The market
From WikiTextbook
The market is anyplace where sellers and buyers meet, for example, a shop, the internet or a traditional market. It is possible to divide the market into local, national and international markets. A local market would be a High Street where the businesses are competing for the customers that live in the local area. A national market is one where businesses compete for customers from all over the UK, for example, Alton Towers attracts customers from all over the UK. An international market is one where the business competes with businesses all over the world to sell to customers in many countries, for example, Microsoft sell their goods all over the world competing with other software businesses.
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Market Forces
In a competitive market, market forces help to set the price of goods and services. Customers will spend their money on goods and services that they want and feel are good value. When customers buy a product, we say, they are casting a vote. If the business receives lots of votes, in other words there is high demand for its products, it can raise its price. If a business does not receive many votes it will have to lower its prices if it wants to increase sales. Market forces are the actions of customers that help to determine the price and quantity of goods sold.
A market will not be competitive if there is only one supplier. When there is only one supplier that business is called a monopolist. Water companies, like South West Water and Thames Water, are examples of monopolists, for example, if you want water supplied to your taps you will have to pay the price charged.
Fixing the Price
In most markets the seller sets the price. Most goods and services have their prices set by the business selling them. You can then choose whether or not to buy it. Market forces may lead to that price changing over time.
In some markets the price may not be fixed. In this case the buyer and seller will haggle over the price. This may occur when buying a car from a newspaper or in many foreign marketplaces. The final price paid by the consumer will be somewhere in between the seller’s asking price and the buyer’s first offer.
In other markets, such as an auction, the customers will compete amongst themselves. The consumer offering the highest price will receive the goods.
