Market concept
Individual economic units can be categorised into two broad groups
according to the functions performed — buyers and sellers. Buyers include consumers, who purchase goods and services, and firms, which buy labour, capital and raw materials that they use to produce goods and services. Sellers include firms, which sell their goods and services; workers who sell their labour services; and resource owners who rent land or sell resources to firms.
according to the functions performed — buyers and sellers. Buyers include consumers, who purchase goods and services, and firms, which buy labour, capital and raw materials that they use to produce goods and services. Sellers include firms, which sell their goods and services; workers who sell their labour services; and resource owners who rent land or sell resources to firms.
Together, buyers and sellers interact to form markets. A market is a
collection of buyers and sellers that interact resulting in the possibility of exchange.
collection of buyers and sellers that interact resulting in the possibility of exchange.
The market is an organisation in which buyers and sellers come into close contact. The function of a market is to enable an exchange of goods or services to take place. It is an arrangement that facilitates buying and selling.
The interaction of buyers and sellers in a free competitive system results in a price, which clears the market, that is, a price at which the quantity demanded is equal to the quantity supplied. In studying Economics, it is important to bear in mind that there are two sides to every transaction in the market. For every buyer of the good, there is a corresponding seller.