Allocation of Resources · 4 question types
Past paper frequency (2018 to 2024)
This topic accounts for approximately 16% of your exam marks.
Equilibrium price, surplus/shortage, and price mechanism analysis are core Section B content; tested in most Paper 2 sittings.
A market is any arrangement in which buyers can trade with sellers. The trade can be face-to-face (a street stall) or virtual (eBay, Amazon). In every market, the interaction of demand and supply sets the price at which goods change hands and the quantity that gets traded.
Topics 4 and 5 looked at demand and supply on their own. This topic puts them together.
Two opposing pressures meet in any market:
The two sides settle on the price at which the quantity each side wants to trade is equal. That price is the market equilibrium.