In this lesson, we will begin our acquaintance with the topic “Market. Part 1". As you know, the market is one of the possible alternatives to the organization of an integral economic system of the economy that exists in a particular society. Therefore, in the lesson we will consider the market from this point of view, we will give it a definition.

SOCIAL STUDIES 11 CLASS

Section 1. Man and economy

Lesson 3. Market. Part 1

Pyotr Alexandrovich Safronov

Candidate of Philological Sciences, Researcher Faculty of Philosophy of Moscow State University named after M.V. Lomonosov

Before starting a conversation about what a market is, it is necessary to introduce the concept of an economic system.

An economic system is a set of elements that form an integral economic structure society.

There are two main types economic systems: administrative-command and market. They have different names, for example, the administrative-command is often called planned. In general, they say that the administrative-command economy is a hierarchy, and the market economy is spontaneous.

Any economic system must provide answers to the three basic questions of economics: what to produce (what goods and services and in what quantity society needs), how to produce (what technological and economic strategies to use), and for whom to produce (what needs of society to consider paramount).

In the case of a command economy, decisions on what to produce and for whom are made by the state and sent in the form of state orders and directives to manufacturers. They, in turn, have some independence in the question of the mode of production, but only relative. The state is also involved in pricing. Although such a system is stable, it has a number of significant drawbacks. The volume of production, as well as the list of goods and services itself, is determined by the state and often does not take into account the real interests of consumers, in connection with which some goods are produced in excess, while others are in short supply on the market.

Producers themselves are not interested in the quality and efficiency of their labor, since the buyer for them is the state, which, acting as a customer, will in any case acquire it. The introduction of scientific and technical developments is slow, since the state is an intermediary in this process. Similarly, stable prices supported by the state are not such an absolute plus, as this limits the initiative of entrepreneurs.

Free pricing is the most important indicator of the state of economic processes.

It is also distinctive feature market economic system.

When market economy what, how and for whom to produce, the company decides, based on its available resources and possible production volumes. Its basis is private property and the division of labor. The price is set as a result of two counter flows - the supply of goods and services by producers, i.e., the driving force is economic interest: for consumers, this is the maximum utility, and for producers, the maximum profit.

The market performs various functions in addition to pricing, such as information, regulation, intermediary.

However, the market economy is not free from shortcomings, which economists most often call market failures, or market externalities, i.e., its unforeseen negative side effects.

The market is incapable of producing public goods and providing social guarantees, it generates excessive income differentiation and social stratification.

Also, the disadvantages of the market include the fact that its internal logic eventually leads to the emergence of monopolies that destroy the market economy. This leads to the need for government intervention in the economy. Such an economic system is called mixed - in it the free market is complemented by the active role of the state.

It should be noted that both major economic systems - both command and market - are rather theoretical abstractions that miss real-life hybrid objects.

In practice, we are always dealing with mixed economy, the question is only in the degree and means of state intervention.

Additional material

Market entities and circular flows

For economic theory it is also important to single out market entities and the relationships existing between them. In the classic model circular flows Walras developed a relationship between households and manufacturing firms. This diagram demonstrates the two-way movement of supply and demand. On the one hand, households consume goods and services produced by firms, and on the other hand, they are suppliers work force for them, i.e. create an offer of this resource.

Hybrid forms of economy

The existence of hybrid forms of economy means that in a planned economy, elements of a market economy can be found, and vice versa. So, for example, in a planned economy there are elements of market exchange, but with the difference that the equivalent is not money, but social influence or status (i.e., various forms of corruption). At the same time, within the framework of a market economy, such forms are possible state regulation like the nationalization of enterprises and banks or planning economic development.

Text footnotes

STATE ORDER - issued government bodies and an order paid from the state budget for the manufacture of products, the release of goods, and the performance of work in which the state is interested.

DIRECTIVE - an order, an indication of a higher authority or official mandatory for guidance or implementation.

DEFICIENCY - the insufficiency of funds, resources or goods in comparison with the previously intended, planned or required level.

UTILITY - pleasure, satisfaction of needs, fulfillment of requests that people receive from the consumption of goods and the use of services. Utility is a subjective category, because each person has his own perception of pleasure, satisfaction and his own range of needs. However, in assessing the degree of satisfaction of different people from the consumption of goods and services and the dependence of the measure of satisfaction on the amount of goods consumed, there is much in common, patterns are found that serve as the subject of study of utility theory, which is a modern branch of economic science. In the theory of utility, the concept of conventional units of utility is introduced - utils (from the English utility - utility), expressing the measure of pleasure derived from the consumption of a unit of good. Utility theory is based on the law of diminishing marginal utility.

