What Markets Do Flashcards

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What is a market in economics?

A system where buyers and sellers meet to trade goods, services, or resources.

What is resource allocation?

How an economy decides to use its land, labour, and capital to make goods and services.

What is the main job of markets?

To bring buyers and sellers together and help decide how scarce resources are used.

Who are the two main groups in a market?

Consumers (buyers) and producers (sellers).

What is voluntary exchange?

A trade both sides agree to because each expects to be better off.

Which three questions do markets help to answer?

What to produce, how to produce, and for whom to produce.

How do markets help decide what gets produced?

Firms make more of goods that people choose to buy, and less of goods people do not want.

How do markets help decide how to produce goods?

Firms choose the mix of land, labour, and capital that keeps costs low.

How do markets decide who gets goods and services?

They go to people willing and able to pay the price.

What is specialisation, and how do markets support it?

People or firms focus on one task and trade for the rest; markets let them swap what they make for other goods.

How can competition in markets help consumers?

It can lead to lower prices, better quality, and more choice.

Give two examples of markets that are not physical shops.

Online marketplaces and auctions.