F291

HideShow resource information

The Market

Demand: The quantity that will be purchased at a particular price.

Income
Wealth
Advertising and Promotions
Taste and Fashion
Demographics
Government action
Substitutes
Complementary Goods

Supply: the quantity offered for sale by the producer

Costs
Taxes
Subsidies
Price of other products
Weather

1 of 3

The Market 2

Equilibrium: the price at which the consumers demand matches the amount suppliers will put out to the market

Price Elasticity of Demand: %age change in quantity demanded/%age change in price

<1: price elastic:flat demand curve    >1: price inelastic-steep demand curve

  • luxury goods are price elastic, whereas necessity goods are price inelastic
  • goods with readily available substitutes are elastic

Price Elasticity of Supply: %age change in quantity supplies/%change in price

<1: price elastic:flat supply curve    >1: price inelastic-steep supply curve

affected by:

  • Barriers to Entry
  • Raw Materials
  • Inventory
  • Time
  • Spare Capacity
2 of 3

Classification of Markets

Competitve:

  • lots of firms
  • price based competition
  • low barriers to entry

Oligopoly:

  • few large firms dominating the market
  • non-price based competition

Monopoly

  • one firm with 25% or more market share
  • can charge any price
  • high barriers to entry
3 of 3

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all The Market resources »