Markets Flashcards
1
Q
Factor market
A
Buying and selling factors of production from households to firms e.g. Labour, capital
2
Q
Product market
A
Buying and selling goods and services, consumers are demand and producers are supply, firms to households
3
Q
Who sets prices in market economies?
A
Consumer sovereignty (consumer is king)
4
Q
For whom (market)
A
Whoever is willing to pay for the resources
5
Q
How to produce (market)
A
Efficiently to operate profitably
6
Q
How does a market economy promote efficiency?
A
The producers incentive for profit makes them minimise costs
7
Q
Invisible hand
A
Price mechanism; pressure on economy to change to the equilibrium price and quantity
