Summary
Summary Chapter 2 - The Allocation of Resources
- Course
- Institution
- Book
This summarises Chapter 2 - The Allocation of Resources of the CIE IGCSE Economics (0455) course.
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
CAIE IGCSE ECONOMICS (0455) SUMMARIZED NOTES 2023
-
Chapter 3 - Microeconomics Decision Makers
-
Unit 1 - The Basic Economic Problem
Seller
Follow
oscarseyau
Reviews received
Content preview
Cambridge International Education (CIE)International General Certificate of Secondary Education (IGCSE)
Study Notes
Economics [0455]
Unit 2 - The Allocation of Resources
1
, CIE IGCSE Economics [0455] Unit 2 - The Allocation of Resources
2.1 Marco and Micro Economics
Market - a place where many buyers and sellers come together
Microeconomics
Microeconomics - The study of individual and business economic behaviour
Microeconomics focuses on what happens in individual firms and the markets in which they operate.
e.g. study the market for cars - looking at behaviours and decisions of firms which produce cars and consumers who buy
them.
Macroeconomics
Macroeconomics - The study of the whole economy (of a country)
Macroeconomics focuses on the results of the each market added together and impact on the whole economy instead of
one particular market.
e.g. unemployment, economic growth, inflation, balance of trade/payments.
2.2 The Role of Markets in Allocating Resources
The Market System
Characteristics
There are a few characteristics of a market system, listed as follows:
- Lots of Buyers and Sellers
- Buyers: Satisfaction Maximisation, based on their level of income.
- Sellers: Profit Maximisation.
- Privately Owned Resources
- Governments play little/no role in the economy.
- Resources allocated via price mechanism
Benefit of the Market System
Avoids Shortages and Surpluses Competition Profit Motive
Firms would use their resources to As consumers will purchase the goods As entrepreneurs have the incentive
produce more products that have a and services that are cheapest in to make a higher profit, they make
higher demand and less of what’s price. This encourages firms to better quality products.
popular. compete to produce goods at a lower
price and allow consumers to
(Δ in Demand → Δ in Price → Δ in purchase goods at a lower price.
Profit → Δ in Resources Allocated)
(Firm A ↓ Price → Firm B also ↓ Price)
Page 2 of 13
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller oscarseyau. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
76462 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now