Here we will look at what causes movements along the curve and the set of factors that cause the curves to shift, affecting both price and quantity, before discussing the meaning and significance of elasticity. Next, we will take a look at what happens when a market fails to produce a reasonable equilibrium. This situation typically occurs when either the market is not competitive or complete, or its participants are ill-informed. We will evaluate various ways in which the government can address these failures and begin to understand the intricate relationship between government and economics.
Upon successful completion, you will be able to:
- apply the concept of elasticity as a measure of responsiveness to various variables; and
- analyze how the market can be manipulated through price controls or quantity controls.