The Market

Question 1

What is the definition of a market?

Answer 1

A place or situation where buyers and sellers meet to exchange goods and/or services.

Question 2

What is market equilibrium?

Answer 2

The price where the quantity supplied equals the quantity demanded and the market is cleared, consumer satisfaction and producer profits are maximised at this point.

Question 3

How can goods or services be exchanged?

Answer 3

Barter
Money - Credit
- Cash

Question 4

What is a market place?

Answer 4

Physical environment where face to face transactions happen.

Question 5

How to write an excellence explanation for movements on a curve.

Variables
P1 = $10
PE = $25
QD = 400 dvd's per week
QS = 100 dvd's per week
QE = 250 dvd's per week

Answer 5

At the price $10 (P1) the quantity supplied is 100 dvd’s per week (QS).
The quantity demanded is 400 dvd’s per week (QD)
There is a shortage of 300 dvd’s at P1.
The price will rise from $10 (P1) to $25 (PE)
The quantity supplied will rise from 100 (QS) to 250 (QE) dvd’s per week.
The quantity demanded falls from 400 (QD) to 250 (QE) dvd’s per week.
This follows the laws of supply and demand.

At PE and QE we are at market equilibrium at this point the market for dvd’s per week has been cleared, consumer satisfaction and producer profits are maximised.