OCR AS Economics - Markets in Action

OCR  AS Economics - Markets in Action: it includes market failure and diagrams, with abit of exam technique, I hope this helps! If there's any questions, corrections or anything like that, just shout :-) **

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  • Created by: Nahedaaa
  • Created on: 03-01-13 21:31

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Page 1

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Economic problem scarce resources compared to the infinite want
Opportunity cost the cost of the next best alternative forgone, when a choice is made

Factors of production (FOP's)

Capital ­ man made aid to production e.g. railway
Entrepreneur ­ manages resources e.g. Sir Richard Branson
Land ­ natural resources e.g.…

Page 2

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Specialisation concentration of workers/firm/region on a narrow range of goods and services

WHY IS IT GOOD? WHY IS IT BAD?
Increases productivity Demand for other goods/service decreases
Decrease in cost of production Natural disasters may ruin production
Quality of good/service increases

Division of Labour

WHY IS IT GOOD? WHY IS…

Page 3

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What affects demand?

Taste and fashion
over time it's constantly changing, if something is fashionable it will be high in demand. Taste is more
personal, for example, vegetarians won't buy beef

Price of substitutes/complements
if the price of a substitute increases then the demand for the good will increase, because…

Page 4

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Contraction and extension still works the same way as it
does with demand

*memory aid that supply goes up is that supply is to the
sky, to S's for both




What affects Supply? (COGS)

Cost of Production
the supply would increase if a company had to pay more for labour…

Page 5

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PED ­ Price Elasticity of Demand


Percentage change in Quantity Demand % QD
Percentage change in Price % P


Less than 1 means inelastic Greater than 1 elastic Unitary is 1


What affects PED?

Addiction
Proportion of income
Availability of substitutes
Necessities
Time


YED ­ Income Elasticity of Demand


Percentage…

Page 6

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PES - Price Elasticity of Supply




Less than 1 means income inelastic Greater than 1 income elastic 1 is Unitary

PES elastic then small change in ££ will have a big effect on the quantity supplied

Determinants of PES:
Availability of FOP's
Availability id sticks of the product
Time


Business…

Page 7

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Information failure
Asymmetric information info not shared equally between 2 parties

Why does this happen? Not enough info, not up to date, not accurate

Goods
Merit goods under produced and under consumed e.g. Libraries
Demerit goods overproduced and over consumed e.g. McDonalds



Subsidies payment usually from the government to encourage…

Page 8

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Regulation any legally enforced standard made by the government of a country




PROS CONS
Efficiency Hard to measure
£££ for the government
Company afford fine

Comments

Juliana Nyarko

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Your revision notes are just amazng particularly National and International economy notes was just a life saver .

Thank you

davidsalter

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This is a clear and concise set of revision notes on supply and demand theory. I would encourage students to use them interactively eg make your own abridged version, produce posters, revision cards etc.

Aishwarya

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This is amazing, thank you

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