Markets Flashcards
What are the 2 types of markets?
Physical and Non-Physical Markets
What does it take to be a market?
there needs to be a potential buyer and seller, there must be goods and services to sell and the buyers must have the means to purchase. The agreement of price must be formalized.
What is Value?
Maximum price the consumer will pay for goods/services
What is Price?
Amount consumer really pays for goods/services
What is Utility?
the benefits/satisfaction of consumer
What are Utility Characteristics?
- The subject is conceptive
- hard to measure
- more use of production in a way to maximize usage
- Consumers spend in a way to maximize use/value
What is total utility?
Total satisfaction/Benefits and individual gets from good/service
What is average utility?
Total usage / number of production consumed
What is marginal utility?
Increase in total utility/use if one more producct is used.
What is marginal utility formula?
Total use 2 (current) - Total use 1(previous)
What is the law of diminishing marginal utility?
As quantity consumed increases, satisfaction gained from each additional unit consumed decreases.
What is a perfect Market?
It is a market where not one supplier can manipulate the price.
what makes a perfect market?
- Great number of buyers and sellers, individuals can’t influence prices.
- Products are homogenous (little difference between products)
- Freedom of entry/exit from market (no state control)
- Sellers have perfect knowledge of market conditions.
What is price inelasticity?
Static quantity of goods/services when prices change.
What is imperfect market?
When 1 supplier can influence prices to own advantage.