Lecture 2. Market structure: essence and classification

The main economic questions and types of economic systems.

The definition of market. Function of market. The conditions of market functioning.

Classification of markets.

Types of markets according market structure.

Forms and methods of market competition.

Market conjuncture: essence and factors.

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As we know all economic resources are limited. It means that if we spent resources for one good we can’t use it for other good. So, the problem of allocation appears.

Allocation is

To decide this problem any society (economics) has to answer fundamental economic questions:

1. What to produce? The economy has to take a fundamental decision that what goods and services are to be produced.

2. How many to produce? In what quantity should we produce goods and services with the limited resources at our disposal.

3. How to produce? This is the problem of what type of technique is to be adopted for production; an economy may choose between labour intensive technique (use of more labour than capital) and capital intensive technique (use of more capital than labour).