LWEO

chapter 6

chapter 6

Markets

Goods and services ate traded via markets, whereby the price is determined by supply and demand. In case of a price increase, demand will decrease and supply will increase. In case of a price drop, demand will increase and supply will decrease. These reactions of supply and demand to price changes will bring the market into a balanced situation. When, for instance, demand exceeds supply, the price will increase, so that demand will decrease and supply will increase. This process will continue until supply and demand are equal and there is an equilibrium on the market. This market equilibrium goes together with a certain equilibrium price and a certain equilibrium quantity. This equilibrium can be represented in a graph or arithmetically in a supply and demand model.

Apart from markets for goods and services, you get other markets. An example is the market where the factor of production labour is traded, the so-called labour market. Hereby the workers and the unemployed are the suppliers of (the factor of production) labour and companies and the authorities are the consumers of (the factor of production) labour. The price that is subsequently established for labour is called the wage.

links
The labor market (video 2 min.)
Market Forms (video 8 min.)
Calculating the Equilibrium Price (www.economiepagina.com)

glossary

Glossary chapter 6


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extra exercises

Extra exercises (Word)