PUBLIC BENEFITS - goods that have the following characteristics: it is almost impossible to exclude a person from the circle of consumers of this good, the consumption of a good by one person does not reduce the possibility of consuming it by another, the good cannot be decomposed into separate units. This definition is well illustrated by the following examples: a lighthouse that guides sailors at night shines on all who reach its light; ensured internal and external security of the state is available to all who are on its territory.

(according to the textbook by Vazhenin A.G. Social studies for secondary vocational education)

The normal functioning of the economy is impossible without the exchange of the results of production activities.Exchange is the process of movement of consumer goods and production resources from one participant economic activity to another. It connects producers and consumers, connects members of society. Through exchange, a system of economic relations is formed.

Exchange methods may vary. In ancient times dominatednatural exchange. It became necessary in the context of the social division of labor (into agriculture, cattle breeding and handicrafts) and specialization. People who produced heterogeneous products were forced to exchange the products of their labor in order to more fully satisfy their material needs. During the exchange, it was necessary to compare the value and usefulness of the exchanged items so that the interests of each of the parties were not infringed. The commensuration of the values ​​of things in natural exchange was a very difficult problem. How, for example, to determine how many clay pots you can get for a cow? Therefore, over time, objects that are equally valued by most people began to be used to measure the value of things. So there weremoney, and with themmoney exchange.

At first, various things acted as money: animal skins, livestock, shells, grain, etc. To this day, some relic tribes use such items as money. The inconvenience of such money consisted in their fragility, loss over time useful properties. So, the skins gradually wore out, and livestock could get sick and fall. Real money has been replacedmetal. They were more durable and could be divided into parts. At first, the metal was used in ingots. To pay for an inexpensive purchase, a piece was cut from the ingot, which had to be weighed to determine its value. In Russia, the main unit of payment was the hryvnia (about 400 grams of silver). Quite often, it was a hoop to be worn around the neck. To pay for goods, it could be divided in half (chopped), hence the name "ruble".

The constant division of metal ingots and the weighing of the cut pieces was also not entirely convenient. Therefore, there werecoins - metal money with a strictly fixed weight and value. In most cases, the coins were and still are disc-shaped. On each of its sides some images were minted. Most often, these were the faces of monarchs, the coats of arms of states, as well as various inscriptions. Coins were quite common money for many centuries, until in the XVIII century. did not appearpaper money. They are more convenient because they are lighter in weight than metal ones and take up much less space. Paper money is still widely used today. But despite the convenience, they also have disadvantages. Metal money (gold, silver) isreal money, they are unlikely to ever depreciate. Paper money is calledsymbolic. Their real value is equal to the cost of paper and printing services used on them. At the same time, the formal value of money is determined by itsdenomination, those. the amount indicated on the banknote.

Paper money, for all its merits, created a lot of problems. They are easy to fake. Modern printing technologies make it possible to copy even the most advanced security measures. Another problem is the depreciation of banknotes. The state is forced to constantly withdraw old banknotes from circulation and replace them with new ones.

The issuance of new batches of paper money is called emission. The state strictly controls this process, granting the right to issue to one or several banks. In accordance with Article 75 of the Constitution of the Russian Federation, the issue of money is carried out exclusively by the Central Bank of the Russian Federation.

The amount of paper money in the country must correspond to the volume of commodity mass and the gold and foreign exchange reserves of the state.The overflow of the sphere of circulation with paper money, causing their depreciation, is called inflation. As a result of the fall in the purchasing power of money, prices for goods and services increase, and the standard of living of the population decreases. Inflation became commonplace in the 20th century. Its small rates are acceptable and are taken into account when drawing up the state budget. According to the pace of development, there aremoderate inflation (up to 10% per year),galloping (up to 200% ) And hyperinflation (up to 1000%). To avoid high rates of inflation, the state must constantly control the circulation of money.

Now, along with paper everything greater value acquireelectronic money. They operate in the form of non-cash payments, i.e. money transfers from one bank account to another. One of the forms electronic money represent credit cards in the form of a nominal monetary document issued by a credit institution (bank), proving the identity of the owner of a bank account and giving him the right to purchase goods and services in retail without cash payment. Credit cards appeared in the 1950s. and have become a fairly common means of payment at the present time. The owner of a credit card does not have to carry money with him. When buying a product, the required amount is withdrawn from his account, and if you need cash, you can get it through an ATM.

