Markets

Question 1

Factor market

Answer 1

Buying and selling factors of production from households to firms e.g. Labour, capital

Question 2

Product market

Answer 2

Buying and selling goods and services, consumers are demand and producers are supply, firms to households

Question 3

Who sets prices in market economies?

Answer 3

Consumer sovereignty (consumer is king)

Question 4

For whom (market)

Answer 4

Whoever is willing to pay for the resources

Question 5

How to produce (market)

Answer 5

Efficiently to operate profitably

Question 6

How does a market economy promote efficiency?

Answer 6

The producers incentive for profit makes them minimise costs

Question 7

Invisible hand

Answer 7

Price mechanism; pressure on economy to change to the equilibrium price and quantity