How Markets Work

Three types of economic agents:

• firms

• students

• individuals

• government

What are consumers trying to maximise?

• Utility

• Losses

• Debt

• Profit

What are producers trying to maximise?

• Utility

• Losses

• Debt

• Profit

________ refers to the quantity of good/services that consumers are willing and able to buy at given prices over a given time period.

• Demand

• Supply

________ refers to the quantity of good/services that producers are willing and able to sell at given prices over a given time period.

• Demand

• Supply

Downward Sloping:

When there's a rise in price, the consumer tends to buy more of a relatively lower-priced good and less of a higher priced one

• Substitution Effect

• Income Effect

Downward Sloping:

When there's a rise in price, the consumer will suffer in their incomes, With normal goods, the fall in real incomes will lead to a fall in quantity demanded.

• Substitution Effect

• Income Effect

Demand : PACIFICS

What's P

• Population

• Advertisement

• City Speculators

• Interest Rates

Demand : PACIFICS

What's A

• Population

• Advertisement

• City Speculators

• Interest Rates

Demand : PACIFICS

What's C

• Population

• Advertisement

• City Speculators

• Interest Rates