Introduction to chapter 8
A market is a place where consumers and suppliers meet, such as a shop, a market stall, an auction or a supermarket. Then again, the Internet is also a place where consumers and suppliers meet. The consumers are the buyers of products, the suppliers are the sellers of products.
There are different kinds of markets, such as:
• The markets for goods and services, whereby the price is determined by supply and demand.
• The labour market, where supply and demand of labour determine the price. The price of labour is the wage.
• The capital market, where money is supplied and money is demanded. The suppliers on this market are the banks, for instance, and the consumers are people who want to borrow money to buy a house or a car. The price of borrowing and lending money is the interest.
• The foreign exchange market, where consumers and suppliers of foreign exchange (such as dollars, yens or euros) determine the price (exchange rate) of a currency.