Economics- Product Market and Factor Market

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Market

A thing or place that brings together buyers and sellers (where goods and services are sold to consumers that want to buy goods)

Consumers

People (buyers) that demands goods and services and want to buy them from firms or individuals (sellers)

Firms

Businesses that sells goods or services to consumers

Demand

Can only exist if consumers are both able and willing to buy goods and services

Market economy

Determined by price

Law of demand

All things being equal, the lower the price for a good, the higher the quantity demanded will be for that good

Law of supply

All things being equal, the higher the price for a good, the more sellers will be able to supply that good

Product market

Where households purchase goods for personal use from firms. Brings together buyers and sellers of goods and services.

Factor market

Households buy goods and services, supply firms with labor to produce goods and services

Factors of Production
(production materials)

Land, labor, capital, & entrepreneurs

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