Things to remember for Econs Test

Things to remember for Econs Test
  • When mentioning movement along a demand / supply curve, have to state the words “Expansion” and “Contraction
  • Draw a diagram to analyse the impact on the demand

Don’t get tricked by the question over here! What you want to draw is not just the demand curves, but also a supply curve that doesn’t change.

6 An ordinary supply curve is upward sloping, showing a positive correlation (1) between price and the quantity supplied (1). This is because the law of supply states that at higher prices, firms are more willing and more able to supply (1) at each given price level.

When talking about the shift of curves, remember to write a direction: not inwards and outwards, left or right!
When there is market equilibrium, there is no pressure on the price to change.

Both excess demand / supply and shortage / surplus should be mentioned. Price and quantity should not be labeled as P1, P2, Q1, Q2, and instead as Pe for the equilibrium price, Qe as the equilibrium quantity, Qd for quantity demanded and Qs as quantity supplied

If the demand is affected due to the substitute compliment issue, the demand / supply changes first. The price does not change first – what is the point of it?

Taxes imposed on suppliers include sales tax.

Reasons for price to fall – increase in supply or decrease in demand.

Conclusion of a discussion problem: Although something … something, something still outweighs something else and ……

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