It is known as maximum price or price ceiling when the government sets a maximum legal limit of a price of a particular good or service. For this to have an effect on market, the price ceiling must be placed below the natural market price. This normally leads to a shortage – the quantity demanded will be greater than the quantity supplied.
The following topics have been recently added under A Level Unit 2 (The price system and the micro economy)
Joint demand means two or more goods are demanded together. To consume one good, you need another good. In other words they are complements. For example, if the demand for tea increases, the demand for sugar will also increase. Here tea and sugar are complements.
Another good example of joint demand is, printers and ink cartridges. You might have noticed that some models of printers with very high functionality are sold at a very cheap price. You may think that the printers are of lower quality or produced with cheap labour.
The word equilibrium means at rest. Equilibrium in the market is the combination of price and quantity from which there is no tendency for buyers or sellers to move away. In a graphical representation, equilibrium means the intersection point of the supply and the demand curves.
Equilibrium Price or Market Clearing Price is the price at which the quantity demanded of a good equals the quantity supplied.
Goods and services can be classified into various categories based on their nature of scarcity.
A free good is available in abundance to people. Consumption of a free good does not arise in an opportunity cost.
Examples of free goods are air, water etc. Sometimes, a good maybe a free good in one country where as it may become an economic good in another country in which the consumers have to pay to use it.
The tutorial has been updated to reflect the changes to the requirement of the Cambridge A Level Syllabus.
Topic: Scarcity, choice and opportunity cost
Unit: Basic economic ideas and resource allocation
Dear visitors, feel free to suggest improvements to the tutorials posted on this website.
The following are the new tutorials posted under A Level Cambridge Unit 2 (Price system and the theory of the firm):
This tutorial is posted under ‘Cambridge A Level Economics’.
Individual Demand means the goods and services demanded by an individual. Individual demand for a particular good means the demand for that good by a specific individual. Read More …
Tutorials have been uploaded to cover the syllabus contents of the Unit 1 of Cambridge A Level Economics (Basic Economic Ideas)
The tutorials cover the following topics:
Click here to go to these tutorials
I hope you find this work useful.
New Quiz(Quiz 12) Added. It is from Cambridge O Level Unit 6 (Economic Indicators)
Click Here to go to Quiz 12