The Market System Flashcards
1
Q
What is a market system
A
A system for producing and allocating goods using price signals
2
Q
2 key concepts of market system
A
- decentralization – people are not being explicitly coordinated by anyone when they produce/consume
- self-interest – people do not care intrinsically about those who they are producing for/trading with
3
Q
Partial equilibrium analysis
A
The study of how equilibrium is determined in one market in isolation
4
Q
General equilibrium analysis
A
how demand and supply conditions interact in several markets to determine the prices of all goods (and factor prices if there is production)
5
Q
complete market meaning
A
complete markets this is when all goods and services can be traded at all dates
