Concept Of Simple Market In Economic Theory
Concept of the ?Simple Market? in economic theory
A market is the interaction between buyers and sellers. The behavior of buyers is described in a demand relationship between price and quantity demanded, on a graph. The relationship between price and quantity demanded is inverse. Behavior of sellers is described by the supply relationship between price and quantity supplied. This relation is direct.
A market is made up of resource markets, production organizations, product markets, and resource organizations. Resources flow from the resource organizations into resource markets where they are bought by productive organizations; they then are turned into products and services and sold in the product market to consumers. Each of these organizations is inner-related in that if one of them is not buying or selling, the ?circle? will not work.
The present market now can not be said to be a simple market because the present market has too much government intervention. Another theory in economics is perfect competition. A perfectly competitive market has a large number of firms, the product is standardized or homogeneous, firms can freely enter or leave the market in the long
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