P2

Question 1

What is a market?

Answer 1

A market is where buyers and sellers meet to agree on prices and quantities to satisfy needs.

Question 2

What are the types of markets?

Answer 2

1. Factor Markets: Where production resources are bought and sold.
2. Goods Markets: Where goods and services are sold.

Question 3

What role do prices play in markets?

Answer 3

Prices guide both consumers and producers:
- Consumers decide if they want to buy a product based on price.
- Producers decide how much to produce based on what price they can get.

Question 4

What is a transaction in a market?

Answer 4

Every sale has a matching purchase.
Sales are in terms of goods/services; purchases are in terms of money.

Question 5

What is the Product Market?

Answer 5

The Product Market is where goods and services are traded for money.

Question 6

Who are the producers in the Product Market?

Answer 6

Producers are businesses and foreign entities that provide goods/services.

Question 7

Who are the consumers in the Product Market?

Answer 7

Consumers include households, businesses, government, and foreign entities that buy goods/services.

Question 8

What are goods?

Answer 8

Goods are tangible items (e.g., food, clothes).

Question 9

What are consumer goods?

Answer 9

Consumer goods are divided into three categories:
1. Non-durable: Used up immediately (e.g., food).
2. Semi-durable: Used for a short time (e.g., clothing).
3. Durable: Long-lasting (e.g., cars).

Question 10

What are capital goods?

Answer 10

Capital goods are items businesses use to produce other goods (e.g., machinery).

Question 11

What are services?

Answer 11

Services are intangible actions that satisfy needs (e.g., cleaning, teaching).

Question 12

What is the Factor Market?

Answer 12

The Factor Market is where resources (labor, land, capital) are traded for income.

Question 13

Who are the sellers in the Factor Market?

Answer 13

Sellers are households that provide labor, land, etc.

Question 14

Who are the buyers in the Factor Market?

Answer 14

Buyers are businesses and government that purchase these resources.

Question 15

What are the subdivisions of the Factor Market?

Answer 15

1. Labor Market: Trades skills/abilities (e.g., employment agencies).
2. Financial Market: Trades financial assets like stocks (e.g., stock markets).
3. Money Market: Short-term savings/loans (less than three years).
4. Capital Market: Long-term investments (e.g., JSE for stock trading).
5. Property Market: Trades land/resources (e.g., through estate agents).

Question 16

What is the flow of production?

Answer 16

The flow of production is the creation and sale of goods/services by producers to earn income.

Question 17

What is the flow of income?

Answer 17

The flow of income is the money earned by resource owners (wages, rent, profit, interest).

Question 18

What is the flow of spending?

Answer 18

The flow of spending is when participants spend their income on goods/services.