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 - Cash
- Credit

Question 4

What is a market place?

Answer 4

A physical environment where face to face transactions happen.

Question 5

What is a market situation?

Answer 5

Where exchange of goods and services happen without physical face to face transactions.

• Internet e.g. Trademe
• Telephone

Question 6

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

Answer 6

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 rises 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 has been cleared. Consumer satisfaction and producer profits are maximised.