Micro

Dynamics of markets

The price mechanism rations goods. Ceteris paribus means other things stay equal, a change in the good's own price causes a movement along a curve, and other factors shift the curve.

CAPS

Grade 11 · Economics · Micro

Economics wants the concept, then the diagram or the data, then the consequence.

  • The papers

    Paper 1 is macroeconomics and economic pursuits. Paper 2 is microeconomics and contemporary economic issues. Each paper is 150 marks.

  • How to write it

    Define the term as CAPS uses it. If a graph is asked for, label both axes, the curves, and the equilibrium or the shift. Then say what happens to price, quantity, growth, inflation or unemployment. A curve with no labels does not explain.

  • How a marker reads it

    A common mix-up is saying a price cut shifts demand, when a price cut only changes quantity demanded along the same curve.

Essays are marked on the introduction, a body that applies the theory, and a conclusion that answers the question. A list of definitions is not an argument.

Worked theory

Worked theory. A spaza in Polokwane sells a cooldrink for R15 and moves 40 cans on a normal Saturday. The owner cuts the price to R12 and sells 55 cans, with the weather and people's pay unchanged. That is a movement along the demand curve, ceteris paribus. The next Saturday a heatwave hits and, at the old price of R15, she sells 70 cans. Buyers want more at every price because of the heat, not because the can got cheaper. The price cut slid along the curve. The heatwave shifted it.

More worked examples

  • Giyani payday loaves

    A bakery in Giyani sells the same loaf at the same price all month. In the week after payday, more loaves leave the shop. Income rose and the price did not, so demand shifted. If the bakery instead raised the loaf from R14 to R17 and sold fewer, with paydays unchanged, that would be a movement along demand. The till looks similar unless you know which thing changed, and the cause decides the word.

  • Worcester feed costs

    A butchery in Worcester has been selling chicken packs at R60. Feed costs rise, the farmer charges more, and the butchery supplies fewer packs at the same R60. That is a shift of supply, caused by cost, not by the shelf price. If the butchery then lifts the price to R75 and is willing to put out more packs, the response to its own price is a movement along the new supply curve. Cost shifted the curve, and the later price change moved along it.

In ordinary words

When the price of a good rises, quantity demanded usually falls, which is a movement along the demand curve. Ceteris paribus is the warning that income, tastes and the weather were assumed unchanged while only price moved. A change in those other factors shifts the whole demand curve, so buyers want a different amount at every price. Supply works the same way, because the good's own price moves quantity along the curve while costs or weather shift the curve, and mixing the words movement and shift mixes up the cause.

In South Africa

A Polokwane spaza fridge is counted once on a normal Saturday and again in a heatwave.

Part 1 / 4

What it is

The price mechanism rations goods. Ceteris paribus means other things stay equal, a change in the good's own price causes a movement along a curve, and other factors shift the curve.

More worked examples

Board walkthroughs on this topic. Open one, copy the working, then try the next.

Example 1 / 20

A firm in perfect competition sells at R10 per unit. Its MC at 100 units is R10. Is this its profit-maximising output?

How we got there

Read this like a teacher at the board. We go slowly, name every number, and say why we take each step.

Explain in another language · 11

1. What is the question asking?

Read the question twice. Circle the unknown. Underline every number and unit. The paper is asking: A firm in perfect competition sells at R10 per unit. Its MC at 100 units is R10. Is this its profit-maximising output?

Before any working — hunt first

Given

Numbers and units already in the sentence: R10 per · 100 units · R10. Copy each one into a column. A name without a number is not given.

Missing

After you copy the given, the letter that still has no number is missing. The paper is pointing at: Is this its profit-maximising output. Circle that word — that is the missing variable.

Find

We are required to find: Is this its profit-maximising output. Write that as a symbol on the left, with a question mark, before you touch a formula.

Calculate

What we need to calculate: Profit max where MR = MC. Then substitute the given, one line at a time, to get Is this its profit-maximising output.

In other words — as if you have never seen this before

If you have never seen this before: Profit max where MR = MC. We will name a method in words, write the formula with no numbers, then substitute one line at a time.

2. What do we already know?

P=R10; MC=R10.

3. Which method — and why this one?

Profit max where MR=MC.

4. Step-by-step working

  1. 01 / 08

    Step A — Read the question twice

    Slow down. Circle the word that names the unknown. Underline every number and its unit. Do not grab a formula yet — first decide what the paper is actually asking.

    Why this step: If you can say the method in a sentence, you will pick the right formula. First-timers skip this and grab the first equation they remember.

  2. 02 / 08

    Step A2 — Hunt: Given, Missing, Find, Calculate

    Given: Numbers and units already in the sentence: R10 per · 100 units · R10. Copy each one into a column. A name without a number is not given. Missing: After you copy the given, the letter that still has no number is missing. The paper is pointing at: Is this its profit-maximising output. Circle that word — that is the missing variable. Find: We are required to find: Is this its profit-maximising output. Write that as a symbol on the left, with a question mark, before you touch a formula. Calculate: What we need to calculate: Profit max where MR = MC. Then substitute the given, one line at a time, to get Is this its profit-maximising output.

    Why this step: Do not name the letters yet. First hunt: what already has a number (Given), what has no number (Missing), the word the paper wants (Find), and which formula still contains the missing letter (Calculate).

  3. 03 / 08

    Step B — Write the given in a column

    P=R10; MC=R10.

    Why this step: A column with units stops you mixing cm with m, or minutes with seconds. Markers can also see you started correctly.

  4. 04 / 08

    Step C — Name the method in words

    Profit max where MR=MC.

    Why this step: If you can say the method in a sentence, you will pick the right formula. First-timers skip this and grab the first equation they remember.

  5. 05 / 08

    Identify the given

    In perfect competition MR = P = R10; MC = MR at 100 units.

    Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.

  6. 06 / 08

    Step G — Sense-check the size

    Ask: is this the kind of number a Grade 10–12 paper would want? A speed of 3 000 ms for a learner walking, or a probability bigger than 1, means a unit or algebra slip. Estimate first: round the numbers and do the sum in your head.

    Why this step: Markers write ‘unrealistic’ in the margin when the method is right but the size is wild. A 10-second head check often finds a missing 10² or a unit that never changed.

  7. 07 / 08

    Step F — Box the answer with its unit

    Yes, 100 units maximises profit.

    Why this step: A number without a unit is half a mark on a Physics paper, and a marker can miss a Maths answer that is buried in working.

  8. 08 / 08

    Step H — What the marker is looking for

    On an NSC memo you usually earn: (1) a method mark for naming the right formula or idea in words, (2) an accuracy mark for substituting the given numbers with units, (3) an accuracy mark for the boxed answer with its unit. Write those three lines even if you are unsure of the arithmetic — blank pages score zero.

    Why this step: First-timers chase the final number and leave the method blank. The memo still pays out for the idea and the substitution even when the last line is wrong.

5. The answer

Yes, 100 units maximises profit.

Copy onto your answer sheet — in this order

Answer: Yes, 100 units maximises profit.

6. Check it like a marker

Rule MR=MC.

7. A trap first-timers fall into

First-timers often grab the first formula they remember, mix units (cm with m, minutes with seconds), or drop a minus sign. Write the formula in words first: “this equals that, because…”

Ntsako · fx-991ZA PLUS. Tap to calculate.