Unit 2A Market fores Flashcards
(68 cards)
What is demand and supply
Demand is the market’s desire to purchase good or services. Supply is the markets ability to produce a good or servce
Define market
Where buyers and sellers come together to buy and sell all goods and servies
How do markets work
Their prices are determined by market forces the demand and supply. Demand is high supply is low prices will rise, demand is law supply is high prices fall. There’s a market equilibrium where the amount supplied of a g/s is wanted equal to the amount wanted of a g/s prices tend to stay close to the price equilibirium
What’s law of demand
as price increases demand will decrease for a product
What’s law of supply
as prices increase supply will increase for a product
What’s microeconomics
the study of particular markets and sections of economy such as a car industry, food industry, smartphone industry, e.t.c
Who are decision akers in microeconomics
households, firms
what people do households include
workers, savers, consumers, and buyers
What’s a economic agent
decision makers, thus people who influence a economy through buying or selling
aim of the economic agent households
consumers want low prices and high quality
workers want good working conditions and high pay
savers want their money to be safe and high interest rates
whats the goal of firms
to make as much profit as possible
what’s macroeconomics
the study of economics behaviuor and decison making in a whole economy for example canadas economy. japans economy
What does macroeconomics focus on
the policies that affect total demand and total supply within the whole economy
what’s the economic agent concerned with macroeconomics
government the system that rules a country or region
what does a government. doin economics
it produces provides products or services, tax, and regulate the private sector
What are the four market structures
perfect competiion, monopolistic competition, oligopoly, and monoply
What’s the market system
the most common economic system, it allocated scarce resources through forces of demand and supply
what are the aims of governments
a strong and stable economy, full employment of labour, and imporving the performance of individual markets
Charateristics of monopoly
when there’s only one firm producing in the market, they have no substitute, and barrier to entry is extremely high such as high costs or legal protection like patents.. extremely high market power to change prices
characteritics of perfect competion structure
a extreme where there’s lots of producers, lots of competition so each firms decision is too small to affect the entire market. Each of the sellers will be selling identical products. Also theres a low barrier for entry in this market. no market power
Characteristics of monopolisitc competiton
large amount of sellers, low barrier for entry, differs from perfect competition as products produced are slightly different. Products are higherly similar and subsitutatble but not identitcal. Such as different colors, different materials, e.t.c. The differentiations between products give firms a little market power
Characteristics of oligopoly
smaller amount of large producers, each with large amount of market power, there’s some level of barrier but not impossibile to enter the industry. The key differentiator is that there’s. a small amount of producers that any decision by a firm will affect the entire market. This makes firms in this market structure codependant on each other.
Law of demand
when prices go down more people buy it, where prices go up less people buy it
what’s key to markets effectiveness
volunatry exchange, buyers and sellers willingly to make the exchange
