Q1 compilation (Hard)

Factors that Influence Demand

• Income, population, taste and preference, price expectation, and price of related goods influence demand.

Market Situations

• A market is a mechanism that brings together sellers and buyers of a product, factor of production, or financial security.
• It can also refer to a specific place or area where buyers and sellers exchange a well-defined commodity.

Buyer and Seller

• A buyer or consumer is the basic consuming or demanding unit of a commodity.
• A buyer can be an individual, a household, or a government.
• A seller is an entity that makes a product, good, or service available to a buyer in exchange for monetary consideration.

Perfect Competition

• Perfect competition is a market situation characterized by many sellers and many buyers, homogeneous products, free market-entry and exit, perfect information, and absence of economic friction.
• Each seller and buyer is small enough to not influence the price of the product transacted.
• Products are identical in physical attributes and are regarded as identical by buyers.
• There are no barriers to entry or exit, and all buyers and sellers have complete information on prices.

Monopoly

• Monopoly is a market situation characterized by one seller and many buyers.
• There are no close substitutes for the monopolist’s product, and barriers to entry are severe.
• A perfect monopoly is when a single vendor can prevent the entry of all vendors into the market.
• A natural monopoly is when economies of scale are significant, and costs are minimized when the entire output of an industry is supplied by a single producer.

Oligopoly

• Oligopoly exists when there are few suppliers of a product or service, and the action of one will inevitably result in a similar action by the other suppliers.

Goods and Services

• Goods are anything that anyone wants or needs, such as consumer goods (food, clothing) and producer goods (raw materials, tools).
• Capital goods are machinery used in the production of commodities in producer goods.
• Services are the performance of any duties or work for another.

Marketing

• Marketing refers to the distribution of goods and services.
• Marketing a product refers to advertising and other efforts to promote a product sale.

Supply and Demand

• Supply refers to how many of a certain good or service are available for people to purchase.
• Demand means how many people wish to buy that good or service.
• The law of supply and demand states that prices are determined by the relationship between supply and demand.
• If supply exceeds demand, prices will fall, and if demand exceeds supply, prices will rise.

Types of Demand

• Elastic demand exists when there is a greater change in quantity demanded as a response to a change in price.
• Inelastic demand exists when there is a lesser change in quantity demanded as a response to a change in price.
• Unitary demand exists when there is an equal change in price and quantity demanded.

Market Equilibrium

• Shortage happens when supply is less than demand.
• Surplus happens when supply exceeds demand.
• Equilibrium point is when supply is equal to demand.