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004 Chapitre 3 Ibtissam
004 Chapitre 3 Ibtissam
markets?
Market: any situation that brings together buyers and sellers of goods or services.
Types of Economies - In the modern world today, there is a range of economic systems:
Market Economy: an economy where economic decisions are decentralized, resources are
owned by private individuals, and businesses supply goods and services based on demand.
Competitive Market: a market in which there is a large number of buyers and sellers, so that no
one can control the market price.
Free Economy: a market in which the government does not intervene in any way.
• What are the characteristics of a planned, or command, economy?
Planned (or Command) Economies: an economy where economic decisions are passed down
from government authority and where resources are owned by the government.
• Resources and businesses are owned by the government.
• Government decides what goods and services will be produced and what prices will be
charged for them.
• Government decides what methods of production will be used and how much workers
will be paid
• What is demand and the law of demand?
Demand: the relationship between the price of a certain good or service and the quantity of
that good or service someone is willing and able to buy.
Law of Demand: the common relationship that a higher price leads to a lower quantity
demanded of a certain good or service and a lower price leads to a higher quantity demanded,
while all other variables are held constant.
• What is a demand curve?
It ‘s a graphic representation of the relationship between price and quantity demanded of a
certain good or service, with price on the vertical axis and quantity on the horizontal axis.
How can you create a demand curve using a data set?
• Which factors cause a shift in the demand curve and explain why the shift occurs?
Shift in demand happens when a change in some economic factor (other than price) causes
a different quantity to be demanded at every price.
• changing tastes or preferences
• changes in the composition of the population
• changes in the prices of related goods
• changes in expectations about future prices
The demand for a product can be affected by changes in the prices of related goods such as
substitutes or complements.
• Substitutes: goods or services that can be used in place of one another
• Complements: goods or services that are used together because the use of one enhances
the use of the other.
• What are substitutes and complements and give examples?
• Substitutes: goods or services that can be used in place of one another. (coca cola and
pepsi)
• Complements: goods or services that are used together because the use of one enhances
the use of the other. ( sugar and tee) ( cereal and milk)
• How do you draw a demand curve and graphically represent changes in demand?
• What is supply and the law of supply?
Supply: the relationship between the price of a certain good or service and the quantity of
that good or service producers are willing to offer for sale.
Law of Supply: the common relationship that a higher price leads to a higher quantity
supplied of a certain good or service and a lower price leads to a lower quantity supplied, while
all other variables are held constant.
What is a supply curve?
Supply Curve: a graphic representation of the relationship between price and quantity supplied
of a certain good or service, with price on the vertical axis and quantity on the horizontal axis.
How do you create a supply curve using a data set?
Which factors cause a shift in the supply curve and explain why the shift occurs?
A shift in supply means a change in the quantity supplied at every price.
• Production Costs Affect Supply: When costs of production fall, a firm will tend to supply
a larger quantity at any given price for its output. This can be shown by the supply
curve shifting to the right.
• Shift in Supply Due Increased Production Costs a higher cost of production typically
causes a firm to supply a smaller quantity at any given price. In this case, the supply curve
shifts to the left.
• Subsidy: A government payment to firms to encourage production of some good or
service. From a firms perspective it reducing the cost of production.