markets, law of

A recognition of the fact that any market (that is, a medium of exchange for buyers and sellers) operates with basic principles such as supply and demand leading to an equilibrium. Imperfections within the market would in time create monopolies and oligopolies.

(1) Market forces are those pressures generated by buyers and sellers which prompt changes in the price or volume of goods exchanged.
(2) Market adjustment is a change in prices or quantities which occurs when supply and demand within the market change.
(3) Market clearing is adjustment of supply and demand until an equilibrium is reached.
(4) Market equilibrium is a state of rest for a market when the quantity of a good is constant and prices do not rise or fall, with the consequence that there is no incentive for buyers or sellers to change their behavior.
(5) Market failure is a malfunctioning of a market because of imperfection within it. It can take the form of unemployment, skills shortages, balance of payments disequilibria and unexpected inflation.
(6) Market orientation is the tendency for manufacturers to locate their factories close to the market where their goods will be sold.
(7) Market share is the proportion of the total sales of a market that a single firm controls.
(8) Market power is the ability of a buyer or seller to influence a price.
(9) Market structure is the number of firms, buyers and producers in a market. They may be structured in a competitive, oligopolistic or monopolistic manner.

Also see: aggregate demand theory, bertrand duopoly model, bilateral monopoly, collusion theory, cournot duopoly model, demand theory, duopoly theory, monopolistic competition, equilibrium theory, theory of the growth of the firm, organization theory, Say’s law

One thought on “markets, law of

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