Price Determination in a Competitive Market Flashcards
1
Q
What is a market?
A
A situation in which buyers and sellers come together to engage in a trade.
2
Q
What is a competitive market?
A
It is a situation where there is a large number of potential buyers and sellers with abundant information about the market.
3
Q
What is a equilibrium price?
A
The price at which the planned demand of consumers equals the planned supply of firms.
4
Q
What is demand?
A
The quantity of a good or service that consumers are willing and able to buy at given prices in a particular time period.
5
Q
What is effective demand?
A
Consumer’s desire to buy a good, backed up by the ability to pay.
6
Q
Why would there be a contraction/ extension of the demand curve?
A
Change in price of the foods and services.
