IBDP Economics Chapter 2 Notes

competitive market-demands and supply

STUDY NOTES FOR ECONOMICS CHAPTER 2 – COMPETITIVE MARKET-DEMANDS AND SUPPLY

These notes have specially been curated by expert teachers to simplify and enlighten concepts given in IB Competitive markets- Demand and Supply HL. The notes are comprehensive in nature and are sufficient to study the chapter in depth and one need not look for other resources beyond the notes provided on our website which can be accessed for free. The notes for Competitive markets- Demand and Supply IBDP HL are available on our official website and can be downloaded for free. The material made available on Tychr’s website is available for all IBDP subjects and is specially curated after an extensive amount of effort to ensure that the notes are in consonance with the IB curriculum and are an amalgamation from various textbooks prescribed by the IBO.

In this chapter of Competitive markets- demand and supply we look at the competitive market which comprises of a large number of buyers and sellers with no individual control over the price. The price is determined by the forces of demand and supply. We study two types of markets: the product market and the factor market. Next we look at demand- the law of demand, concept of effective demand, demand schedule, the demand curve, individual demand to market demand and the reasons behind the shift of the demand curve and movement along the demand curve. Similarly, we look at the concept of supply- the law of supply, supply schedule and curve, market supply, the slope of the supply curve, the vertical supply curve and the movement along the supply curve.

The difference between the movement along the demand/ supply curves and the shift of the demand/ supply curves is very crucial to understand in this chapter. The next important concept in this chapter is of equilibrium where we study market equilibrium: demand and supply, equilibrium price and quantity (excess demand and excess supply), changes in the market equilibrium with 4 cases (1) demand increases, (2) demand decreases, (3) supply increases, (4) supply decreases. All the above-mentioned concepts are explained in detail with the help of graphs and schedules. In addition to this, the chapter also looks at linear demand function and linear supply function. The price mechanism helps in understanding resource allocation through two markets: the factor market and the goods and services market. Lastly, we look at the market efficiency and competitive market equilibrium.