Economics SSS1 First Term

WEEK 4

Concepts of Demand and Supply – Price System, Demand, Schedule, Curves and Laws.

Performance Objectives

Student should be able to:

1. Explain the meaning of price system, demand, draw schedules and curves of a given commodity.
2. State the law of demand.

Content

Meaning of Price system

In a free-market economy, all the decision-makers are free to make their own choices; no one will interfere. In this pursuit of self-interest and the general good of all, every economic agent (i.e., households and firms) is guided by a hidden hand of an invisible hand. The invisible hand mechanism, as was called by Adam Smith, operates due to free play of competition.

The price system is one in which all economic decisions are taken through the medium of prices which are, by nature, self-adjusting and self-correcting. An economy consisting of households and firms is connected by.... View More