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How markets work (Indirect taxes and subsidies (Tax is there to shift the…
How markets work
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Commoditity markets
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Prices can be volitile, due to both demand and supply side
An example of this is oil, one of the worlds biggest commodities
Cartel agreement - agreements between firms on a price to take a product to the market, maximises their profits
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The housing market
Owner-occupier, demand depends on intrest rates
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Different segments that operate in different ways; owner-occupier, private and public rental
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Financial markets
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Bank of England supply the money, and the supply does not depend on intrest rates
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Supply of money is perfectly inelastic, demand curve slopes downwards
Demand - lower the intrest rate, the higher the demand for money
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