2.2 Flashcards
define market
where many buyers and many sellers come together
define market economy
also called a ‘free market’, an economy in which goods are brought and sold, and prices are determined by the free market without intervention by the government
define price mechanism
a system that enables buyers and sellers to trade with each other at an agreed price
define planned economy
an economy in which all decisions concerning production, investments, prices and incomes are determined by the government
define economic resources
land, labour, capital, enterprise
define market equilibrium
where the quantity demanded by consumers and the quantity supplied by producers are equal
define equilibrium price
the price at which the quantity that buyers want to buy is equal to the quantity that sellers are prepared to sell
define market disequilibrium
where the quantity demanded by consumers and the quantity supplied by the producers are not equal
define allocation of resources
the way resources are allocated tot eh production of the goods and services most wanted by the consumers
what are the three key questions in determining the allocation of resources
what to produce?
how to produce?
who consumes the goods and services?
