Microeconomics Summary part 1: Markets

Markets- A market is any effective arrangement that brings buyers and sellers together, (not necessarily face to face). In a market it is always assumed that the producers and consumers act rationally. There are two types of markets, the market for consumer goods, and a market for consumer services. There are different types of market structures, Perfect competition, Monopoly, Monopolistic competition and Oligopoly.

Monopoly-When there is only one producer in a particular market (I.E Comcast being the only cable provider in certain areas of the US)

Perfect competition – Many competitors who produce the same product and the market decides the price (I.E soft drinks) It is ideal (not real can not exist)

Monopolistic competition -Cross between competition and monopoly. Here firms have competitors but they are producing different types of products

Oligopoly- here there is just a few competitors and there is interdependence between the firms. The markets rely on non price competition such as after-service sales.

Demand:
Demand- Quantity of a good or service that would be bought at each and every price over a period of time. Thus it means that there is a willingness to pay for a product, a desire to pay for a product and an ability to pay for a product. Without these three factors it is not demand

Law of Demand: The law of demand states that the consumers acts in a rational manner, thus higher the price the lower the demand.

Determinants of Demand-

Price

Price of other goods

Reas disposable income

Availability of credit

Expectations of Price change

Taste

Adverts

Season

Population