The Economics of Market Systems (Lesson 1.3 )

What are the forces that determine decisions about buying and selling in a market economy?

The forces of demand and supply.

What is the law of demand?

Buyers will purchase more of a product as its price drops and less as its price increases.

What is the law of supply?

Producers will offer more of a product for sale as its price rises and less as its price drops.

What does the equilibrium price represent?

The price at which the quantity of goods demanded and the quantity of goods supplied are equal.

What is a surplus in economic terms?

A situation in which the quantity supplied exceeds the quantity demanded.

What is a shortage?

A situation in which the quantity demanded is greater than the quantity supplied.

What are the four elements required for a private enterprise system?

Private property rights, freedom of choice, profits, and competition.

What is perfect competition?

A market structure where many small firms produce identical products, and no single firm can influence the price.

What is monopolistic competition?

A market structure with many sellers trying to make their products appear different from competitors' products.

What characterizes an oligopoly?

An industry with a few large sellers, where entry of new competitors is difficult due to high capital investment.

What defines a monopoly?

A market structure where a single producer has complete control over prices and there is little to no competition.

What role does competition play in a market economy?

It motivates businesses to operate efficiently and improves product quality and pricing.

How do consumer choices affect market dynamics?

Consumer demand influences pricing and production decisions across different markets.

How does the concept of supply and demand impact resource distribution in the global market?

Supply and demand guide how resources are allocated based on consumers' purchasing decisions and producers' offerings.