ECC1000 Chapter Notes - Chapter 3: Shortage, Normal Good, Substitute Good
Document Summary
An economy is which resources are allocated among households and firms with little or no government interference: producers earn a living by selling the products that customers want. Invisible hand: a saying; guides resources to their highest valued uses. Exchanges of goods and services in a market economy happens through prices that are established in markets. Prices change according to the level of demand for a product and how much is supplied. Markets exist whenever goods and services are exchanged. A market in which there are so many buyers and sellers that each only has a small (negligible) impact on the market price and output. Similar goods and many participants create a highly competitive market in which the price and quantity sold of a good are determined by the market rather than by one person or business. A market in which the buyer or seller can influence the market price.
