Disposable income Income after all charges and taxes have been paid Spending Also called consumption To satisfy needs and wants Provide satisfaction Factors affecting consumption Disposable income The higher the income, higher the consumption Wealth Wealthy people usually spends more …
Money Something that is generally acceptable as a means of payment Barter System Exchange one good for another or one service for another However, such system can’t work in global trade. Co-existence of needs will not always occur that is …
2.11.1 Definition of the Mixed Economic System A mixed economic system combines elements of both the market economy and the planned economy. It includes both: Private sector decision-making via the price mechanism, and Government intervention to correct market failure and …
2.10.1 Definition of Market Failure Market failure occurs when the price mechanism fails to allocate resources efficiently, resulting in overproduction or underproduction of certain goods and services. In such cases, the market does not achieve allocative efficiency, and social welfare …
2.9.1 Definition of Market Economic System A market economic system (also known as a free market economy or capitalist economy) is an economic system in which economic decisions are made through the interaction of supply and demand without significant government …
2.8.1 Definition of PES Price Elasticity of Supply (PES) measures the responsiveness of quantity supplied of a good to a change in its price. Formula basis: % change in quantity supplied / % change in price PES is generally positive, …
2.7.1 Definition of PED Price Elasticity of Demand (PED) measures the responsiveness of quantity demanded of a product to a change in its price. Formula basis: % change in quantity demanded / % change in price It is always negative, …
2.6.1 Causes of Price Changes Price changes occur due to shifts in demand and/or supply in response to changes in market conditions. These changes disrupt equilibrium and lead to a new price and quantity. Key Causes of Demand Shift (Right …
2.5.1 Market Equilibrium Market Equilibrium occurs when quantity demanded equals quantity supplied at a particular price. This price is known as the equilibrium price, and the quantity is the equilibrium quantity. Key Definitions: Equilibrium Price: The price at which the …
Lesson Objectives Definitions of Supply Price and Supply Individual and Market Supply Conditions of Supply Definitions of Supply Supply refers to the willingness and ability to sell a product. Remember, production is not the same as supply. Production is all …