RI Price Mechanism its Applications

CONTENTS: LECTURE NOTES • PRICE MECHANISM AND ITS APPLICATIONS (PART 1) o Demand and Supply Model o Price Mechanism in Resource Allocation • PRICE MECHANISM AND ITS APPLICATIONS (PART 2) o Elasticities and its Applications o Impact of Government Intervention o The Labour Market TUTORIAL PACKAGE • Supplementary Worksheets • Section A: Short Structured Questions • Section B: Case Study Questions • Section B: Essay Questions • Section C: Further Reading This series of lectures provides an insight into the workings of the price mechanism in a perfectly competitive market. It focuses on the use of the demand-supply framework and elasticity concepts to analyse product and factor markets such primary products, manufactured product, and the labour market. It also discusses the role of the price mechanism in the efficient allocation of resources. RAFFLES INSTITUTION YEAR 5 H2 ECONOMICS 2025 PRICE MECHANISM AND ITS APPLICATIONS ECONOMICS

RAFFLES INSTITUTION YEAR 5 H2 ECONOMICS 2025 Contents 1. MARKET ECONOMY ................................................................................................ 3 1.1 The Market System ................................................................................................ 3 1.2 The Price Mechanism ............................................................................................ 3 1.3 An Overview of Demand-Supply Model ............................................................... 5 2. DEMAND THEORY ................................................................................................... 7 2.1 Demand .................................................................................................................. 7 2.2 The Law of Demand .............................................................................................. 7 2.3 Movement along vs shifts of the demand curve .................................................. 9 2.4 Factors shifting the market demand curve ........................................................ 10 3. SUPPLY THEORY ................................................................................................... 15 3.1 Definition of Supply ............................................................................................. 15 3.2 The Law of Supply .............................................................................................. 15 3.3 Movement along vs shifts of the supply curve ...................................................... 17 3.4 Factors shifting the market supply curve .............................................................. 18 4. INTERACTION OF DEMAND AND SUPPLY .......................................................... 21 4.1 Effect of Demand Shifts on Equilibrium Price and Quantity .................................... 21 4.2 Effect of Supply Shifts on Equilibrium Price and Quantity .....................................