How Do Markets Work Flashcards
Exchange
Means selling what or can produce and using money to buy what we want for ourself
Markets
Exist wherever there are buyers and sellers who vs. communicate with each other and agree to buy or sell at a price that the transaction worthwhile
Specialisation
Concentrating on creating the products we can make and sell most efficiently
Competition
The process by which businesses tribe against one another to attract more customers by keeping prices down and making the product more appealing.
The more sellers the stuffer the competition will be and more likely that prices are as low as possible
Impact of competition
Try hard to develop products like iPad
Improve the design of existing products
Look for new technologies
Covering costs
Avoiding losses
Risks
Profits
Costs
All the payments that have to be made in order to get a product into the market place.
Costs
Includes wages. Premises and all other input costs ( raw materials, components, business rates, interest, energy bills and so on)
Sales revenue
Sales revenue = Price x Quantity sold
Profit
Profit = sales revenue - costs of production
Investment
Spending now in order to generate income in the future.
Eg. Investing in capital equip such as machinery, computer or vans
Scarcity
Refer to s situation in which people want to buy more of a product than is currently being produced
Incentives
Financial and other rewards that can induce people to behave in a certain way
Supply
The more scarce the product is, the higher the price and the profit will be when supplying it
Demand
The amount of a product that customers want to buy
High price fewer customers
