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2.1 The Role of Markets - Coggle Diagram
2.1 The Role of Markets
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What is a Market?
A market is where buyers and sellers come together to buy and sell goods and services. This can be in both a physical or virtual environment.
A market economy relies on the forces of supply and demand to determine the allocation of scarce resources as well as government intervention.
What is exchange?
Giving up something an individual has in
return for something the need but do not possess. All economic behaviour involves the
exchange of one scarce resource for another; today this is usually money.
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What is specialisation?
Specialisation is when individuals, firms, regions or counties
concentrate on producing the goods and services they have an advantage in making it more efficient
and often increasing output. This can apply to all factors of production.
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What is a factor market?
The factor market is the market where the services of the factors of production (CELL) are bought and sold. Price for each factor
is based on supply and demand and is a derived demand.