Economics Revision Sheet 11th Grade

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Questions and Answers

What indicates the equilibrium point on a graph involving supply and demand?

The equilibrium point is indicated where the supply curve intersects the demand curve.

How does an increase in price help restore equilibrium in a market experiencing a shortage?

An increase in price reduces the quantity demanded and increases the quantity supplied, helping to eliminate the shortage.

List three non-price factors that can affect the demand for a product.

Disposable income, consumer tastes, and prices of complementary goods.

What are the effects of a market surplus, and what typically happens to restore equilibrium?

A surplus occurs when supply exceeds demand, leading to unsold goods, and equilibrium is restored by lowering the price. Signup and view all the answers

Identify one non-price factor that can lead to a decrease in supply and explain its impact.

Increased production costs can lead to a decrease in supply, as higher costs may discourage producers from offering as much product. Signup and view all the answers

What does relative scarcity refer to in economics?

Relative scarcity refers to the situation where people's unlimited needs and wants exceed the limited resources available. Signup and view all the answers

Name and describe the three types of productive resources.

The three types of productive resources are natural resources, which occur in nature; labor resources, which are the mental or physical efforts of people; and capital resources, which are manufactured goods used in production. Signup and view all the answers

What are the three basic economic questions every society must answer?

The three basic economic questions are: what to produce, how to produce it, and for whom to produce. Signup and view all the answers

How do the household sector and business sector interact in an economy?

The household sector provides labor and capital in exchange for income from the business sector. Signup and view all the answers

Define demand in economic terms.

Demand refers to the quantity of goods and services that buyers are willing and able to purchase at a given price. Signup and view all the answers

What does the law of demand state?

The law of demand states that as the price increases, the total quantity demanded decreases, and as the price decreases, the total quantity demanded increases. Signup and view all the answers

Explain market equilibrium.

Market equilibrium occurs when the total quantity consumers demand is equal to the total quantity producers are willing to supply. Signup and view all the answers

Describe the effects of price changes on supply.

An increase in price leads to an expansion of supply (higher quantity supplied), while a decrease in price results in a contraction of supply (lower quantity supplied). Signup and view all the answers

Study Notes

Relative Scarcity

Definition: The condition where unlimited wants exceed limited resources available to satisfy those wants.

Productive Resources

Natural Resources: Resources found in nature used in production.
Labour Resources: Mental and physical efforts provided by individuals during the production process.
Capital Resources: Manufactured goods used in the production of other goods.

Basic Economic Questions

What to produce?
How to produce?
Who to produce it for?

Interaction of Household and Business Sectors

Households provide labour, capital, and land to businesses in exchange for income.

Demand

Definition: The quantity of goods and services buyers are willing and able to purchase at a specific price.

Supply

Definition: The quantity of goods and services producers are willing and able to provide at a specific price.

Law of Demand

Principle: As price increases, total quantity demanded decreases; as price decreases, total quantity demanded increases.

Demand Curve

Ability to illustrate the relationship between price and quantity demanded on a graph.

Expansion and Contraction of Demand

Expansion: Lower prices lead to increased quantity demanded (movement down the curve).
Contraction: Higher prices lead to decreased quantity demanded (movement up the curve).

Movement Along the Demand Curve

Changes in quantity demanded due to price changes while the demand curve itself remains unchanged.

Law of Supply

Principle: As price increases, total quantity supplied increases; as price decreases, total quantity supplied decreases.

Supply Curve

Ability to illustrate the relationship between price and quantity supplied on a graph.

Expansion and Contraction in Supply

Expansion: Higher prices lead to increased quantity supplied (movement up the curve).
Contraction: Lower prices lead to reduced quantity supplied (movement down the curve).

Movement Along the Supply Curve

Changes in quantity supplied based on price changes while the supply curve remains constant.

Market Equilibrium

Occurs when total quantity demanded equals total quantity supplied, leading to a stable market condition.

Equilibrium Graphing

Ability to identify the equilibrium point, equilibrium price, and equilibrium quantity on a graph.

Market Shortage

Defined as demand exceeding supply, resulting in insufficient goods or services available at a low price.
Implies that price increases to correct the imbalance.

Return to Equilibrium from Shortage

Achieved by increasing the price to balance demand and supply.

Market Surplus

Defined as supply exceeding demand, resulting in excess goods or services at a high price.
Indicates that price decreases to restore balance.

Return to Equilibrium from Surplus

Achieved by lowering the price to align supply with demand.

Identifying Shortage and Surplus on Graphs

Ability to visually represent areas of shortage and surplus on supply and demand graphs.

Equilibrium Adjustment Graphs

Demonstrating graphically how equilibrium is achieved from both surplus and shortage conditions.

Non-Price Factors Affecting Demand

Influencing factors include consumer disposable income, tastes, seasonal changes, prices of complementary goods, prices of substitute goods, and population size.
Demand curve shifts right for increased demand and left for decreased demand.

Non-Price Factors Affecting Supply

Influencing factors include technological advancements, seasonal changes, and production costs.
Supply curve shifts right for increased supply and left for decreased supply.

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Description

This quiz is designed to help students revise key concepts from their economics curriculum, focusing on relative scarcity and productive resources. Students will explore definitions and descriptions that are essential for understanding economic principles. Perfect for exam preparation or class revisions.