Firms, markets, and price

Coordination in An Economy

Firm: a business organization that hires factors of production, and utilizes those factors to produce goods and services to sell.

Market: a medium that allows buyers and sellers to get information, and do business with each other by exchanging goods and services.

Property Rights: A social agreement that presides over the legal ownership, use, and disposal of resources, goods, or services.

Money: is any commodity or token that is acceptable as payment for goods and services.

Competitive Market and Price

Competitive Market: a market with many buyers and sellers so that no single buyer or seller can influence the price.

Money Price: the amount of money needed to buy a good or a service.

Relative Price: the ratio of one good relative to the price of another good. This is an opportunity cost.