Regardless of the form, money has common features and perform the same functions.Signs of money are their portability (take up little space)homogeneity (equal value of homogeneous banknotes),stability (same value for a long time) andrecognition (difficulty of forgery).

Money does threefeatures: serve as a medium of exchange, a measure of value and a means of accumulation. Asmeans of circulation money acts as a means of payment in the exchange of goods. By purchasing any thing, the buyer pays money for it; the seller, having received the money, pays for goods and services with it, etc. The faster the money circulates, the less the money supply in the country and, accordingly, the less the likelihood of inflation. Speaking likethe measure of value, money plays the role of a unit of account, a universal equivalent, thanks to which it is possible to compare the cost of all goods and services. Howstore of value money appears when it is not spent, but set aside in order to accumulate the necessary amount to buy an expensive thing or for a “rainy day”.

With the development of money exchange appearsmarket. This word has several meanings. In a broad sense, a market is a place where goods and services are bought and sold. Depending on the type of goods, grocery, automobile, radio markets, etc. are distinguished, and according to the form of trade - wholesale and retail.

From the point of view of economic sciencemarket - this is a form of economic relations between consumers and producers in the sphere of exchange, a mechanism for the interaction of buyers and sellers of economic goods. The market serves production, exchange, distribution and consumption. For production, the market supplies necessary resources and sells its products, and also determines the demand for it. For exchange, the market serves as the main channel for the sale and purchase of goods and services. For distribution, it acts as the mechanism that determines the amount of income for the owners of resources sold on the market. Through the market, the consumer receives the bulk of the consumer goods he needs. Finally, the market determines the price, which is the main indicator of a market economy.

Price - is the monetary value of goods and services. The process of setting foam on a product is calledpricing. Of course, the seller can set the price arbitrarily. But if the price is too high, then the goods will not be bought, and if it is below the cost, then the entrepreneur will go bankrupt. The pricing process is influenced by many objective factors: the ratio of supply and demand, the rarity (deficit) and prestige of the product, the possibility of replacing the product with a similar one, the degree of its need.

Prices are of several types: wholesale and retail, domestic and global. But regardless of the type of prices perform the samefunctions. Price informs (informing function) buyer abouthow much money the seller wants to receive for the goods. This information guides(orienting function) buyer in choosing a product and determines the demand for it. An increase in the price of a product stimulates the manufacturer to produce products(stimulating function), and an increase in demand for a product with a decrease in price encourages the manufacturer to reduce the cost(resource-saving feature). Finally, price changes contribute toredistribution to anuma l a (distributive function) from one sector of the economy to another.

The conditions for the existence of the market are the division of labor, specialization, exchange, the presence of independent subjects of economic activity, freedom of entrepreneurial activity. based on private property. All this is regulated by generally binding rules of conduct - customs, traditions, laws. The market as a mechanism for the interaction of buyers and sellers (the "large" market) consists of separate ("small") markets - capital, labor, securities, foreign exchange, food, housing, insurance services, etc.

The market performs a number of functions. First of all, thisinformation function. It is manifested in the determination of prices for goods and services, supply and demand for them.Regulating function is manifested in a change in the structure of production, the regulation of foam. introduction of new technologies, etc. The market acts as an intermediary between producers and consumers(intermediary function), allowing them to find the most profitable option purchase and sale.Stimulating function directs the manufacturer to improve production efficiency.

Buyers and sellers in the market constantly exchange money for goods and vice versa.A commodity is a product of labor that satisfies some need and is intended not for the producer's own consumption, but for sale.

An important property of a product is itsutility, those. the ability to satisfy a consumer need. The consumer evaluates the degree of benefit from the consumption of goods and builds for himself a scale of the usefulness of each of them. The needs of people are very different from each other. At the same time, there are objective circumstances that force everyone to buy this or that product. In economics, formulatedlaw of diminishing marginal utility, according to which, as consumption of a good increases, its utility decreases. For example, when a person wants to eat, the first portion of food will have a high degree of usefulness for him, the second - less, the third - even less, and, finally, when a person is full, the remaining food will have a minimum degree of usefulness in his eyes. Another quality of the product is itsvalue (value). Value is understood as the monetary assessment by the consumer of the usefulness of a good.

