Untitled Flashcards Set

What makes a market competitive?

1. many buyers and sellers

2. free entry and exit, and

3. homogenous products

The law of demand

The law of demand states that, all else being equal, as the price of a good or service decreases, the quantity demanded increases, and vice versa.

Non price demand factors (7)

The law of supply

The law of supply states that, all else being equal, as the price of a good or service increases, the quantity supplied increases, and vice versa.

Non price supply factors

Factors affecting supply that are not related to the price of the good or service, such as production costs, technology, and number of suppliers.

Market equilibrium

Market equilibrium is the point at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in an stable market price.