LWEO

chapter 8

chapter 8

Markets

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.

links
Market Forms (video 8 minutes)
Calculating the Equilibrium Price (www.economiepagina.com)

glossary

Glossary chapter 8

cartel
Suppliers make mutual agreements with the aim to reduce the competition.
consumers
Buyers of goods and services, who have no intention to sell them or to process them for sale.
demand curve
The demand curve indicates the relation between the price and the demanded quantity.
equilibrium price
The price that is established if the demand is equal to the supply.
equilibrium quantity
The number of products supplied and demanded at the equilibrium price.
goods
Material products.
heterogeneous goods
Goods and services which are different from each other in the eyes of consumers. It makes a difference which supplier has made the product.
homogeneous goods
Goods which in the eyes of consumers are fully identical.
market
Place where consumers and suppliers meet.
model
A simplified representation of reality, which nly described the relation between the most important (economic) quantities.
monopolistic competition
A market form in which the actual differences between products of different suppliers are small, but in which consumers still appreciate the products differently. There are many suppliers and the product is heterogeneous. Within certain limits the entrepreneur can fix the price himself.
monopoly
Market where there is only one supplier.
oligopoly
A market form with a limited number of suppliers or several large suppliers who hold the biggest part of the market share.
perfect competition
Market form with a large number of consumers and suppliers, homogeneous products, free accession and withdrawal and full transparence. The individual consumer or individual supplier has no influence on the price.
producers
Makers of goods and services.
services
Non-material (= intangible) goods such as a taxi ride, a visit to the family doctor, a theatrical performance, etc.
supply curve
The supply curve is a graphic representation of the relation between the price of an article and the quantity supplied of that article. This supply curve can indicate both the individual and the collective supply.
willingness to pay
The maximum amount you are prepared to pay for something.
willingness to supply
The willingness of the supplier to offer a certain quantity at a certain price.