Markets in action

Market: where/when buyers and sellers meet to trade or exchange goods and services.

• Demand: the quantity of a product that consumers are able and willing to purchase at various prices over a period of time
• Notional demand: the desire for a product
• Effective demand: the willingness and ability to buy a product

Relationship between price and quantity demanded:

• there is an inverse relationship between price of a product and the quantity demanded 
• the lower the price, the more that will be demanded
• the higher the price, the less that will be demanded
• (assuming that consumers are rational)

• Movement along the demand curve: this is in response to a change in the price of a product

Consumer surplus: the extra amount that a consumer is willing to pay for a product above the price that is actually paid

Factors that effect change in demand:

• change in consumer income
• change in price of subsitutes 
• change in price of complements
• change in tastes and fashion

Change in demand: this is where a change in a non-price factor leads to an increase or decrease in demand for a product

• Disposable income: income after taxes on income have…