Hi, I'm Dr. Sangaralingam Ramesh.
In this talk, we're going to be discussing
"The Nature of the Market" in the context of microeconomics,
seeking to answer the question,
what is the market?
Because the market is central to buying and selling of goods and services.
So, in the context of what is a market, by 1900,
it was being found that demand for goods and
services was more than just simple purchasing power.
And in this case, we can refer to purchasing power as the ability of
consumers' income adjusted for inflation
for changes in the price level to buy certain goods and services.
And another concept of the market was very relevant to neoclassical economics of the time,
and still is, is the ability of the market to automatically adjust.
In other words, demand to equate with supply to reach a harmonious equilibrium.
A third idea, which was around in the context of the market,
was that the cost of production of
a good was the principal determinant of the price of the good at least in
the long run when the firm was able to change
both the quantity of labor used in
production and the quantity of capital used in production.