The Market Flashcards
What is the definition of a market?
A place or situation where buyers and sellers meet to exchange goods and/or services.
What is market equilibrium?
The price where the quantity supplied equals the quantity demanded and the market is cleared. Consumer satisfaction and producer profit are maximised at this point.
How can goods or services be exchanged?
Barter
Money / credit and cash
What is a market place?
A physical environment where face to face transaction happens
What is a market situation?
where exchange of goods and services happens without physical face to face transaction
ie
internet
postal service
Excellence Answer for;
Market for DVDs per Week
At the price of $10 (p1) the quantity supplied is 100 DVDs per week (qs). The quantity demanded is 400 DVDs per week (qd). There is a shortage of 300 DVDs at p1. The price will rise from $10 (p1) to $25 (pe). As the price rises the quantity supplied rises from 100 (qs) to 250 (qe) DVDs per week. The quantity demanded falls from 400 (qd) to 250 (qe) DVDs per week. This follows the laws of supply and demand. At pe and qe we are at market equilibrium. At this point the market has been cleared. Consumer satisfaction and producer profits are maximized.
Excellence Answer for;
Market for lift tickets in Winter
At the price of $80 (p1), the quantity demanded is 7500 tickets in Winter (qd). The quantity supplied is 17500 lift tickets in Winter (qs). There is a surplus of 10000 lift tickets at p1. The price will fall from $80 (p1) to $60 (pe) lift tickets in winter. As the price falls, the quantity demanded rises from 7500 (qd) to 12500 (qe) lift tickets in Winter. The quantity supplied falls from 17500 (qs) to 125000 (qe) per week. This follows the laws of supply and demand. At pe and qe we are at market equilibrium. At this point the market has been cleared. Consumer satisfaction and producer profits are maximized at this point.
