Outcome 2 Flashcards
(16 cards)
What are markets and where do they exist?
Any situation where buyers and sellers of goods and services come together in exchange. They exist anywhere as long as you have buyers and sellers.
Define labour markets, labour sellers and labour buyers
Market- where buyers and sellers of labour come together in exchange.
Sellers- workers will work for money.
Buyers- workers willing to pay for labour. ie. company, business
Name and describe the four market structures
Monopoly- when there is only one SUPPLIER in the market. The supplier can generally set prices higher because consumers don’t have another choice
Monopsony- when there is only one or few PURCHASERS of a product and can therefore demand suppliers lower their price (purchaser buying off a supplier)
Oligopoly- when a relatively small number of businesses dominate the market. They can restrict supply, raise or lower prices and raise barriers to entry/exit for consumers.
Perfectly competitive- large number of buyers and sellers, products are homogenous (the same), low or no barriers to entry or exit, have access to perfect info to make informed decisions.
Explain barriers to entry
Barriers can be high, Moderate or low. Things such as regulations, restrictions, price etc.
What are price takers?
In perfect competition, where they would be unable to charge a higher price than their competitors without going out of business in the long term.
What is a price maker?
Occurs in a monopoly, where they have maximum control over price and quantity in the market.
Non price factors for demand
Substitute and compliment,
Interest rates, population changes,
Gov intervention
Non price factors supply
Technological changes, productivity growth,
Climatic changes, gov intervention
Characteristics of markets
Perfect market= large number of buyers and sellers, homogenous products, low barriers, perfect info
Oligopoly= relatively small numbers of business dominate the market, can change prices
Monopsony= one purchaser, demands suppliers to lower price
Monopoly= one supplier, set price, consumers don’t have another option
Equilibrium price
Total quantity demanded equal to quantity supplied
Equilibrium quantity
Volume sold when price is at its equilibrium level
Describe demand shifts
Right= higher price and quantity Left= lower price and quantity
Describe supply shifts
Right= lower price higher quantity Left= higher price lower quantity
What is aggregate demand and its formula
Total expenditure in an economy
AD= Cons demanded+Inve+G (consumption)+G (capital) +(x-m)
What is aggregate supply and what’s the formula
Total volume prepared to supply a market.
AS=L+L+K
Elasticity
Elasticity is a measure of a variable’s sensitivity to a change in another variable
Elastic; generally wants, inelastic; generally needs
Demand: perfectly inelastic (vertical on graph) perfectly elastic (horizontal on graph)
