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ScotlandEconomics

Economics of the Market

6 dot points across 6 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

How does a firm work out its costs, its revenue and its profit, and why does the goal of profit drive production?

Costs, revenue and profit: fixed, variable, total and average costs; total and average revenue; and profit as the reward to enterprise.
A focused answer to the SQA National 5 Economics content on costs, revenue and profit, covering fixed, variable, total and average costs, total and average revenue, and profit calculated as total revenue minus total cost, the reward to enterprise that drives firms to produce.
11 min answer →

Why does the quantity people want to buy fall as price rises, and what shifts the whole demand curve?

Demand: the law of demand, the downward-sloping demand curve, movements along the curve versus shifts, and the non-price determinants that shift demand.
A focused answer to the SQA National 5 Economics content on demand, covering the law of demand and the downward-sloping demand curve, the difference between a movement along the curve and a shift of the curve, and the non-price determinants such as income, tastes, the price of related goods and population that shift demand.
11 min answer →

How do demand and supply together set the market price, and what happens when one of them shifts?

Market equilibrium and the price mechanism: equilibrium price and quantity, surpluses and shortages, market clearing, and how prices change when demand or supply shifts.
A focused answer to the SQA National 5 Economics content on market equilibrium and the price mechanism, covering how demand and supply set the equilibrium price and quantity, surpluses and shortages away from equilibrium, the market-clearing process, and how the equilibrium changes when demand or supply shifts.
12 min answer →

How do individuals and families make economic choices about spending, saving, borrowing and managing the risk of an uncertain future?

Personal economics: choices about spending, saving and borrowing; sources of income; budgeting; and managing risk and uncertainty.
A focused answer to the SQA National 5 Economics content on personal economics, covering the spending, saving and borrowing choices individuals and families make, sources of income such as wages, rent, interest and profit, budgeting under scarcity, and how households manage risk and uncertainty.
11 min answer →

Why are producers willing to supply more as price rises, and what shifts the whole supply curve?

Supply: the law of supply, the upward-sloping supply curve, movements along the curve versus shifts, and the non-price determinants that shift supply.
A focused answer to the SQA National 5 Economics content on supply, covering the law of supply and the upward-sloping supply curve, the difference between a movement along the curve and a shift of the curve, and the non-price determinants such as costs of production, technology, taxes and subsidies, and weather that shift supply.
11 min answer →

Why does scarcity force every individual, firm and government to choose, and what does each choice cost?

The basic economic problem of scarcity, the need for choice, opportunity cost as the next best alternative given up, and the four factors of production.
A focused answer to the SQA National 5 Economics content on the basic economic problem, covering scarcity of resources against unlimited wants, why this forces choice, opportunity cost as the next best alternative given up, and the four factors of production: land, labour, capital and enterprise.
11 min answer →