The+market+glossary

** Auction ** || ** A form of market where buyers bid the price they are prepared to pay for a good or service. The highest bid is accepted. ** ||  || The swapping of goods/ services for other goods/ services – requires a “double coincidence of wants” || || Where goods and services are sold illegally (or without taxes being paid) || || A person must be solvent, sober and sane to enter a contract. Some contracts require parties to be over 18years old. || || “Let the buyer beware” || || Something of value must be exchanged for a contract to be valid (e.g. money) || ||   ||  A tax on **income** – paid directly to IRD by person or business levied e.g. PAYE, RWT, and Company Tax. || ||  The price where quantity demanded = quantity supplied; where the market clears. || ||
 * ** Barter **
 * ** Black Market **
 * ** Capacity **
 * ** Caveat Emptor **
 * ** Consumer Guarantees Act **** 1993 ** || Protects consumers AFTER they have purchased a good or a service. ||
 * ** Consideration **
 * Contract **
 * An agreement between at least two competent parties that creates an obligation enforceable by law – a VALID contract must contain essential elements – intention, offer &acceptance, legality, consent, capacity, and consideration – otherwise it is VOID**. ||
 * Direct Tax **
 * Equilibrium Price **
 * Equilibrium Quantity **

The quantity that is bought and sold at the equilibrium price || ||  ||   At any price above equilibrium quantity supplied exceeds quantity demanded – eventually producers will lower price to sell excess stock and equilibrium returns  || ||
 * Excess Demand **
 * (Shortage) **
 * (Shortage) **
 * At any price below equilibrium quantity demanded exceeds quantity supplied – eventually consumers will bid up the price to guarantee purchase and equilibrium returns ** ||
 * Excess Supply **
 * (Surplus) **
 * (Surplus) **
 * Fair Trading Act 1986 **

Designed to prevent misleading and unfair practices by sellers. || ||  Standard of value; medium of exchange; store of value and means of deferred payment. || ||  A tax on **spending** – paid indirectly to IRD by sellers or producers of the goods and services on which the tax is levied. || ||  A place or situation where buyers and sellers meet to exchange goods and services. || ||  Where quantity demanded = quantity supplied – it is the only place a market can operate in the long run. || ||  Result from producers and consumers operating in their own self interest – returns shortages and surpluses to equilibrium. || ||  A price ceiling set by government in an attempt to keep goods and services affordable to low income earners – causes excess demand. || ||  A price floor set by the government in an attempt to keep producers in a market e.g. minimum wage – normally creates excess supply. || ||  Firms compete using product differentiation and variation to increase market share  || ||  Firms compete on price to increase market share by using methods such as: “buy one get one free”, sales, interest free credit and loss leaders. || ||  Methods employed by producers to make consumers believe a product is different e.g. location, packaging and sponsorship. || ||  Real difference in the product e.g. deluxe station wagon and economy car etc.  || ||  Money has 7 qualities that make it a good medium of exchange – it is acceptable, recognisable, stable, portable, divisible, durable and scarce. || ||  A payment to producers to encourage production of a good or service  || || A form of price setting where buyers place their bid in writing. ||
 * Functions of Money **
 * Indirect Tax **
 * Market **
 * Market Equilibrium **
 * Market Forces **
 * Maximum Price **
 * Minimum Price **
 * Non-price competition **
 * Price Competition **
 * Product Differentiation **
 * Product Variation **
 * Qualities of Money **
 * Subsidy **
 * Tender **