in • Outlines the assumptions of said law • Show that the principle of equi marginal returns holds true, given data Explain Consumer Surplus Give examples of market places • Define and graph individual demand • Define and graph market demand • Draft and graph sample demand schedule • Define the law of the demand • Explain, with examples, the exceptions to the law of demand • Outline the factors that affect demand and graphically illustrate the effects • Explain the substation effect with graphs • Explain the income effect with graphs • Explain, with examples, the difference between normal goods and inferior goods • Explain, with graphical example, the difference between and substitute and a complement • Define and graph individual supply • Define and graph market supply • Draft and graph sample supply schedule • Outline the factors that affect supply and graphically illustrate the effects • Graph and explain unusual supply curves (Min. Price, Fixed, Limited Capacity) • Explain Market Equilibrium • Graph and explain market equilibrium making reference to eq. price and quantity • Show how changes in demand and supply affect the equilibrium
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