Markets Flashcards

1
Q

What are the 2 types of markets?

A

Physical and Non-Physical Markets

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2
Q

What does it take to be a market?

A

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.

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3
Q

What is Value?

A

Maximum price the consumer will pay for goods/services

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4
Q

What is Price?

A

Amount consumer really pays for goods/services

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5
Q

What is Utility?

A

the benefits/satisfaction of consumer

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6
Q

What are Utility Characteristics?

A
  1. The subject is conceptive
  2. hard to measure
  3. more use of production in a way to maximize usage
  4. Consumers spend in a way to maximize use/value
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7
Q

What is total utility?

A

Total satisfaction/Benefits and individual gets from good/service

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8
Q

What is average utility?

A

Total usage / number of production consumed

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9
Q

What is marginal utility?

A

Increase in total utility/use if one more producct is used.

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10
Q

What is marginal utility formula?

A

Total use 2 (current) - Total use 1(previous)

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11
Q

What is the law of diminishing marginal utility?

A

As quantity consumed increases, satisfaction gained from each additional unit consumed decreases.

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12
Q

What is a perfect Market?

A

It is a market where not one supplier can manipulate the price.

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13
Q

what makes a perfect market?

A
  1. Great number of buyers and sellers, individuals can’t influence prices.
  2. Products are homogenous (little difference between products)
  3. Freedom of entry/exit from market (no state control)
  4. Sellers have perfect knowledge of market conditions.
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14
Q

What is price inelasticity?

A

Static quantity of goods/services when prices change.

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15
Q

What is imperfect market?

A

When 1 supplier can influence prices to own advantage.

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16
Q

What makes an Imperfect market?

A
  1. 1 or few big suppliers of product
  2. product unique or no similar substitutes
  3. entry/exit is restricted
  4. producers and consumers have incomplete knowledge of conditions
17
Q

What is monopoly?

A

is when one producer dominates the market

18
Q

What is Oligopoly?

A

When a few big producers dominate the market

19
Q

What is monopolistic competition?

A

certain producers have strong position in the market.