The Market

Question 1

What is the definition of a market?

Answer 1

A place or situation where buyers and sellers meet to exchange goods and / or services

Question 2

What is market equilibrium?

Answer 2

The price where the quantity supplied equals the quantity demanded and the market is cleared. Consumer satisfaction and producer profits are maximised at this point.

Question 3

How can goods or services be exchanged?

Answer 3

Barter
Money - Cash
- Credit

Question 4

What is a market place?

Answer 4

A physical environment where face to face transactions happen.

Question 5

What is a market situation?

Answer 5

Where exchange of goods and services happen without physical face to face transactions.

• Internet e.g. Trademe
• Telephone
• Postal Service
• Text Messaging

Question 6

How to write an excellence explanation for movements on a curve.

Answer 6

At the price $10 (P1) the quantity supplied is 100 DVDs per week (Qs). The quantity demanded is 400 DVDs per week (Qd). There is a shortage of 300 DVDs at P1. The price will rise from $10 (P1) to $25 (Pe). The quantity supplied rises from 100 (Qs) to 250 (Qe) DVDs per week.

The quantity demanded falls from $400 (Qd) to 250 (Qe) DVDs per week. This follows the laws of supply and demand. At Pe and Qe we are at market equilibrium. At this point the market for DVDs per week have been cleared. Consumer satisfaction and producer profits are maximised.