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1. Demand is the amount of goods or services a consumer is able to and willing to buy at a
Price of related goods Preferences Income Number of buyers Future expectation Technology
2. Supply is the quantity of goods that a seller is able to and willing to supply at a given
Price of related goods Cost of production Future expectation of price Number of sellers/suppliers
3. Market Equilibrium occurs when the quantity demanded becomes the equal to the
quantity supplied.
P = Equilibrium Price
Q = Equilibrium quantity
Types of PED
1) Unit elasticity The value of PED is equal to 1. 2) Elastic demand The value of PED is greater than 1 but less than . 3) Inelastic demand The value of PED is greater than 0 but less than 1.
Types of YED
1) Income inelasticity The value is between 0 and 1. 2) Elastic income The value of YED is between 1 and . 3) Unit elasticity The value of YED is 1.
c) Cross Elasticity of Demand (XED) measures the response of consumers when the
price of substitute changes. XED = % change in QD of good A % change in price of good B If the value of XED is negative, then the two goods are said to be complements of each other. If the value of XED is positive, then the two goods are substitutes. If the value of XED is zero, that means the goods are not related to each other.
Types of PES
1) Inelastic supply The value of PES is between 0 and 1. 2) Elastic supply The value of PES is between 1 and . 3) Unit elasticity of supply The value of PES is equal to 1.
It is of 3 types:
1) Average Fixed cost (AFC) is the total fixed cost per output.
AFC = FC Q
2) Average Variable cost (AVC) is the total variable cost per unit output.
AVC = VC Q
3) Average Total cost (ATC) is the total cost per unit of output.
ATC = AFC + AVC ATC = FC + VC (OR)
Production Possibility Curve shows the maximum amount of different goods and
services that can be produced by the available factors of production. We cannot produce goods and services outside the curve so point D is unattainable. At point C, there is either misallocation of resources or there are unused resources. So, to get the maximum efficiency, goods should be produced on the curve such as point A and point B.
7. Specialization means dividing work into smaller and more specialized jobs. It is also called Division of Labor.
Provide legal protection for members such as representation in court if an employee is fighting a case against employer. Put pressure on the government to pass legislation that improves the rights of workers. Provide financial benefits such as strike pay whenever necessary. Done By: Hazel Grade - 9