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• Market


  A place where buyers and sellers can meet to facilitate the exchange or transaction of goods and services. Markets can be physical like a retail outlet, or virtual like an e-retailer.
• Market


  A means by which the exchange of goods and services takes place as a result of buyers and sellers being in contact with one another, either directly or through mediating agents or institutions. Market comes from the Latin mercatus (Market Place)
• Kinds of market


  • Wet Market
  • Dry Market
  • Stock Market
  • Real Estate Market
  • Labour Market
• Adam Smith (Father of Demand and Supply)


  Often referred to as the Father of Economics, Smith explained the concept of supply and demand as an "invisible hand" that naturally guides the economy.
• If it satisfies a need, demand comes first. If it satisfies a want, supply comes first.
• Demand


  Pertains to the quantity of a good or service that people are ready to buy at a given prices within a given time period.
• Demand Implies


  • Desire to possess a thing (good and service)
  • Ability to pay for it or means of purchasing it (price)
  • Willingness in utilizing it
• Methods of demand analysis

  • Demand Schedule
  • Demand Curve
  • Demand Function
• Supply


  The quantity of goods and services that firms are ready and willing to sell at a given price within a period of time.
• Methods in supply analysis

  • Supply Schedule
  • Supply Curve
  • Supply Function
• Market Equilibrium

  Pertains to a balance that exists when quantity demanded equals quantity supplied. Qd = Qs

  
• Market Equilibrium


  Is the general agreement of the buyer and the seller in exchange of goods and services at a particular price and a particular quantity.

  
• Forces that cause the demand curve to change

  • Changing incomes
  • Taste/Preference
  • Population Change
  • Occasional/Seasonal Products
  • Nominal/Inferior Goods
  • Expectations
  • Substitute and Complimentary Good
• Forces that cause the supply curve to change

  • Technological Change
  • Number of Seller
  • Weather Condition
  • Government Policy
  • Future Expectations
  • Optimization in the use of factors production
• Disequilibrium


  Occurs whenever the price or quantity is not equal to price or quantity.
• Price ceiling


  A price ceiling is the mandated maximum amount a seller is allowed to charge for a product or service. Usually set by law, price ceilings are typically applied to staples such as food and energy products when such goods become unaffordable to regular consumers.
• Price ceiling


  Government imposes a price ceiling to control the maximum prices that can be charged by suppliers for the commodity. This is done to make commodities affordable to the general public.
• Price ceiling


  • Rent controls, which limit how much landlords can charge monthly for residences (and often by how much they can increase rents)
  • Caps on the costs of prescription drugs and lab tests
• Price floor


  A situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply.
• Price floor


  • Minimum wage laws, where the government sets out the minimum hourly rate that can be paid for labour.
• Elasticity


  An economic concept used to measure the change in the aggregate quantity demanded of a good or service in relation to price movements of that good or service.
• Elasticity


  The ability of an object or material to resume its normal shape after being stretched or compressed; stretchiness.
• Soft drinks aren't a necessity, so a big increase in price would cause people to stop buying them or look for other brands.
• Elasticity


  It is computed as the percentage change in quantity demanded (or supplied) divided by the percentage change in price.

  
• Types of Elasticity


  • Perfect Inelasticity
  • Inelastic
  • Unitary Elastic
  • Elastic
  • Perfect Elastic
• The elasticity of supply has five categories

  • When Ꜫ = 0, it is perfectly inelastic
  • When Ꜫ < 1, it is inelastic
  • When Ꜫ = 1, it is unitary elastic
  • When Ꜫ >1, it is elastic
  • When Ꜫ = ∞, it is perfectly elastic at constant costs

  
• Service Business


  The type of business service provides intangible products (products that do not have a body type). Service type firms offer technical skills, expertise, advice, and other similar products.
• Merchandising Business

  This type of business buys products at full price and sells the same at a retail price. They are known as "buy and sell" businesses. They make a profit by selling products at a higher price than their purchase costs.
• Manufacturing Business


  the manufacturing business buys products with the intention of using them as building materials for a new product. Therefore, there is a modification of the purchased products.
• The manufacturing business incorporates inputs, labor and higher costs into its manufacturing process. The manufactured goods will then be sold to customers.
• Hybrid Business


  Hybrid businesses are companies that can be placed on more than one type of business. The restaurant, for example, includes ingredients for a good meal (production), sells a cold bottle of wine (for sale), and fills customer orders (service).
• Sole Proprietorship


  Ownership is a business with only one person. Easy to set up and very expensive for all types of ownership. The owner is subject to unlimited debt; that is, business lenders can pursue the owner's assets if the business is unable to repay them.
• Only the ownership form is usually accepted by small business organizations.
• Cooperation


  A partnership is a business owned by two or more people who provide resources for a business. Partners share business profits.
• In a normal partnership, all partners have unlimited debt. In a limited relationship, lenders are unable to track the assets of their limited partners.
• Organization


  An organization is a business entity that has a different legal personality from its owners. The ownership of a stock company is represented by stocks.
• Owners (shareholders) enjoy limited credit but have limited involvement in the operations of the company. The board of directors, a group elected from the shareholders, oversees the activities of the organization.
• Co-operative


  A co-operative is a business organization that is owned by a group of people and is for the benefit of both of them. The people who form a group are called members. Co-operatives can be included or not merged.
• Other examples of co-operatives

  • water and electricity (aid) co-operatives
  • co-operative banks
  • credit unions
  • housing co-operatives
• Primary Industries


  Extract raw materials (which are natural products) from the land or sea e.g. oil, iron ore, timber, fish. Mining, quarrying, fishing, forestry, and farming are all example of primary industries.