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economics > Market > Flashcards

Market Flashcards

1
Q

market

A

a place/situation where buyers and sellers of goods and services come together to exchange g/s

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2
Q

price

A

the rate of exchange of the g/s that is being sold

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3
Q

products

A

a good (physical, tangible )
eg.) food

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4
Q

3 types of market

A

financial market- receiving loan from bank

labour market- getting job @ Maccas

education market- BCC offering their education services

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5
Q

services

A

an intangible product
eg.) bus ride

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6
Q

what does the market decide

A

what to produce and how to produce through the operation of the price (or market ) mechanism

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7
Q

4 different types of market structures

A

perfect and pure competition
monopolistic
monopoly
oligopoly

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8
Q

market structure- perfect competition

A

-price taking
-homogenous products-identical and substitutable
-easy entry and exit

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9
Q

Australian market-market based capitalist

A

resources are mostly privately owned

important decisions are made through unregulated interactions of buyer and sellers

government regulations is minimum/ when required

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10
Q

what and how much to produce?

A
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11
Q

how to produce?

A
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12
Q

for whom to produce?

A
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13
Q

lessons 2

A
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14
Q

lesson 2

A
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15
Q

lesson 2

A
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16
Q

non- price factors which influence demand (disposable income )

A

disposable income is the income left for spending after receiving welfare payments and paying income tax

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17
Q

how does disposable income change?

A

change in income tax rates

increase in pay rates/income

increase in minimum wage

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18
Q

non- price factors which influence demand (Changes in Population Size)

A

Population size is the number of individuals in the economy

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19
Q

How does population size change?

A
  • Birth rate increases/decreases
  • Immigration increases/decreases
20
Q

non-price factors which influence demand (Preferences and Tastes)

A

Preferences and tastes, the choice of the individuals, which changes over time due to influence of marketing and promotion of products by individuals.

21
Q

How does preferences and taste change?

A
  • New trendy product in the market
    -> Better promotion of the product
  • New discovery about how a certain product is beneficial
22
Q

non- price factors which influence demand (Interest Rates)

A

The cost of borrowing is usually measured by the level of interest rates attached to various forms of credit, such as credit cards or home loan rates.

23
Q

non-price factors which influence demand (Price of a substitute)

A

Substitutes are the products who are somewhat homogenous or can be replaced for each other.
Include in summaries
For example, Coke and Pepsi; butter and margarine.

24
Q

non-price factors which influence demand ( Price of a complement)

A

Complements are the products that are typically consumed together.

For example, sugar and coffee; bread and margarine.

25
Q

non-price factors which influence demand. (Consumer Sentiment)

A

Consumer sentiment/confidence is consumer perceptions about future income levels or job prospects.

This refers to consumer spending on non-essential goods and services such as eating at a luxury restaurant.

26
Q

non-price factors which influence demand (Onset of the season)

A

Season of the year is an important factor in determining the demand for certain products.

For example, woollen clothes, heaters are more popular in winters.

Whereas, ice creams, air conditioners and beach equipments are more popular in summers.

27
Q

non-price factors which influence demand (Government Intervention/Policies)

A

Government intervention influence producers and affect demand in various markets.

For example:
Subsidies- subsidies for solar panel, first home grant

Taxes-indirect taxes such as taxes on alcohol and cigarettes

Rebates- child care rebates

Laws/regulations such as restricting smoking in public places.

28
Q

supply

A

wilingnes / ability of supplier / producer to produce and or sell goods and services

29
Q

law of supply

A

As the price of a product increases the quantity supplied increases

As the price of a product decreases the quantity supplied decreases

there is positive relationship between quantity supplied and price

30
Q

equilibrium price

A
31
Q

equilibrium quantity

A
32
Q

disequilibrium shortage

A

i

33
Q

disequilibrium surplus

A
34
Q

price mechanism

A

r

35
Q

relative price

A
36
Q

relative price eg

A
37
Q

price elasticity of demand

A

responsiveness of total quantity demanded of a product to a change in the price of that product

determines the slope/gradient of the demand curve

inelastic= hard to change
elastic=change easily

38
Q

price elasticity of demand formula

A

percentage change in quantity demanded/ percentage change in price

39
Q

elastic demand

A

when the change in demand is large when there is a change in price

eg.) cookies

40
Q

inelastic demand

A

the change in demand is small when there is a change in price

eg.) bread, gasoline, milk

41
Q

factors that affect price elasticity
(the degree of necessity)

A

necessities tend to have an inelastic demand whereas luxuries tend to have a more elastic demand. For example, groceries vs iphone.

42
Q

factors that affect price elasticity
(Availability of substitutes)

A

the more close substitutes there are in the market, the more elastic is demand because consumers find it easy to switch. For example, different brands of mobile phones offering similar features.

43
Q

factors that affect price elasticity (Proportion of Income)

A

The price elasticity of demand tends to be low when spending on a good/ service is a small proportion of their available income.

Therefore, a change in the price of a good exerts a very little impact on the consumer’s ability to purchase the good.

Whereas, when a good / service represents a large chunk of the consumer’s income, the consumer is said to possess a more elastic demand.

44
Q

ped guide

A

High PED = > 1
Medium PED = 1
Low PED < 1

45
Q

price elasticity of supply

A

measures the degree of responsiveness of quantity supplied of a commodity to change in its price

46
Q

PES guide

A

High pes- large price elasticity of supply (elastic)
Low pes- small price elasticity of supply (inelastic)

economics (7 decks)

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