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Price mechanism - Coggle Diagram
Price mechanism
Theory of Demand (P6-19)
Law of Demand
Factors affecting demand
Change in consumer's income
Change in price of related goods
Price changes of goods
change in consumer's expectation
Government's policies
change in consumer's taste and preferences
change in composition of consumers
Change in demand is due to factors not relating to change in price of good/service
Change in quantity demanded is due to change in price of good/service
Derived Demand
Free market economy (P4-5)
Freedom of choice and enterprise
Pursuit of self-interest
Private ownership of property
Competition
Theory of Supply (P19-28)
Law of Supply
Factors affecting supply
Nature, 'random shocks' and other unpredictable events
Expectation of future price changes
Change in price of related goods
changes in tech
Change in cost of relevant resources
Government policies -- Indirect taxes and subsidies
Number of sellers
Change in quantity supplied is due to change in price of good/service
Change in supply is due to factors not relating to price of good/service
Market Equilibrium (P28-34)
Occurs when Qd=Qs
Producer surplus (P36-37)
Consumer surplus (P34-35)