Question

a. Using appropriate demand and supply diagrams in each of the following cases explain the impact on the market price and quantity traded.

i. Market for second-hand clothing following a high increase on import duties on second- hand clothes

ii. The market for tomatoes following a bumper harvest

iii. The market for Sanwatt battery following a fall in price of Tiger head battery

b. Define market as applied in economics and explain briefly any four types of markets.

Answer 1

1. When import duty is imposed on import if second hand clothes he price of clothes increases and when price increases the demand decreases.

2.when there is bumper harvest it means that supply of tomatoes increase and when supply increase the price falls which leads to increase in qty demanded

3.Assuming that both batteries are substitute. A fall in price of Tiger battery increases it's demand and decreases that of sanwatt battery. Thus when demand decrease

B A market is a place where buyers and sellers are engaged in buying and selling. The market can be a physical like a retail one where people meet face to face or a virtual place online where there is no direct contact between like traditional markets.

There are four basic type of markets

Perfect competition - a market where there are large number of buyers and sellers dealing in similar products.All the sellers compete with each other and are price taker

Monopolistic competition- A market where there are large number of buyers and sellers but they deal in slightly differentiated products.

Oligopoly - a market where there are 3-5 large sellers and many buyers. They each try to influence the price and thus buyers are price taker.

Monopoly - A market where there is single seller and many buyers. Entry to this market is difficult. Monopoly is either due to government protection or due to huge funds involved to enter the market