2.How Are Prices Determined? Flashcards
1
Q
In theory how are prices determined in a free market?
A
By the law of supply and demand
2
Q
What is demand?
A
Willing and able
3
Q
What can cause a change in demand?(3)
A
Prices, income, preferences
4
Q
Explain the law of demand
A
(Arrow up)(arrow down)
5
Q
What is supply?
A
Quantity
6
Q
What can cause a change in supply?(3)
A
Number of sellers, climate events, war
7
Q
Explain the law of demand
A
(To arrows same direction)
8
Q
What is the market price?(2)
A
Point buyers and sellers agree on price
9
Q
Why are the us, Canada, Spain and Germany not in a free market?(2)
A
Government intervention and police regulations
