Markets- Micro Flashcards
What is a free market economy?
Resource allocation is done by the price mechanism within markets
What two sectors are mixed economies made of?
Market and non market
How are goods and services allocated in the non-market sector?
Produced and delivered to final users outside markets (usually by governments)
What is a market?
The meeting of buyers and sellers
What is a competitive market?
When there is a large number of buyers and sellers
What is the equilibrium price?
The point at which demand and supply are equal
What is supply?
The quantity of a good/service that firms are willing and able to sell
What is demand?
The quantity of a good/service that consumers are willing and able to buy
What is effective demand?
The desire for a good/service that is backed by an ability to pay
What is the law of demand?
As a goods price falls, more is demanded
What is a command economy?
The state decides what to produce, for whom and how much
What are mixed economies?
Have some command and some free market aspects
What are value judgements?
An assessment of something as good or bad in terms of ones standards or priorities
What is the invisible hand?
What nudges the business to keep producing more of a specific product
(Market economies take longer to respond)