The formation of market prices occurs in the process of interaction between producers (sellers) and consumers (buyers), pursuing diametrically opposed goals. This process is usually associated withcompetition - rivalry between market participants. Competition can be a struggle both for economic resources and for the establishment of a stable niche in the market. The advantage of competition is that it makes the allocation of scarce resources dependent on the economic arguments of competitors. Winning the competition can usually be done by offering more benefits. High Quality at a lower price. That's whythe role of competition is that it contributes to the establishment of a certain order on the market, which guarantees the production of a sufficient amount of high-quality goods that are sold at an equilibrium price.

There are such types of competition as perfect and imperfect. At perfect competition There are many small firms offering homogeneous products on the market. The consumer himself does not care which company he purchases this product from. The share of each firm in the total volume market supply of this product is so small that any decision to increase or decrease the price is not reflected in the Price of similar products from other manufacturers. The emergence of new firms in the industry does not meet any obstacles or restrictions. Exiting the industry is also absolutely free. There are no restrictions on the access of a particular firm to information about the state of the market, prices for goods and resources, costs, quality of goods, production techniques, etc.

Imperfect Competition associated with a marked restriction on free enterprise. Such competition takes place with a small number of firms in each field of entrepreneurial activity. Any group of entrepreneurs (or even one entrepreneur) can arbitrarily influence market conditions. Penetration of new entrepreneurs into the market is difficult. There are no substitutes for products from privileged manufacturers.

An intermediate type of competition ismonopolistic competition. It is a type of market, in terms ofwhom a large number of small firms offer a variety of products. Entering and exiting the market is usually not associated with any difficulties. There are differences in quality appearance and other characteristics of goods produced by different firms that make these goods somehow unique, albeit interchangeable.

The opposite of competition is monopoly. In a monopoly, there is only one seller of a given product that has no close substitutes. Rigid barriers are put up for other firms to enter the industry.

If the buyer is singular, then such competition is calledmonopsony. IN In some industries, there is a bilateral monopoly, when there is one seller and one buyer on the market for a certain product. For example, in the field of military production, the customer is the state, and the supplier is some one and only firm.

Pure monopoly and pure monopsony are comparatively rare phenomena. Much more often in a market economy it developsoligopoly, which assumes the existence of several large firms in the market, producing both homogeneous and heterogeneous products. Entry of new firms into the industry is difficult. The peculiarity of an oligopoly lies in the mutual dependence of firms in making decisions about the prices of their products.

Within the framework of a market economy, the protection of the competitive environment becomes relevant in order to achieve an optimal combination of various types of competition and prevent the suppression of some economic entities by others. This task is performed by the state, which pursues an antimonopoly policy, fixing the rules of economic activity in laws.

The most important elements of the market mechanism are supply and demand. Demand - it is the intention of buyers to purchase a given product at a given price, backed by monetary opportunity.Under market conditions law of demand, according to which, when equal conditions the higher the demand for a product, the lower the price of this product, and vice versa, the higher the price, the lower the demand for the product. Demand largely depends on the income of the consumer and on the prices of goods that are close in purpose and quality.

The law of demand works in conditions of stable economic development. It does not work in situations of rush demand caused by the expected increase in prices. The law of demand does not apply to antiques, luxury items, i.e. on those goods that act as a means of accumulation, as well as on those cases when demand switches to technologically new goods.

The change in the quantity of a good that buyers are willing and able to buy in response to a change in price is calledchange in demand. If the price of a good goes down, then the demand for it goes up, and vice versa. In addition to prices, demand is affected by incomes of the population, changes in its structure (according to age, professional and other characteristics), changes in prices for other similar goods, as well as changes in fashion, tastes, habits.

Sentence - then the intention of the seller to offer his product for sale for a certain period of time at all possible prices for it. Active on the marketlaw of supply consists in the fact that, under equal conditions, the quantity of goods offered by sellers is the higher, the higher the price of this product, and vice versa, the lower the price, the lower the value of its supply. In addition to the price of the offer, other factors also influence. For example, a decrease in production costs leads to an increase in supply.

Demand ratio And suggestions shapes equilibrium market price, which tends to settle at a level at which demand is equal to the offer.

The market economy is the most common type of economic systems in modern world. It is in the conditions of the market that it is possible to fully realize one's entrepreneurial abilities and satisfy the necessary needs.

Questions and tasks

What is an exchange? What methods of exchange existed in the history of mankind?

What forms of money have been adopted in the past? What are their advantages and disadvantages?

What is inflation? What are its types? How does inflation affect the development of the economy?

Describe the characteristics of money.

What are the functions of money?

What is the meaning of the word "market"? What is the market from the point of view of economic science?

What is the price? What influences the pricing process?

