Economics - Ujian Sekolah

A situation where there is not enough to satisfy everyone’s wants

Unlimited wants exceeding finite resources

• Land: gifts of nature available for production (most immobile)

• Labour: Human effort used in producing goods and services

• Capital: Human made goods used to produce other goods and services

• Enterprise: The willingness and ability to bear uncertain risks and to make decisions in a business (most mobile)

The loss of the next best alternatve

A curve that shows the maximum output of two types of products that a country can generate if it uses all of its factors of production.

When there is any change in the allocation of existing resources within an economy

The study of individual markets & sections of the economy. It examines the different choices individuals, households & firms make and what factors influence their choices.

The study of economic behaviour & decision making in the entire economy. It examines the role of the government in achieving economic growth & human development through the implementation of specific government policies

• What to produce

• How to produce

• Who is the receive the products produced

The amount of a good/service that a consumer is willing & able to purchase at a given price in a given time period

Extension in demand

Contraction in demand

The price, which is the only factor that changes (this causes a change in quantity demanded)

• Contraction = Increase in price, decrease in QD

• Extension = Decrease in price, increase in QD

Example of movement along the demand curve

Decrease in demand

Conditions of demand (irrespective of the price level)

• Advertising campaigns

• Changes in population

• Changes in taste and fashion

  Etc.

Example of shift of the demand curve

D1 → increase

D2 → decrease

The amount of a good/service that a producer is willing & able to supply at a given price in a given time period.

• The supply curve is sloping upward as there is a positive relationship

Contraction in supply

Extension in supply

Price (the only factor), there will be a change in QS (quantity supplied)

• Extension = Increase in price, increase in QS

• Contraction = Decrease in price, decrease in QS

Example of movement along a supply curve

Increase in supply

Decrease in supply

Conditions of supply (irrespective of the price level)

• Change in cost of production

• Improvements in technology

• Taxes

• Subsidy

• Conditions (health of livestock, crops, weather)

• Prices of other products

• Disasters and wars

• Discoveries and depletions of commodities

Example of shift of the supply curve

S1 → Decrease

S2 → Increase

Demand = Supply

Demand ≠ Supply

Excess demand (supply cannot keep up)

Excess supply (demand cannot keep up)

Price elasticity of demand measures how responsive the change in quantity demanded is to a change in price

• The PED value will always be negative so economists ignore the sign and present the answer as positive.

Price elasticity of supply (PES) measures how responsive the change in quantity supplied is to a change in price

A market economy/free market economy is an economy that has no (little) government intervention in the allocation of resources & distribution of goods/services

The part of the economy controlled by the goverment

Covers business organisations which are owned by shareholders and individual