Principles Of Economics
Nurlisa Asyiqin Salehuddin
19295 , Foundation in ICT
Madam Khalidah Khalid
1.Define a market.
A market is any arrangement where buyers and sellers interact with each other to determine the price and quantity of goods and services to be exchanged at a certain period . It need not be a particular place . For example , Amazon.com website is a market in itself since they bring buyers and sellers together to transact goods and services . Consumers actually send signals to the producers on what to produce , how many products to be produce and in what shape or colour based on their choices and buying desicions . Markets include mechanisms or means for: 1} Determining price of the traded item
2} Communicating the price information
3} Facilitating deals and transactions
4} Effecting distribution
The market for a particular item is made up of existing and potential customers who need it and have the ability and willingness to pay for it . Market can be classified into few which is,
Harvard economist Greg Mankiw, author of "Principles of Economics," identifies three types of markets competitive markets, monopolies and oligopolies. Most economists regard competitive markets as the ideal type of market for economic activity. A competitive market consists of many buyers and sellers, such that no single buyer or seller can influence the market price.Next, monopoly, is a market in which there is only one seller of a product. The third type, an oligopoly, is a market in which only a few sellers exist.
At any one time , the market will undergo surplus , shortage and equilibrium . This can be explain using the diagram below ,
Shortage - quantity demanded is greater than quantity supplied , surplus is when quantity supplied is greater than quantity demanded and lastly equilibrium whichis when quantity supplied equal to quantity demanded.
2. Discuss on the current...
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