3. The market is the place where
buyers and sellers meet and trade
takes place.
4. The FREE Market
In a pure market economy (free market) buyers and
sellers make their own trading decisions without any
interference from the government.
5. Mixed Economy
In most countries in the world today governments are
involved in the economy.
The more decisions that are made by the government,
the less free is the economy.
6. COMPETITION
When buyers and sellers are free to enter and leave the
market and determine their own prices we have perfect
competition.
When the actions of buyers and sellers are regulated or
otherwise restricted we have imperfect competition.
7. Perfect Competition
The Law of Demand states that the more people that
are willing and able to buy something the greater its
price will be.
The Law of Supply states the more people that are
willing and able to sell something the smaller its price
will be.
8. Uncompetitive Markets
When there is less competition the seller is more
powerful than the consumer.
If there are only 1 or 2 sellers they may act together and
set prices. PRICE FIXING.
If the business tries to limit competition we talk of
uncompetitive practice.
