Please enable JavaScript.
Coggle requires JavaScript to display documents.
economics paper 1 revision - Coggle Diagram
economics paper 1 revision
2.1 - the role of markets
a
market
is where buyers and sellers come together to buy and sell goods and services (can be a physical or virtual environment)
product market
- markets where goods and services are offered to consumers, businesses and the public sector
primary sector
- the direct use of natural resources. the extraction of basic goods from the land and sea
secondary sector
- all activities concerned with manufacturing or construction
tertiary sector
- all activities in the economy that involve the idea of a service
factor market
- markets where the services of factors of production are bought and sold
specialisation
is when individuals, firms, regions or counties concentrate on producing the goods and services they have an advantage in making it more efficient and often increasing output
exchange
is giving up something an individual has in return for something they need but do not possess
division of labour
- where workers specialise in, or concentrate on, one area of the production process
2.2 - Demand
demand - the willingness and ability to purchase a good or service at the given price in a given time period
derived demand - demand that comes about because of the demand for another project
a normal good is where demand increases as income increases
the law of demand - for most goods and services the quantity demanded varies inversely with price
the relationship between price and demand is that as price increases, demand falls and as price falls, demand increases
individual demand - the demand for a good or service by an individual consumer
market demand - the total demand for a good or service
to calculate price elasticity of demand you do: %change in quantity demanded / %change in price
elasticity of demand is a measure of the responsiveness of quantity demanded to a change in the price of the product
inelastic demand means the price change will lead to a smaller change in demand - the PED value will be between 0 and -1
elastic demand means the price change will lead to a larger change in demand - the PED value will be between -1 and infinity