economics unit 1 aos 2 Flashcards
the law of demand
the law of demand states that at a higher price consumers will demand a lower quantity of the good or service
the law of supply
states that a higher price leads to a higher quantity supplied and that lower prices lead to lower supply.
pure or perfect competition and example
Pure competition is a market structure where many sellers offer the same products for similar prices. In pure competition markets, corporations have little control of a product’s price.
balloon manufacturers.
pure or perfect monopoly and an example
A pure monopoly is a market structure where one company is the single source for a product and there are no close substitutes for the product available. There are many barriers to entry and this market is considered less efficient than others.
Public utilities: gas
monopolistic competition and example
Monopolistic competition is a type of market structure where many companies are present in an industry, and they produce similar but differentiated products. there are quite a few firms in the market.
clothing items.
oligopoly and example
An oligopoly is when a few companies exert significant control over a given market. Together, these companies may control prices by colluding with each other, ultimately providing uncompetitive prices in the market.
airlines.
equilibrium
exists when the quantity demanded is the quantity supplied.
relative prices
the price of a good or service in terms of another
demand factors
disposable income, intrest rates, price sensativiety,
supply factors
cost of production, change in price of good or service
perfect market
Perfect competition is where there are many buyers and sellers, homogeneous products, and no one firm has the power to influence prices. This scenario leads to prices closely reflecting marginal social costs, maximizing economic efficiency
pure market
A system in which economic decisions. about production and price are made. by producers and consumers, involving. little government intervention.
expansion
a period in which national levels of of production and employment are rising
contraction
a period which nation level of production and employment are decreasing
substitute goods - 2 examples
A substitute good is a product that can be used as a replacement for another product because it serves the same purpose. If the price of one product goes up, people may choose to buy the substitute instead, which can lead to a decrease in demand for the original product
-Butter and margarine
-Tuna and salmon
complementary goods
-1 example
are those goods and services which demands are linked in a positive way. For instance, a rise in the demand for tea may tend to cause a rise in the demand of milk and sugar.
intrest rates
An interest rate is the price paid for money
that has been borrowed, expressed as a percentage
market equilibrium
Market equilibrium is a market state where the supply in the market is equal to the demand in the market.
shortage
is a condition where the quantity of a product or service demanded is greater than the quantity supplied at the market price.
surplus
the simple state of supply outweighing demand.
market mechanism
is the system of decision making whereby the free forces of supply and demand for particular goods and services operate to set relative prices at the point of market equilibrium.
price signal
help to make key economic decisions in a market economy by creating incentives for the owners of resources.
relative price
Relative price is the price of a good or service in relation to the prices of other goods and services.
price discrimination
the action of selling the same product at different prices with small variation to different buyers, in order to maximize sales and profits.
multibranding
A multi-brand strategy means having a portfolio of products with different brands or names, all owned and managed by the same company, produced in the same factory. Increases shelf space
anti-competative behaviour
Anticompetitive behavior refers to actions taken by a business or organization to limit, restrict or eliminate competition in a market, usually in order to gain an unfair advantage or dominate the market.
Competition and Consumer Act 2010
regulates fair trading in Australia and governs how all businesses in Australia must deal with their customers, competitors and suppliers.
economic stabilisation
Economic stabilisation by the government involves deliberate actions or policies to reduce the severity of peaks and troughs within the business cycle.
an increase in economic activity
An increase in economic activity involves an increase in the demand for goods and services and businesses raising levels of production
