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Choices
Economic problem - limited resources, unlimited wants
Specialisation - concentrate on a particular product or task
+ raises output per person
+ reducing cost per unit
+ increase overall output
+ division of labour - production is split into many tasks
+ time saving
+ better quality
- immobility…

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- Technology
- Number of producers in same market
- Changes in price of other good
Consumer surplus - the difference between the price a consumer is willing to pay and the price they
actually pay / market price
Producer surplus - the difference between the price producers are willing…

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Cross prices elasticity of demand measures the responsiveness of demand for a product to a change
in the price of other related products.

Percentage change in the demand for Good X
Percentage change in the price of Good Y




Market Failure - causes productive and allocative inefficiency
When markets do…

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Information failure - When people have inaccurate or incomplete data to make potentially wrong
choices
Smoking - health warnings ignored
Education - benefits of university ignored

Asymmetric information - When somebody knows more than somebody else in the market Market
failure caused as people's incentives to buy and sell are…

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