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CGMA BA1
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Textbook
Introduction
1. Goals and decisions of an organization
2. The market system
2.1 Introduction
2.2 Supply
2.3 Demand
3. The domestic economy
4. Macroeconomics – The international economy
5. Macroeconomics – Index numbers
6. Introduction to the financial context of business entities
7. Foreign currencies
8. Investment appraisal
9. Summarizing and analyzing data
10. Inter-relationships between variables
11. Time series model
Wrapping up
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2.1 Introduction
CGMA BA1
2. The market system
Our CGMA course is currently in development and is a work-in-progress.

Introduction

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Definitions
Supply
The quantity of a good or service that producers are willing and able to offer for sale at different prices over a given period of time.
Demand
The quantity of a good or service that consumers are willing and able to purchase at different prices over a given period of time.

In the previous chapter, the focus was mostly on external factors, with less attention on what happens inside the organization and how changes in market forces affect it.

This chapter looks at demand and supply, and at how government intervention can address areas where market forces don’t lead to the best outcomes. You’ll also notice that assessments tend to draw more heavily on this chapter than the previous one, so the material is a step up in difficulty.

Demand and supply

  • Fundamental concepts in market economics
  • Determine prices and quantities in markets
  • Interaction shapes market equilibrium

Market equilibrium

  • Point where demand equals supply
  • Sets equilibrium price and quantity
  • Shifts in demand or supply disrupt equilibrium

Government intervention

  • Addresses market failures (e.g., externalities, public goods)
  • Tools: taxes, subsidies, price controls, regulation
  • Aims to improve market outcomes where forces alone are insufficient

Assessment emphasis

  • Greater focus on application and analysis
  • Requires understanding of both theory and real-world implications
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Next  | 2.2.1 Market failures and government intervention
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Introduction

Definitions
Supply
The quantity of a good or service that producers are willing and able to offer for sale at different prices over a given period of time.
Demand
The quantity of a good or service that consumers are willing and able to purchase at different prices over a given period of time.

In the previous chapter, the focus was mostly on external factors, with less attention on what happens inside the organization and how changes in market forces affect it.

This chapter looks at demand and supply, and at how government intervention can address areas where market forces don’t lead to the best outcomes. You’ll also notice that assessments tend to draw more heavily on this chapter than the previous one, so the material is a step up in difficulty.

Key points

Demand and supply

  • Fundamental concepts in market economics
  • Determine prices and quantities in markets
  • Interaction shapes market equilibrium

Market equilibrium

  • Point where demand equals supply
  • Sets equilibrium price and quantity
  • Shifts in demand or supply disrupt equilibrium

Government intervention

  • Addresses market failures (e.g., externalities, public goods)
  • Tools: taxes, subsidies, price controls, regulation
  • Aims to improve market outcomes where forces alone are insufficient

Assessment emphasis

  • Greater focus on application and analysis
  • Requires understanding of both theory and real-world implications