Name the functions of the market.

What is a commodity? What are its properties?

What is the relationship between producers and consumers? What role does competition play in this?

What is the difference between perfect and imperfect competition? What is the opposite of competition?

12 What is the relationship between price, supply and demand? Formulate the laws of supply and demand.

Social Studies. Full course preparation for the exam Shemakhanova Irina Albertovna

2.4. Market and market mechanism. Supply and demand

Market is a set of economic relations between market entities regarding the movement of goods and money, which are based on mutual agreement, equivalence and competition. A free (competitive) market is a self-regulating system that achieves results and maintains its balance spontaneously, without the intervention of external forces. signs free market: unlimited number of competitors; free access to and exit from the market; absolute mobility of all resources; availability of complete information (through prices); no competitor can influence the decision of others.

Market shaping factors: the needs of people, the existence of private property, the division and specialization of labor. Under the influence of these factors, the product of labor turns into a commodity, that is, into a product of labor that people need to meet their needs, but which can be obtained from the owner of the product only through an equivalent (equal) exchange for other products of labor or their substitutes (for example, money ).

Market institutions- norms and principles of behavior, economic traditions and customs. The market economy covers the following institutions: private property; freedom of enterprise and choice; personal interest as main motive behavior; competition; pricing based on the interaction of supply and demand; limited role of the state.

Market conditions is a set of economic conditions that are developing on the market at each moment of time, under which the process of selling goods and services is carried out.

Market Functions

- is a link between sellers and buyers, a means of moving economic benefits between people, territories and states; communication between people is carried out regardless of the division of people into classes, nationalities;

– carries out public acceptance goods offered for sale, and hence the labor invested in them; regulates the supply and demand of goods, as well as price setting;

- is an independent distributor of economic benefits on an equivalent and reimbursable basis;

- is a mechanism for rewarding successes and failures, it is an objective appraiser of the abilities of each person as a consumer, producer, entrepreneur;

- performs a sanitizing function, "rejecting" those manufacturers who cannot offer the best quality at the lowest price;

- distributes resources, directing them to those productions, the results of which are in demand;

- ensures the balance of the economy;

- is a kind of engine of scientific and technological progress;

- objectively forms a body of skilled entrepreneurs, disciplines the subjects of market relations.

Market classification

1. According to the economic purpose of objects of market transactions.

a) The market for consumer goods and services: the market food products; market non-food items; service market.

b) The market for factors of production: the labor market; the market for means of production; raw material market.

c) Financial market: stock market (securities); money market (deposits, currencies); capital market (insurance, mortgage, interbank); credit market (banks, investment and dealer companies); foreign exchange market. Equity securities are the commodity in the stock market. Types of issue: 1) private (issue of shares and bonds joint-stock companies); 2) state (issue of bonds of state loans).

d) Real estate market: land market; real estate market.

e) Information market: the market of a spiritual and intellectual product.

2. On a spatial basis, they distinguish: local, or local, market; regional market; interregional market; national market; international market; world market.

3. By subjects: buyers' market; sellers market.

4. According to legislation: legal market; illegal market ("black market").

5. According to the degree of limited (development) competition: pure competition, monopoly, monopolistic competition, oligopoly.

Competition - 1) rivalry between market economy participants for Better conditions production and sale of goods; confrontation, rivalry between producers of goods and services for the possibility of increasing profits.

1. Perfect competition- the struggle between individual independent producers, in which each of the rivals owns an insignificant share of production in comparison with its total market volume, which does not allow an individual manufacturer to dominate the market and have a significant impact on the market price of the goods.

Imperfect Competition- market dominance of several (2–4) large firms, which own the main share of the production of this product, due to which these firms can significantly influence the market price of the product.

2. Market of perfect (pure) competition: there are many competing firms on the market that offer the same goods to satisfy the same need and do not have the ability to influence the price at which they sell their goods, they cannot block the entry of new competitors into the market.

Monopolistic competition: there are many competing firms on the market that, in order to satisfy the same need, firms offer different goods, and each firm has some ability to influence the price at which it sells its goods; existing firms cannot prevent new competitors from entering the market.

Oligopoly: production of the same or similar goods by a small number of large firms competing with each other; each firm can have a significant influence on the prices at which its products are sold. Oligopoly usually arises in those industries where technology itself dictates the preference for creating large-scale industries.

Monopolistic competition must be distinguished from monopoly. Monopoly- the exclusive right of production, trade and other activities belonging to one person, a certain group of persons or the state.

