Economics 3
- Created by: Gabrielle
- Created on: 29-12-13 16:12
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- The Market System
- Market Forces - determine quantity & price
- Demand
- Supply
- Competitive Market - many buyers and sellers
- Perfectly competitive
- Homogenous goods meaning buyers have no preference
- Price takers: Numerous buyers and sellers each unable to influence prices
- Perfectly competitive
- Oligopoly
- A few sellers not always aggressively competing with each other
- Imperfect or monopolistic market:
- Many sellers each offering a slightly different product
- Supply
- The amount that sellers are willing and able to sell
- A movement along the supply curve is caused by a change in price
- A shift in the supply curve is caused by a factor affecting supply other than change in price
- Input prices
- Technology
- Number of sellers
- Social Factors
- Demand
- Amount of the good that buyers are willing and able to purchase at a given price level
- A movement along the demand curve occurs when there is a change in price
- Movement in the demand curve is caused by a factor affecting demand other than a change in price
- Income
- Price of substitute or complementary goods
- Tastes
- Expectations
- Size of population
- Above equilibrium price = surplus Below the equilibrium price = shortage
- E =QS=QD
- Market Forces - determine quantity & price
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