Market Is An Actual Or Nominal Place That Forces Of Demand

-The role and significance of prices in the market economy has to do with supply and demand. If there are the same amount of buyers as products, the price will settle. If there are more buyers than products, the price of the product will rise. And, if there are more products than buyers, the price of the product will decrease. This occurs until the supply of the product matches the demand of the product.

Have you ever wondered how the goods and services you purchase become available to you, and have you ever wondered how the prices are determined? Even though economics involves many concepts, supply and demand, as well as trade, are among the most important forces in an economy because of their effect on prices, consumer behavior and economic growth.

If we consider this supply and demand diagram prior to Government intervention (red line), the market leads to equilibrium price and quantity (P1, Q1) determined at the intersection of the supply (or MPC) and demand curve. Due to the

Red line goes up. Not enough supply. New equilibrium point (higher on the price axis) *shift to the right. * price increase and quantity increase.

This causes the price and the quantity move in opposite directions in a supply curve shift. Also, if the quantity supplied decreases at any given price the opposite will happen.

When there is a change of one of the factors of supply- like changes in the prices of production inputs like labour or capital; a change in production technology and its associated productivity change; or the amount of competition in a specific product market- there is a corresponding change in the supply curve. For example, if worker productivity improves due to some human capital or technology investment, then the costs of production decrease. This exerts a positive effect on the supply curve shifting it right, where the new market equilibrium is at a higher quantity and a lower price, holding everything else constant. There can also be a negative shift that moves the supply curve to the left, with the resulting market clearing price being higher and quantity lower, ceteris

To summarize the concept, when the price of a product falls, the quantity demanded of the product will increase, and conversely, when the price of a product increases, the quantity demanded of the product will decrease, where all other relevant factors are constant. (Glen, 2012).

1) In a traditional economic market, basic rules of supply and demand create a variance in price and, depending on the situation and how the market is perceptually framed, a variance in the products or services being offered in the market (Prasch, 2008). These variances create and/or are created by relationships between consumers and producers, and an implicit agreement between these two basic parties regarding the value of a good or service is reached simply by determining what price producers can produce at and what price consumers are willing to pay; the connection between producer and consumer is direct (Prasch, 2008). Even in situations where this is complicated by the existence of separate manufacturers, wholesalers/distributors, and retailers, the basic relationship remains the same for each relationship and in the overall market scheme (Prasch, 2008).

Supply and demand regulate the amount of each good produced and the price at which it is sold. It is the conduct of individuals as they work together with one another in aggressive markets. “A market is a group of buyers and sellers of a particular good or service. The buyers, as a group, determine the demand for the product, and the sellers, as a group,

In addition to the law of demand, the law of supply also serves as the second major resource in studying economics. The law of supply states that with other factors remaining constant, as the price rises, the quantity of the product supplied also rises. Conversely, as the price falls, quantity of the product supplied also falls (Colander, 2006, p 97). The law of supply is refers to how producers can effectively substitute the production of one product for another (Colander, 2006, p.

The greater the demand of a product, the greater the associated value, and hence greater will be price. Price is also dependent upon the supply of a product, the lower the supply, the higher the price. The price of a product is also dependent upon the state of the overall economic conditions. At the time of the recent recession, the ticket prices of matches and merchandise were set at a comparatively lower level than at the time of a boom. (Kotler)

Firstly though a market is defined as an ‘actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter (businessdictionary.com, n.d.). These markets can be controlled by one company, which is known as a

Chapter two is associated with the review and analysis of some important theoretical and empirical studies relating to money-price relationship. Important findings and conclusions of different past studies are reviewed thoroughly.

The markets today are so complex and deal with so many variables it can be difficult to understand just exactly how they operate. In the following I will reveal the different kinds of market structures along with their different pricing strategies. Relating to these topics, I will focus on the importance of cost, competition and customer.

Firstly we need to define what a market is, it is in its simplest form a place where buyers and sellers meet. We also need to understand that there are various forms of markets; commodities markets, money markets, virtual markets and bond markets to name a few. Kohi and Jawarski (1990) “the literature pays little attention to the contextual factors that may make a market orientation either more or less appropriate