Market infrastructure- a set of institutions, services, enterprises serving the market; an interconnected system of organizations that serve the flow of goods, services, money, securities, labor moving through the economy under the influence of market incentives. Market infrastructure: exchanges; institutions linking markets into a single whole (transport network, communications system, information networks, Insurance companies, courts).

Exchange- a state or joint-stock organization that provides premises, certain guarantees, settlement and information Services for transactions with goods and securities. Broker- a person who has a place on the stock exchange and carries out transactions on his own behalf and at his own expense. Broker- an official intermediary that has a place on the stock exchange and concludes transactions on its own behalf and at the expense of the client. Dealer- a person who has a place on the exchange, concludes transactions on his own behalf and at his own expense, and also makes a quotation, i.e., setting the seller's price and the buyer's price for goods and securities. commodity exchange- the form of the market for goods sold in large quantities, as a rule, according to samples. Most of the transactions made on modern commodity exchanges are futures transactions (term contracts). futures contract is an agreement to sell something in the future at a price agreed upon today. Stock Exchange- an institution in which the purchase and sale of securities is carried out. Currency exchange carries out operations for the purchase and sale of foreign currency. Labor exchange carries out mediation in the labor market, registers the unemployed, promotes their employment.

Market mechanism - 1) the mechanism of interconnection and interaction of the main elements of the market: demand, supply, price, competition and the basic economic laws of the market; 2) the mechanism of interaction between sellers and buyers regarding the establishment of prices, production volumes, its structure and product quality; 3) a mechanism for the distribution of resources and income based on the objective economic laws of the market (changes in demand, changes in supply, equilibrium price, competition, cost, utility and profit).

Elements of the market mechanism: 1) subjects (sellers, buyers, intermediaries, government agencies, etc.); 2) objects ( different kinds goods market); 3) economic ties between subjects that may manifest themselves in cooperation or competition; 4) the availability of information about the decisions made to establish economic ties; 5) pricing mechanism.

Interaction demand And suggestions determines what and how much to produce and at what price to sell. Prices are the most important instrument of the market, as they provide its participants with the necessary information, on the basis of which a decision is made to increase or decrease the production of a particular product.

Signs of a free ("pure") market: 1) unregulated supply (producers independently decide which goods and in what quantity to produce); 2) unregulated demand (the buyer, depending on whether he has Money independently determines what and how much to buy); 3) an unregulated price that balances supply and demand.

Demand - a) the desire and ability of the consumer to buy a certain amount of goods or services at a certain price in a certain period of time; b) solvent need for any product or service. Demand quantity is the quantity of goods and services that buyers are willing to purchase at a given time, in a given place, at given prices. Types of demand: individual demand, market demand, demand for factors of production (production demand), consumer demand.

Factors affecting demand: advertising, fashion and tastes, consumer expectations, changing preferences environment, the availability of goods, the amount of income, the utility of a thing, fixed prices on interchangeable goods, the number of population.

Sentence is the willingness of a producer to sell a certain quantity of a good or service at a certain price in a certain period of time. Volume (value) of the offer The quantity of a good or service that sellers are willing to sell at a given price over a given period of time.

Non-price supply factors: 1) resource prices; 2) taxes and subsidies; 3) prices for other goods; 4) production technology; 5) the number of sellers in the market; 6) expectations of price changes.

Two prices are formed on the market: the demand price (the maximum price at which the buyer agrees to buy the product) and the offer price (the minimum price at which the manufacturer is willing to sell the product). Law of demand: the higher the price of a good, the less quantity people are willing to buy, and vice versa, the lower the price, the large quantity people are willing to buy the product. It is based on three reasons: 1) the new buyer effect, 2) the substitution effect, and 3) the income effect.

The law of supply: ceteris paribus, the quantity supplied of a good increases if the price of the good rises, and vice versa.

The price at which the supply and demand for a good is the same is called equilibrium. An indicator that indicates how strong the relationship between a change in the quantity demanded for a product and a change in its price is called price elasticity of demand. Goods with price elastic demand include luxury items, goods, the cost of which is tangible for the family budget (furniture, TV). Goods with inelastic demand: basic necessities (drugs, clothing, electricity); goods whose cost is insignificant for the family budget (pen, toothbrush); hard-to-replace goods (gasoline, light bulbs).

The elasticity of demand depends on: 1) availability of substitute goods; 2) the volume of the offered goods; 3) the need to purchase; 4) time of purchase. Price elasticity of supply is the degree to which supply changes with an increase in price.