Introduction to Business Module Federal Reserve Monetary Policy Market Computer Industry Returns Market MSFT (Microsoft) Price Level Market
What Is a Market? Two or more individuals, groups, or both, who come together to make exchanges. They are often referred to as a Buyer and Seller.
How, What and When Do They Exchange? They Exchange? Resources with differing levels of scarcity Different combinations of exchanges What roles can participants play in the exchange? Types of Markets Topics
Resources With Differing Levels of Scarcity Physical goods, such as, Soap and Cars Services, such as, Haircuts and Checking Accounts Money
Different Combinations of Exchanges (1) Goods for Goods Bartering, such as, a farmer who trades fruit grown on their farm for wine produced by another farmer Countertrade, such as, Ford Tractors traded for commodities, such as, wheat, hemp, or other industrial products
Different Combinations of Exchanges (2) Goods for Money & $$$ for Goods Purchasing household products from Walmart Selling your car in the classified advertisements
Different Combinations of Exchanges (3) Services for Money Money for Services Purchasing phone service from MCI Repairing a neighbors car for money
Different Combinations of Exchanges (4) Promises for Money Money for Promises Paying money for car insurance in exchange for a promise by the seller to compensate you for loss or damages to your car Receiving money from a lender (Student loans), in exchange for your promise to repay the loan plus interest, some time in the future
Different Combinations of Exchanges (5) Money for Money While visiting Paris, exchanging U.S. Dollars for French Francs
What Roles Can Participants Play in the Exchange? Buyer or Seller Rule Maker
The Role of Buyers and Sellers Price Setter or Price Taker Because of the scarcity of the resource, when purchasing gasoline, the buyer is a price taker and the gas company is a price setter What are the roles of Shaq and the Los Angeles Lakers?
The Role of the Rule Maker Rule makers set the ground rules for a particular market and its transactions NASD and its members SEC in the securities market
Types of Markets Legal and Illegal Markets Real and Virtual Markets 24/7 and Time Limited Markets
Legal and Illegal Markets Purchasing a prescription drug from your local pharmacy Purchasing cocaine from a drug dealer
Real and Virtual Markets Purchasing your textbook at your college bookstore Purchasing your textbook at Amazon.com
24/7 & Time Limited Markets Purchasing your textbook at Amazon.com at anytime of day and any day of the week Auctions, such as, eBay, where the timeframe to participate or complete the transaction is limited and expires
Markets of Interest Labor Rules created by legislation, such as, minimum wage laws, child labor laws, Equal Employment Opportunity Laws (e.g. ADA) Organized labor sellers
Markets of Interest Land Rules intensive, attorney or realtor involved Land is scarce and unique There are no substitutes
Markets of Interest Exchange Rates Market Players include: Individuals purchasing and selling foreign currency Multi-national Corporations, such as Ford, who periodically need to repatriate foreign currency into US Dollars Large global banks Governments who enter the exchange to strengthen or devalue a currency
Markets of Interest Capital and Financial Stocks and Bonds
Markets of Interest Other Financial Markets Commodities Spot Market and Futures Market IEM
Conclusion Other Financial Markets Commodities Spot Market and Futures Market IEM
What is The Iowa Electronic Market (IEM) The IEM is an on-line, computerized market Contracts are based on real-world events A research tool A teaching tool Open to academic community
IEM Resources IEM Introduction PowerPoint Presentation IEM Traders Manual WebExchage Users’ Guide