Types of markets
Retail |
the sale of goods and services from businesses to an end user (called a customer). |
Labour |
the availability of employment and labour, in terms of supply and demand. |
Financial |
any marketplace where trading of securities including equities, bonds, currencies and derivatives occurs. |
Property |
business or trade in land and houses. |
Government influence on markets
Protecting property rights |
protects your land, possessions and intellectual property. |
Maintaining competition |
prohibits monopolies, prevents companies from hindering competition. |
Protecting consumers |
provides info on products/ensure they're safe. |
Protects health and wellbeing of workers |
protects health/well-being of labourers. |
Addressing externalities |
government will promote positive externalities and limit negative ones. |
Providing public goods |
government products some goods and services to use at no charge. |
Providing economic stability |
government ensures job security and price predictability |
redistributing income |
collect taxes and share with others for better income equality; unemployment welfare ect. |
Externality: something outside of anyone's control.
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Business sucess
A business owner should aim to produce a high-quality product. This means that the product will be reliable, safe and easy to use, durable, well designed and delivered to customers on time. |
-introduce premium features |
-ensure durability and reliability |
-achieve better performance than competitors |
Exposing the product is essential for retail business. A business generally needs to locate as close as possible to it's customers or suppliers. Avoid locating businesses close to competitors. The area reputation is also an important factor. |
Careful financial management is vital- cash flow must be maintained. The owner must ensure that the business is profiting. |
Consumer rights
‘Consumer rights’ are the rights you have when you buy something – either a product or a service. |
The consumer guarantee states that the products you buy must be: |
-be safe |
-be of reasonable quality |
-do all the things a reasonable person would expect them to |
-match descriptions made by the salesperson, on the packaging and labels, and in promotions or advertising |
-not have any hidden costs associated with their use or purchase |
-meet any extra promises made about performance, condition and quality, such as lifetime guarantees and money-back offers |
-have spare parts and repair facilities available for a reasonable time after purchase |
Services that are provided by people must: |
-be provided with acceptable care and skill, taking all necessary steps to avoid loss or damage |
-achieve the results that the consumer and the business had agreed to |
-be delivered within a reasonable time if there is no agreed end date |
*see Australian Consumer Law
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Key Terms
Goods |
tangible items that satisfy people's wants (items you can see, touch and purchase) |
Services |
the subject that deals with the production, distribution and consumption of goods and services |
Supply |
the total amount of a specific good or service that is available to consumers |
Demand |
consumer's desire and willingness to pay a price for a specific good or service |
Wants |
desires for goods and services that are not essential to live |
Surplus |
supply of goods and services exceeds demand |
Shortage |
demand for a product or service exceeds its supply in a market |
Producer |
individual or group that exchanges any type of good or service in return for payment |
Consumer |
person/group who agrees to buy goods or services |
Price equilibrium |
supply of goods is equal to demand |
Supply and Demand
The Law of Demand |
The law of demand states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good. |
The Law of Supply |
The law of supply states that the higher the price, the higher the quantity supplied. |
Equilibrium |
When supply and demand are equal (i.e. when the supply function and demand function intersect) the economy is said to be at equilibrium. |
Disequilibrium |
Disequilibrium occurs whenever the price or quantity is not equal to P or Q |
Excess Supply |
If the price is set too high, excess supply will be created within the economy and there will be allocative inefficiency. |
Excess Demand |
Excess demand is created when price is set below the equilibrium price. Because the price is so low, too many consumers want the good while producers are not making enough of it. |
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