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Kích cỡ chữ:

1. What are two sides of the market? How is supply distinguished from demand? How is the market price formed? What causes the price to go up and down?

- Organizationally defined, a market is the entire enterprise of buying and selling goods and services at a particular location or at geographically dispersed locations

+ Behaviorally defined, a market is a self-coordinating mechanism, which adjust the behaviors of the sellers and the buyers on the basis of prices.

+ From above definitions, two sides of the market are buyers and sellers. In other word, they are supply and demand.  

- The first side of the market is supply.

+ Supply is the quantity of good or service that is offered for sale.

+ Quantity supplied: is a specific quantity of a good or service that the seller is willing and able to sell at a specific price level.

+ Law of supply: states that supply increases as prices increase and decreases as prices decrease.

+ The supply curve: tends to slope upward from left to right. The upward slope of the supply curve represents the direct relationship between the quantity of a good or service offered for sales and its prices. i.e. the quantity supplied of a good or service is higher at a higher price than at a lower one

- Demand is the second side of the market.

+ Demand: is the amount of an item that buyers are willing and able to purchase at the range of different prices.

+ Quantity demanded: a specific quantity of a good or service that is demanded at a specific price level

+ Law of demand: states that the quantity of items demanded increases and decreases in the opposite direction from changes in price

+ The demand curve: tends to slope downward from left to right. The downward slope of the demand curve represents the inverse relationship between the quantity demanded of a good or service and its price. i.e. the quantity demanded of a good or service is higher at a lower price than at a higher one.

- How is market price formed: When being demonstrated on the same graph, the demand curve and supply curve intersect at one point, creating the equilibrium point or the market equilibrium price. At this point, the quantity supplied is equal to the quantity demanded. It can satisfy both the sellers and consumers.

- Market equilibrium price is not fixed.

+ Affected by change in supply of and demand for goods and services.

+ Supply is affected by different factors: technology, input costs and government regulations

+ Demand is also affected by other factors: prices of related goods (complements and substitutes), consumer incomes and consumer tastes