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O/L Unit 2: The allocation of resources: how the market works; market failure

Topic #
The allocation of resources
Describe the allocation of resources in:
• market economic systems
• mixed economic systems
Sectors of an Economy
Describe the terms used for sectors in an economy:
• Primary
• Secondary
• Service (tertiary)
The principle of equilibrium price
• Demonstrate the principle of equilibrium price
• Analyse simple market situations with changes in demand and supply
Changes in demand and supply conditions
• Describe the causes of changes in demand and supply conditions
• Analyse such changes to show effects in the market
Price elasticity of demand and supply
• Define price elasticity of demand
• Define price elasticity of supply
• Perform calculations
Usefulness of price elasticity of demand and supply
Demonstrate the usefulness of price elasticity in particular situations, such as in relation to:
• revenue changes
• consumer expenditure
The market system
Evaluate the merits of the market system
Market failure
• Describe the concept of market failure
• Explain the reasons for its occurrence
Private and social costs and benefits
• Define private and social costs
• Define private and social benefits
• Discuss conflicts of interest in relation to these costs and benefits in the short-term and long-term through studies of the following issues:
(i) conserving resources versus using resources
(ii) public expenditure versus private expenditure

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