How do consumers and producers make choices in trying to meet their economic objectives?

Conceptual understandings

• Interaction between consumers and producers in a market is the main mechanism through which resources are directed to meet the needs and wants in an economy.

• Consumer and producer choices are the outcome of complex decision-making.

• Welfare is maximized if allocative efficiency is achieved.

• Constant change produces dynamic markets.

What is market equilibrium?

How do economists model community surplus?

What is allocative efficiency?

Calculating consumer and producer surplus (HL Only)

PED & GOVT AND FIRM DECISIONS

Back to PES on Primary Goods (HL ONLY)

IA PRACTICE