small test 2 Flashcards
(17 cards)
market mechanism
system where b+s exchange g/s w or wo money
(m.m.) conditions
4
-product
-b+s agreeing on price
-no need for physical interaction
-can cover large areas
(m.m.) fuctions
4
-affects behaviour of consumers + producers
-enables trade
-gives info on: production, b+s
-distributes income by setting prices
(m.m.) types of markets
4
- by territory: loval, national, international, world
- by subject: g/s, fannacial, factors of production
- by scope: partial (1), aggregate (2+)
- by llegality: legal, illegal
market failures
bad distribution due to distortions
(m.f.) causes
4
- externalities: positive, negative
- public goods: shared goods causing free-rider issues
- market control: s+b manipulate prices
- imperfect info: lack of knowledge disrupts pricing
(m.f.) solutions
2
-legislation: regulate behaviours
-price mechanism: taxes on harmfull goods
Market subjects
3
1) Household: sell goods -> buy production factors
2) Companies: buy p.f. -> sell goods
3) Goverment: create laws, manage market issues
Market mechanics
interaction of b+s to allocate resources and set prices
(M.M.) processes
2
-demand and supply creation
-price determination
(M.M.) key points
2
-b. demand, s. supply
-determine price, quantity and flow of g/s
Demand
how much b. want at different prices
(d.) demand curve
graph of price vs. quantity demand
(d.) law of demand
- higher price = lower demand
- higher demand = lower price
(d.) movements
-along curve- price change
-shift of curve- × price change
(d.) causes of demand change
5
-advertising
-population change
-taste and fashion change
-disposable income change
-price of related products
(d.) causes of demand change
5
-advertising
-population change
-taste and fashion change
-disposable income change
-price of related products
