Copyright 2006 – Biz/ed Introduction to Markets

Copyright 2006 – Biz/ed Introduction to Markets Market – any place or process that brings together buyers and sellers with a view to agreeing a price The basis of how an economy operates – through production and subsequent exchange

Copyright 2006 – Biz/ed Introduction to Markets The range of markets: –Organised markets – commodities e.g. rubber, oil, sugar, wheat, gold, copper, etc. –Financial markets – stocks, shares, currencies, financial instruments –Goods markets – the supply and demand of goods and services in general, food, clothing, leisure, houses, cars, etc. –Factor markets – the supply and demand of factors of production – land, labour and capital

Copyright 2006 – Biz/ed Introduction to Markets A market does NOT have to be a physical place like a shop The market place consists of all those who have items/services for sale and all those who are interested in buying those items/services Many businesses have global markets because of the developments in technology – see

Copyright 2006 – Biz/ed Introduction to Markets Demand – the amount consumers desire to purchase at various alternative prices Demand – reflects the degree of value consumers place on items – price and satisfaction gained from purchase (utility) Supply – the amount producers are willing to offer for sale at various prices Supply – reflects the cost of the resources used in production and the returns/profits required

Copyright 2006 – Biz/ed Introduction to Markets Factors affecting the efficiency of markets –The amount of information about the markets held by consumers and producers –The ease with which factors of production can be put to alternative uses –The extent to which price is an accurate signal of the true utility and true cost in determining the level of demand and supply (externalities) –The degree to which firms hold monopoly power –The degree to which property rights are clearly defined –Whether the market can provide goods and services (public goods)