ECONOMICSS GRADE 11 fo learners studying economics

Economics in South Africa as a business teacher for GRADE 11

1. microeconomics ECONOMICS GRADE 11

2. Utility – MU (Marginal) and TU |(Total)

3. Marginal utility & Diminishing utility

4. Demand – Law of Demand (relative to Buyers and Consumers) The Law of Demand – there is an inverse relationship between price (P) and quantity demanded (Q) Plotted on the X and Y axis When you plot the points you will get a DEMAND CURVE This means when the prices goes DOWN demand goes UP When the price goes UP demand goes DOWN Consumers are price conscious/sensitive Increase is always to the RIGHT

5. Why does it slope downwards? Substitution Effect (if the price goes down for Fanta people will buy more and demand increases but if the price goes up for Fanta people will look for substitute like Jive so the demand for Fanta decreases) Income Effect (when the price goes down people buy more Fanta because purchasing power has increased and vice versa, if the price goes up PP decreases) Law of Diminishing Marginal Utility (Utility means satisfaction, marginal means additional so it the law of decreasing ADDITTIONAL SATISFACTION )as you continue to consume a given product you will eventually get less additional utility (satisfaction) from each unit you consumer

6. Influences for Demand curve shift – 5 Shifters Tastes/preferences e.g. news on how healthy Milk is for the body increases demand or if the article is bad the demand will be less Number of consumers e.g. new consumers will increase demand Prices of related goods/substitutes e.g. for Milk/ Almond, Soy Milk Income e.g. depends on the product (normal vs inferior goods) increase income what happens to demand? Normal Goods – income and demand for the product are directly related. Inferior goods – income and the demand for the product are inversely related (opposites) Expectations – change in expectation e.g. if you think Petrol will go up tomorrow you will buy today, if you think it is going down you would wait – correct?

7. Supply and the Law of Supply We spoke about Milk before so lets look at supply of Milk The law of supply says there is a DIRECT relationship between price and quantity supplied Why do you think this is? Increase in P = increase in Q (increase in supply and expected profits) Increase is always to the right

8. What happens to supply for a product when price increase? Supply remains the same but Quantity supplied increases A change in price moves along the supply curve 5 shifters cause supply to change or SHIFT

9. Shifters of supply Prices/availability of resources (change in inputs such as price or increase in dairy cows) Number of producers (increase will increase supply) Technology (new technology increases supply) Government action: taxes & subsidies (subsidies to produce more, tax is opposite and supply would decrease) Expectations of future profit (if they expect Milk demand to increase and vice versa)

10. Elasticity

11. Price Elasticity of Demand P rice elasticity of demand  measures the responsiveness of demand after a change in a product's own price.

12. Forms of Elasticity (Demand)

13. Price Elasticity of Supply

14. Forms of Elasticity (Supply)