This opening chapter sets the scene by introducing vou to some key ideas and identifving the scone of economic analysis.

Land, labour, capital and enterprise can be directed toward countless activities, yet at any given moment only one set of choices can be implemented. Resource allocation is the process by which a society decides how to deploy its productive assets across those alternatives.

The demand curve offers a compact way to depict this relationship and to separate movements caused by price changes from shifts caused by other influences.

In thinking about supply, attention switches to firms (businesses), as it is firms that take decisions about how much outout to sunoly to the market

The previous chapters introduced the notions of demand and supply, and it is now time to bring these two curves together in order to meet the key concept of market equilibrium. The model can then be further developed to see how it provides insights into how markets operate.

Whether the changes in demand and supply are reflected in price or in quantity depends upon the extent to which demand and supply are sensitive to the change in market conditions.