people rely on tradition or customs to make the what, how and who choices.
an economy that relies on voluntary trade as primary means of organizing and coordinating production (free enterprise)
government holds most property rights. The government commands the what, how and who choices.
may emphasize private ownership and voluntary exchange, but it also allows government to play an important role
(ex/ theUS, there is no true market economies, the US does involve the government in the economy.)
(What is going to be produced. How is it going to be produced. & Who will produce.)
Great many amount of firms
very easy to enter and exit the market
complete amount of information open to buyers and sellers
no price control
EX: farm industry
Many amount of firms
differentiated products (similar but not identical)
easy to enter and exit the market
reasonably complete information open to buyers and sellers
some price control, price searcher
EX: fast food industry.
3-5 large firms,
differentiated or homogeneous products,
hard to enter or exit market,
incomplete information to buyers and sellers,
varying price control but must keep up with market, price searcher, EX: cell phone industry
1 large firm
very hard to enter or exit the market
complete information open to buyers and sellers
a lot of price control
patent and copyright/trademarks
to supervise and regulate banking institutions, and to maintain the stability of the financial system by limiting the systemic risk.
FED Main Functions
provides financial services to depository institutions, the U.S. Government, and foreign official institutions, including playing a major role in operating the nation’s payment system.
Law of Demand
consumers will buy more of something at lower prices than higher prices.
Law of supply
At higher prices, producers are willing and able to offer more at lower prices.
the price where the supply and demand meet.
Law of demand relates to pricing
because when the price goes down demand goes up vice versa.
Law of supply relates to pricing
because when the price goes up the supply goes up too.
Equilibrium relates to pricing
because prices become stable and balanced.